Download GTU (Gujarat Technological University) MBA (Master of Business Administration) 2018 Summer 2nd Sem 3529203 Financial Management Previous Question Paper

Seat No.: ________ Enrolment No.___________

GUJARAT TECHNOLOGICAL UNIVERSITY

MBA ? SEMESTER (2) ? EXAMINATION ? SUMMER 2018

Subject Code: 3529203 Date: 25/05/2018

Subject Name: FINANCIAL MANAGEMENT

Time:10:30 AM To 01:30 PM Total Marks: 70

Instructions:

1. Attempt all questions.

2. Make suitable assumptions wherever necessary.

3. Figures to the right indicate full marks.

Q.1 Explain the following terms:

1) Discounted Cash Flow

2) Retained Earnings

3) Cost of Capital

4) Agency Problem

5) Working Capital

6) Operating Cycle

7) Doubling Period

14

Q.2 (A) What do you mean by Financial Management? Discuss various Functions of financial

management in detail.

07

Q.2 (B) Suppose Mr. Nehal deposits at each year starting Rs. 750, Rs. 1000, Rs. 1250, Rs. 1500 and

Rs. 1750 in his saving bank account 1 to 5 years respectively. Calculate the compound value

of deposits at the end of 5 years. Interest rate is 6%.

07

OR

Q.2 (B) ABC company issued 10% bonds with a face value of Rs. 1000 for a maturity period of 4

years. Required rate of return is (A) 10%, (B) 12% and (C) 8%.

Determine the value of bond in each situation.

07

Q.3 (A) Explain Capital Budgeting and also discuss importance of Capital Budgeting. 07

Q.3 (B) Cash inflows of Kayaan Projects Pvt. Ltd. Along with Cash outflows are given below.

Year 0 1 2 3 4 5

Cash Outflows 1,50,000 30,000 -- -- -- --

Net Cash Inflows after

depreciation and Tax

-- 20,000 30,000 60,000 80,000 30,000

The salvage value at the end of 5

th

year is Rs. 40,000. Calculate Net Present Value of this

Project at 10% Discounting Rate and also through light on the acceptance of this Project.

07

OR

Q.3 (A) What is Pay Back Method? State its Advantages and Limitations in detail. 07

Q.3 (B) From the following information of Tavishee & Kashvee Pvt. Ltd. Determine Overall Cost of

Capital by using Book value Rates and Market value Rates.

Sources of Finance Book Value Market Value Cost Percentage

Equity share 3,00,000

1,00,000

}

6,00,000

15%

Retained Earnings 13%

Preference share 50,000 60,000 8%

Debenture 2,00,000 1,90,000 6%

Total 6,50,000 8,50,000

07

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Page 1 of 3

Seat No.: ________ Enrolment No.___________

GUJARAT TECHNOLOGICAL UNIVERSITY

MBA ? SEMESTER (2) ? EXAMINATION ? SUMMER 2018

Subject Code: 3529203 Date: 25/05/2018

Subject Name: FINANCIAL MANAGEMENT

Time:10:30 AM To 01:30 PM Total Marks: 70

Instructions:

1. Attempt all questions.

2. Make suitable assumptions wherever necessary.

3. Figures to the right indicate full marks.

Q.1 Explain the following terms:

1) Discounted Cash Flow

2) Retained Earnings

3) Cost of Capital

4) Agency Problem

5) Working Capital

6) Operating Cycle

7) Doubling Period

14

Q.2 (A) What do you mean by Financial Management? Discuss various Functions of financial

management in detail.

07

Q.2 (B) Suppose Mr. Nehal deposits at each year starting Rs. 750, Rs. 1000, Rs. 1250, Rs. 1500 and

Rs. 1750 in his saving bank account 1 to 5 years respectively. Calculate the compound value

of deposits at the end of 5 years. Interest rate is 6%.

07

OR

Q.2 (B) ABC company issued 10% bonds with a face value of Rs. 1000 for a maturity period of 4

years. Required rate of return is (A) 10%, (B) 12% and (C) 8%.

