Download JNTUA MBA 2019 June 2nd Sem 17E00204 Financial Management Question Paper

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Code: 17E00204

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MBA & MBA (Finance) II Semester Regular & Supplementary Examinations June 2019

FINANCIAL MANAGEMENT

(For students admitted in 2017 & 2018 only)

Time: 3 hours Max. Marks: 60

All questions carry equal marks

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SECTION -A

(Answer the following: 05 X 10 = 50 Marks)

1. Discuss the nature and scope of financial management.

   OR

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2. Explain the scope and objectives of financial management.
3. Describe the investment decision process in detail.

   OR

4. A company is considering two mutually exclusive projects. Both require an initial cash outlay of Rs.10,000 each and has a life of 5 years. The company's required rate of return is 10% and pays a tax of 50%. The project will be depreciated on a straight line basis. The before tax cash flows expected to be generated by the project are as follows:

Year	1	2	3	4	5
Before tax cash flows
Project A	4,000	4,000	4,000	4,000	4,000
Project B	5,000	5,000	2,000	5,000	5,000

Calculate for each project:

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1. Payback period.
2. Profitability index.

Which project should be accepted and why?

5. Discuss any two sources of long term finance with their relative merits and demerits.

   OR

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6. Explain the various factors that influence the dividend decision of a firm.
7. Discuss the factors that affect the size of the receivables.

   OR

8. Define working capital. Discuss in detail objectives of working capital. Also discuss in detail operating cycle approach to working capital and cash management.
9. Identify and discuss the factors which are considered necessary in determining a firm's value before taking a merger decision.

   OR

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10. Who can be a “Issue manager” as per the SEBI regulations? Briefly describe the various activities undertaken by an issue manager while managing a public issue.

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Code: 17E00204

SECTION -B

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Case Study: (Compulsory question, 01 X 10 = 10 Marks)

1. X company Ltd is considering three different plans to finance its total project cost of Rs.100 lakhs. They are
   1. Plan A: Equity (Rs.100 per share) – 50 lakhs

      Debt (8% Debentures) – 50 lakhs

   2. Plan B: Equity (Rs.100 per share) – 34 lakhs

      Debt (8% Debentures) – 66 lakhs

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   3. Plan C: Equity (Rs.100 per share) – 25 lakhs

      Debt (8% Debentures) – 75 lakhs

   Sales for the first three years of operations are estimated at Rs.100 lakhs, Rs.125 lakhs and Rs.150 lakhs and a 10% profit before interest and taxes is forecasted to be achieved. Corporate taxation to be taken at 50%. Compute earnings per share in each of the alternative plans of financing for the three years.

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