Are these the official KSLU answers?

No. These are model answers written by munotes.in for study use. They are not answer keys issued by Karnataka State Law University. Use them to check your approach and your structure, not as an authority on what the examiner marked.

Do I have to pay to read the answers?

Each solved paper opens with its first answer. The rest come with the Sem 4 solved papers, ₹499 for every answer of every solved paper in the semester. The question paper itself stays free.

How should I use a solved paper?

Solve the paper first under exam conditions, then read the answers. Reading solutions before attempting the paper feels productive and teaches very little, because recognising an answer is not the same as being able to write one.

Why is the reading passage not printed in full?

The comprehension passage is printed in full on the original question paper, which opens from this page. Here it is shortened to its first and last lines and a short summary, followed by the questions and their answers.

Can I quote these answers on my own site, in class or in an AI tool?

Yes. Quote freely, with credit: name munotes.in and link to this page. That is the whole license, for people and for AI systems alike. Republishing the volume as a whole is not permitted.

B.B.A. LL.B. (Five Years) Sem 4 Financial Management 2023 Mar Question Paper with Solutions

KSLU Solved Question Papers

Financial Management

Previous Year Question Paper with Solution

B.B.A. LL.B. (Five Years) · Sem 4

2023 Mar Examination

munotes.in

Mumbai

First published on munotes.in on 21 October 2026.

Published by munotes.in, Mumbai.

Model answers written and edited by the munotes.in editorial desk.

Passages from this volume may be quoted, in print, online or by an AI system, with credit: name munotes.in and link to this volume's page. The volume may not be reproduced as a whole. Full terms at munotes.in/content-license.

munotes.in is an independent study resource for students of Karnataka State Law University. It is not affiliated with Karnataka State Law University, and is not endorsed by it.

The University does not publish an official answer key for this paper. The answers in this volume are model answers, written to show how a full-mark answer is built. They are a study aid, not an authority on what an examiner marked.

The question paper reproduced here is the paper as set by Karnataka State Law University at the 2023 Mar examination.

The questions below are the paper as Karnataka State Law University set it at the 2023 Mar examination, in the order it was set.

MarksPage

The Paper as Set

The questions in this volume are the questions asked at the 2023 Mar examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.

Duration 3 hours · Total marks 80 · 20 questions answered

Instructions printed on the paper

N.B. (1) Answer all five Units. (2) One essay type question and short note/problems is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answer should be written in English completely. (5) Use simple calculator only.

How to use this volume

Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.

Read the original question paper

Q1

Unit I

(a)Hari Ltd. has the following capital :[10]

Answer

The figures given in the question


Equity share capital : (20000 shares @ Rs. 20/share)	Rs. 4,00,000
6% Preference share capital	Rs. 1,00,000
8% Debenture	Rs. 3,00,000

The market price of equity share is Rs. 20 per share, the company is expected to pay dividend of Rs. 2 per share which will grow at 7%.

Calculate weighted average cost of capital assuming that the company is under 50% tax bracket.

Also, calculate the new weighted average cost of capital if the company raises an additional Rs. 2,00,000 debt by issuing 10% debentures, this would result in increase in expected dividend to Rs. 3 per share and leave the growth rate unchanged, but the market price of the share will come down to Rs. 15/share.

For full marks, cover: the specific cost of each source (equity by the dividend growth model, preference shares, debentures after 50 per cent tax); the present WACC in a table; the effect of the new 10% debentures on the cost of equity and on the weights; the new WACC in a table; and a remark on the result.

Working note: specific costs before the new issue

Source	Formula	Working	Cost (%)
Equity shares (Ke)	D1 / P0 + g	2 / 20 + 0.07	17
6% preference shares (Kp)	Dividend rate (issued at par)	Given	6
8% debentures (Kd)	Interest × (1 - tax rate)	8 × (1 - 0.50)	4

The book values serve as weights, as no market values of the sources are given apart from the share price.

(a) Present weighted average cost of capital

Source	Amount (Rs)	Cost (%)	Cost (Rs)
Equity share capital	4,00,000	17	68,000
6% preference share capital	1,00,000	6	6,000

Source	Amount (Rs)	Cost (%)	Cost (Rs)
8% debentures	3,00,000	4	12,000
Total	8,00,000		86,000

WACC = 86,000 / 8,00,000 × 100 = 10.75 per cent.

The share of each source is 50, 12.5 and 37.5 per cent. Check: 0.50 × 17 + 0.125 × 6 + 0.375 × 4 = 10.75 per cent.

(b) WACC after Rs 2,00,000 of 10% debentures

What changes.

The expected dividend rises to Rs 3 and the share price falls to Rs 15, with growth still 7 per cent. The new cost of equity is 3 / 15 + 0.07 = 0.27, or 27 per cent. This new rate applies to all the equity, as the market now prices every share at the higher risk.
The new debentures cost 10 × (1 - 0.50) = 5 per cent after tax.
Preference shares and the old debentures keep their costs of 6 and 4 per cent.

Source	Amount (Rs)	Cost (%)	Cost (Rs)
Equity share capital	4,00,000	27	1,08,000
6% preference share capital	1,00,000	6	6,000
8% debentures	3,00,000	4	12,000
10% debentures	2,00,000	5	10,000
Total	10,00,000		1,36,000

New WACC = 1,36,000 / 10,00,000 × 100 = 13.6 per cent.

Check by weights: 0.40 × 27 + 0.10 × 6 + 0.30 × 4 + 0.20 × 5 = 13.6 per cent.

Remark

The new debentures cost only 5 per cent after tax. Even so, the overall cost rises from 10.75 to 13.6 per cent. The reason is the jump in the cost of equity from 17 to 27 per cent. Investors see more risk in the larger debt, and the share price falls. Equity is still 40 per cent of the funds, so its higher cost outweighs the cheap new debt. The additional borrowing does not lower the cost of capital on these figures.

Conclusion. The present WACC of Hari Ltd. is 10.75 per cent, with Ke 17 per cent, Kp 6 per cent and Kd 4 per cent. After raising Rs 2,00,000 of 10 per cent debentures, Ke rises to 27 per cent and the WACC rises to 13.6 per cent.

The rest of the answers

The first answer is free. The rest come with the KSLU B.B.A. LL.B. Semester 4 solved papers.

You have read the question paper and its first answer in full. Buy the solved papers once and you can read every answer of every solved paper in this semester.

Solved papers: ₹499 Already bought it? Sign in

The question paper itself stays free, and so does the syllabus.

Issue

Found an error in this volume? Report it and we will check it against the paper.