Determine the value of bond in each situation.

07

Q.3 (A) Explain Capital Budgeting and also discuss importance of Capital Budgeting. 07

Q.3 (B) Cash inflows of Kayaan Projects Pvt. Ltd. Along with Cash outflows are given below.

Year 0 1 2 3 4 5

Cash Outflows 1,50,000 30,000 -- -- -- --

Net Cash Inflows after

depreciation and Tax

-- 20,000 30,000 60,000 80,000 30,000

The salvage value at the end of 5

th

year is Rs. 40,000. Calculate Net Present Value of this

Project at 10% Discounting Rate and also through light on the acceptance of this Project.

07

OR

Q.3 (A) What is Pay Back Method? State its Advantages and Limitations in detail. 07

Q.3 (B) From the following information of Tavishee & Kashvee Pvt. Ltd. Determine Overall Cost of

Capital by using Book value Rates and Market value Rates.

Sources of Finance Book Value Market Value Cost Percentage

Equity share 3,00,000

1,00,000

}

6,00,000

15%

Retained Earnings 13%

Preference share 50,000 60,000 8%

Debenture 2,00,000 1,90,000 6%

Total 6,50,000 8,50,000

07

Page 2 of 3

Q.4 (A) Determine various Factors influencing Capital Structure. 07

Q.4 (B) Mihir Auto Pvt Ltd, a petrol engine manufacturer buys an item in lots of 2,000 units which is

a three month requirement. The cost per unit is Rs. 90 and the ordering cost is Rs. 180 per

batch order. The inventory carrying cost is estimated at 20% of the overage inventory

investment.

a) What is the Annual Total Cost of existing inventory policy?

b) How much money can be saved by using Economic Order Quantity (EOQ)?

07

OR

Q.4 (A) Discuss the differentiation between Operating Leverage and Financial leverage. 07

Q.4 (B) Kahan Industries Ltd. Pays a dividend Rs. 2 per share with a growth rate of 7%. The risk free

rate is 9% and the market rate of return is 13%. The company has a beta factor of 1.50.

However due to a decision of the finance manager, beta is likely to increase to 1.75. Find out

the present as well as the likely value of the share after the decision.

07

Q.5 Following details are given related to operation and capital structure of Sharaan Ltd.

Particulars Situation-A Situation-B

Installed Capacity 1,000 Units 1,000 Units

Actual Production and Sales 800 Units 800 Units

Selling Price per Unit Rs. 20 Rs. 20

Variable cost per Unit Rs. 15 Rs. 15

Fixed Cost Rs. 800 Rs. 1500

Capital Structure Equity Capital Debt Capital

Financial Plan I 5,000 5,000

Financial Plan II 7,000 2,000

Cost of debt is 10%

(A) Calculate Financial Leverage, Operating Leverage and Combine leverage under Situation A

with Financial Plan I

07

(B) Calculate Financial Leverage, Operating Leverage and Combine Leverage under Situation B

with Financial Plan I

07

OR

(A) Calculate Financial Leverage, Operating Leverage and Combine leverage under Situation A

with Financial Plan II

07

(B) Calculate Financial Leverage, Operating Leverage and Combine Leverage under Situation B

with Financial Plan II

07

*************

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Page 1 of 3

Seat No.: ________ Enrolment No.___________

GUJARAT TECHNOLOGICAL UNIVERSITY

MBA ? SEMESTER (2) ? EXAMINATION ? SUMMER 2018

Subject Code: 3529203 Date: 25/05/2018

Subject Name: FINANCIAL MANAGEMENT

Time:10:30 AM To 01:30 PM Total Marks: 70

Instructions:

1. Attempt all questions.

2. Make suitable assumptions wherever necessary.

3. Figures to the right indicate full marks.

Q.1 Explain the following terms:

1) Discounted Cash Flow

2) Retained Earnings

3) Cost of Capital

4) Agency Problem

5) Working Capital

6) Operating Cycle

7) Doubling Period

14

Q.2 (A) What do you mean by Financial Management? Discuss various Functions of financial

management in detail.

