Exam Details
| Subject | financial management | |
| Paper | ||
| Exam / Course | pg diploma in business management | |
| Department | ||
| Organization | acharya nagarjuna university-distance education | |
| Position | ||
| Exam Date | May, 2018 | |
| City, State | new delhi, new delhi |
Question Paper
Total No. of Questions 10] [Total No. of Pages 02
P.G. DIPLOMA DEGREE EXAMINATION, MAY 2018
BUSINESS MANAGEMENT
Financial Management
Time 3 Hours Maximum Marks :70
Answer any five questions.
All questions carry equal marks.
Q1) What are the scope and objectives of financial management? Explain in detail.
Q2) Discuss the concept and need for working capital.
Q3) What are the determinants of capital structure?
Q4) Differentiate between liquidity and profitability.
Q5) What are the evils of excess or inadequate working capital?
Q6) Explain all the dividend theories in brief.
Q7) What do you mean by liquidity of a firm? How can be the liquidity of the firm
assessed?
Q8) Discuss the different approaches to the computation of the cost of equity
capital.
(DBM03)
Q9) A company whose cost of capital is 12% is considering two mutually projects
X and the details of which are given below:
Project X Project Y
Investment Rs. 70,000 Rs. 70,000
Cash inflow after taxes:
Year 1 Rs.10,000 Rs.50,000
Year 2 Rs.20,000 Rs.40,000
Year 3 Rs.30,000 Rs.20,000
Year 4 Rs.45,000 Rs.10,000
Year 5 Rs.60,000 Rs.10,000
Question:
Compute the Net Present Value and Internal Rate of Return of the two
projects and suggest which project should be undertaken?
Q10) The following is the capital structure of Sara Ltd., as on 31-12-2013.
Equity shares (20,000 shares of 100 each) 20,00,000
10% preference shares of 100 each 8,00,000
12% debentures 12,00,000
40,00,000
The market price of the Company's share is and it is expected that a
dividend of Rs.10 per share would be declared after 1 year. The dividend
growth rate is 6%.
If the company is in the 50% tax bracket, compute the weighted average
cost of capital.
Assuming that in order to finance an expansion plan, the company intends
to borrow a fund of Rs.20 lacs bearing 14% rate of interest, what will be
the Company's revised weighted average cost of capital? This financing
decision is expected to increase dividend from Rs.10 to Rs.12 per share.
However, the market price of equity share is expected to decline from
Rs.110/- to 105 per share.
P.G. DIPLOMA DEGREE EXAMINATION, MAY 2018
BUSINESS MANAGEMENT
Financial Management
Time 3 Hours Maximum Marks :70
Answer any five questions.
All questions carry equal marks.
Q1) What are the scope and objectives of financial management? Explain in detail.
Q2) Discuss the concept and need for working capital.
Q3) What are the determinants of capital structure?
Q4) Differentiate between liquidity and profitability.
Q5) What are the evils of excess or inadequate working capital?
Q6) Explain all the dividend theories in brief.
Q7) What do you mean by liquidity of a firm? How can be the liquidity of the firm
assessed?
Q8) Discuss the different approaches to the computation of the cost of equity
capital.
(DBM03)
Q9) A company whose cost of capital is 12% is considering two mutually projects
X and the details of which are given below:
Project X Project Y
Investment Rs. 70,000 Rs. 70,000
Cash inflow after taxes:
Year 1 Rs.10,000 Rs.50,000
Year 2 Rs.20,000 Rs.40,000
Year 3 Rs.30,000 Rs.20,000
Year 4 Rs.45,000 Rs.10,000
Year 5 Rs.60,000 Rs.10,000
Question:
Compute the Net Present Value and Internal Rate of Return of the two
projects and suggest which project should be undertaken?
Q10) The following is the capital structure of Sara Ltd., as on 31-12-2013.
Equity shares (20,000 shares of 100 each) 20,00,000
10% preference shares of 100 each 8,00,000
12% debentures 12,00,000
40,00,000
The market price of the Company's share is and it is expected that a
dividend of Rs.10 per share would be declared after 1 year. The dividend
growth rate is 6%.
If the company is in the 50% tax bracket, compute the weighted average
cost of capital.
Assuming that in order to finance an expansion plan, the company intends
to borrow a fund of Rs.20 lacs bearing 14% rate of interest, what will be
the Company's revised weighted average cost of capital? This financing
decision is expected to increase dividend from Rs.10 to Rs.12 per share.
However, the market price of equity share is expected to decline from
Rs.110/- to 105 per share.