Download JNTUH (Jawaharlal Nehru Technological University Hyderabad) MBA (Master of Business Administration) 2nd Semester (Second Semester) R15 2018 July 721CM Financial Management Previous Question Paper
Code No: 721CM
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD
MBA II Semester Examinations, June/July-2018
FINANCIAL MANAGEMENT
Time: 3hours Max.Marks:75
Note: This question paper contains two parts A and B.
Part A is compulsory which carries 25 marks. Answer all questions in Part A.
Part B consists of 5 Units. Answer any one full question from each unit. Each question
carries 10 marks and may have a, b, c as sub questions.
PART - A 5 ? 5 Marks = 25
1.a) Define financial management? Explain its nature and scope. [5]
b) What is capital Budgeting? Why it is significant for a firm? [5]
c) What is EBIT-EPS analysis? Explain in detail. [5]
d) Briefly discuss the different types of dividend policies? [5]
e) Explain the cash management techniques. [5]
PART - B 5 ?10 Marks = 50
2. What are the basic financial decisions? How do they involve risk-return trade-off?
[10]
OR
3. What is multi- period compounding? How does it affect the annual rate of interest? Give
a suitable numerical example. [10]
4. Briefly discuss the techniques of capital budgeting with their merits and limitations.
[10]
OR
5. Bullock Gold Mining:-
Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in
South Dakota. Dan Dority, the company?s geologist, has just finished his analysis of the
mine site. He has estimated that the mine would be productive for eight years, after
which the gold would be completely mined. Dan has taken an estimate of the gold
deposits to Alma Garrett, the company?s financial offer. Alma has been asked by Seth to
perform an analysis of the new mine and present her recommendations on whether the
company should open the new mine.
Alma has the estimates provided by Dan to determine the revenue that could be
expected from the mine. She has also projected the expences of opening the mine and
the annual operating expenses. If the company opens the mine, it will cost $750 million
today, and it will have a cash outflow of $75 million nine years from today in costs
associated with closing the mine and reclaiming the area surrounding it. The expected
cash flow each year from the mine are shown in the following table. Bullock Mining has
a 12% required return on all of its gold mines.
R15
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Code No: 721CM
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD
MBA II Semester Examinations, June/July-2018
FINANCIAL MANAGEMENT
Time: 3hours Max.Marks:75
Note: This question paper contains two parts A and B.
Part A is compulsory which carries 25 marks. Answer all questions in Part A.
Part B consists of 5 Units. Answer any one full question from each unit. Each question
carries 10 marks and may have a, b, c as sub questions.
PART - A 5 ? 5 Marks = 25
1.a) Define financial management? Explain its nature and scope. [5]
b) What is capital Budgeting? Why it is significant for a firm? [5]
c) What is EBIT-EPS analysis? Explain in detail. [5]
d) Briefly discuss the different types of dividend policies? [5]
e) Explain the cash management techniques. [5]
PART - B 5 ?10 Marks = 50
2. What are the basic financial decisions? How do they involve risk-return trade-off?
[10]
OR
3. What is multi- period compounding? How does it affect the annual rate of interest? Give
a suitable numerical example. [10]
4. Briefly discuss the techniques of capital budgeting with their merits and limitations.
[10]
OR
5. Bullock Gold Mining:-
Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in
South Dakota. Dan Dority, the company?s geologist, has just finished his analysis of the
mine site. He has estimated that the mine would be productive for eight years, after
which the gold would be completely mined. Dan has taken an estimate of the gold
deposits to Alma Garrett, the company?s financial offer. Alma has been asked by Seth to
perform an analysis of the new mine and present her recommendations on whether the
company should open the new mine.
Alma has the estimates provided by Dan to determine the revenue that could be
expected from the mine. She has also projected the expences of opening the mine and
the annual operating expenses. If the company opens the mine, it will cost $750 million
today, and it will have a cash outflow of $75 million nine years from today in costs
associated with closing the mine and reclaiming the area surrounding it. The expected
cash flow each year from the mine are shown in the following table. Bullock Mining has
a 12% required return on all of its gold mines.
R15
Year Cash Flow
0 -$750,000,000
1 130,000,000
2 180,000,000
3 190,000,000
4 245,000,000
5 205,000,000
6 155,000,000
7 135,000,000
8 95,000,000
9 -75,000,000
a) Calculate PBP, IRR, NPV and PI values of the proposed mine.
b) Based on your analysis, should the company open the mine? [10]
6. Define capital structure? Discuss the important factors that should be considered while
determining capital structure. [10]
OR
7. Firm P and Q are similar expect that P is unlevered, while Q has Rs 3, 00,000 of 6%
debentures outstanding. Assume that the tax rate is 45%: NOI is Rs 47,000 and the cost
of the equity is 10%.
a) Calculate the value of the firms, if the M-M assumptions are met.
b) Suppose VQ = Rs 3, 90,000. According to MM, do these represent equilibrium
values? How will equilibrium be set? Explain. [10]
8. What is Miller-Modigliani?s dividend relevance hypothesis? Explain with examples.
[10]
OR
9. Ashoka Ltd has a capital structure shown below:
Particulars Rs Crore
Equity share capital(Rs 10 par, 5 Crore shares) 50
Preference share capital(Rs 100 par, 50 lakh shares) 50
Share premium 50
Reserves and surpluses 80
Net worth 230
Show the changed capital structure if the company declares a bonus issue of shares in
the ratio of 1:5 to ordinary shareholders when the issue price per share is Rs 100. How
would the capital structure be affected if the company had split its stock five-for-one
instead of declaring bonus issue? [10]
10. Briefly explain the factors influencing working capital. [10]
OR
11. From the following information calculate operating cycle and cash cycle? [10]
Item Beginning Ending Average
Inventory 2,000 3,000 2,500
Accounts Receivables 1,600 2,000 1,800
Accounts payables 750 1,000 875
Additional Information:- Net sales 11,500.
Cost of goods sold 8,200.
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This post was last modified on 23 October 2020