07

Q.2 (B) Suppose Mr. Nehal deposits at each year starting Rs. 750, Rs. 1000, Rs. 1250, Rs. 1500 and

Rs. 1750 in his saving bank account 1 to 5 years respectively. Calculate the compound value

of deposits at the end of 5 years. Interest rate is 6%.

07

OR

Q.2 (B) ABC company issued 10% bonds with a face value of Rs. 1000 for a maturity period of 4

years. Required rate of return is (A) 10%, (B) 12% and (C) 8%.

Determine the value of bond in each situation.

07

Q.3 (A) Explain Capital Budgeting and also discuss importance of Capital Budgeting. 07

Q.3 (B) Cash inflows of Kayaan Projects Pvt. Ltd. Along with Cash outflows are given below.

Year 0 1 2 3 4 5

Cash Outflows 1,50,000 30,000 -- -- -- --

Net Cash Inflows after

depreciation and Tax

-- 20,000 30,000 60,000 80,000 30,000

The salvage value at the end of 5

th

year is Rs. 40,000. Calculate Net Present Value of this

Project at 10% Discounting Rate and also through light on the acceptance of this Project.

07

OR

Q.3 (A) What is Pay Back Method? State its Advantages and Limitations in detail. 07

Q.3 (B) From the following information of Tavishee & Kashvee Pvt. Ltd. Determine Overall Cost of

Capital by using Book value Rates and Market value Rates.

Sources of Finance Book Value Market Value Cost Percentage

Equity share 3,00,000

1,00,000

}

6,00,000

15%

Retained Earnings 13%

Preference share 50,000 60,000 8%

Debenture 2,00,000 1,90,000 6%

Total 6,50,000 8,50,000

07

Page 2 of 3

Q.4 (A) Determine various Factors influencing Capital Structure. 07

Q.4 (B) Mihir Auto Pvt Ltd, a petrol engine manufacturer buys an item in lots of 2,000 units which is

a three month requirement. The cost per unit is Rs. 90 and the ordering cost is Rs. 180 per

batch order. The inventory carrying cost is estimated at 20% of the overage inventory

investment.

a) What is the Annual Total Cost of existing inventory policy?

b) How much money can be saved by using Economic Order Quantity (EOQ)?

07

OR

Q.4 (A) Discuss the differentiation between Operating Leverage and Financial leverage. 07

Q.4 (B) Kahan Industries Ltd. Pays a dividend Rs. 2 per share with a growth rate of 7%. The risk free

rate is 9% and the market rate of return is 13%. The company has a beta factor of 1.50.

However due to a decision of the finance manager, beta is likely to increase to 1.75. Find out

the present as well as the likely value of the share after the decision.

07

Q.5 Following details are given related to operation and capital structure of Sharaan Ltd.

Particulars Situation-A Situation-B

Installed Capacity 1,000 Units 1,000 Units

Actual Production and Sales 800 Units 800 Units

Selling Price per Unit Rs. 20 Rs. 20

Variable cost per Unit Rs. 15 Rs. 15

Fixed Cost Rs. 800 Rs. 1500

Capital Structure Equity Capital Debt Capital

Financial Plan I 5,000 5,000

Financial Plan II 7,000 2,000

Cost of debt is 10%

(A) Calculate Financial Leverage, Operating Leverage and Combine leverage under Situation A

with Financial Plan I

07

(B) Calculate Financial Leverage, Operating Leverage and Combine Leverage under Situation B

with Financial Plan I

07

OR

(A) Calculate Financial Leverage, Operating Leverage and Combine leverage under Situation A

with Financial Plan II

07

(B) Calculate Financial Leverage, Operating Leverage and Combine Leverage under Situation B

with Financial Plan II

07

*************

Page 3 of 3

FVIF Table

FVIFA Table

PVIF Table

PVIFA Table

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This post was last modified on 19 February 2020