B.Com In Banking & Insurance (BCBI) Sem III ATKT FINANCIAL MANAGEMENT I Question Paper - Mumbai University | munotes

Questions asked in this paper

• B. Figures to the right indicate full marks

1. Q1 Financial management is important even to non-profit form of organisation
2. Q2 Financial managers and financial accountant have same functions
3. Q3 Factoring is long term source of finance
4. Q4 Floating cost affect the overall cost of the security
5. Q5 Internal rate of return considers the time value of money
6. Q6 Profitability index ratio is also called as benefit to cost ratio
7. Q7 Inter corporate deposits carry a feature of demand call deposits
8. Q8 Return on Investments indicates the earning capacity of business
9. Q9 Capital Budgeting decisions are irreversible and hence require careful evaluation
10. Q10 M-M Approach assumes there are no transactions costs involved while raising capital
    • B. Choose the correct alternative. (Attempt any Seven) 7
    • i. Cost of 12% preference shares issued at par, assuming tax rate to be 30% will be
    • ii. Payback period fora project costing of Rs. 10,00,000 with an annual cash inflow of Rs. 2,50,000
    • a. 4 years b.5 years
    • c. 6 years d. 8 years method uses trial and error
    • a. Net present value b. Internal rate of rate
    • c. Profitability index d. None of the above Iv. is a modern approach of financial management The term capital employed includes
    • c. Loans d. All of the above Vi. is not a type of preference share
    • a. Cumulative b. Convertible
    • c. Bearer d. Redeemable Vil. is a method based on time value of money
    • c. Internal rate of return d. All of the above Vill. shares are received by shareholders at free of cost
    • a. Preferential b. Bonus
    • c. Right d. None of the above Ix. capital is the maximum capital that company can issue during its life time
    • a. Authorised b. Issued
    • x. During the period of no transfer of share is undertaken by the company
    • c. FPO d. All of the above Palak’s Capital Structure consists of the following: Equity Shares of Rs. 100 each 80,00,000 10% Preference Share Capital ( FV Rs. 1000 each) 60,00,000 The company earns 15% on capital employed. The income tax rate is 50%. The company requires sum of Rs. 50,00,000 to finance expansion programme for which the following plans are available to
    • a. Issue of new equity shares at a premium of Rs. 25 per share
    • b. Issue of 12% Preference Shares
    • c. Issue of 10% debentures It is estimated that the P/E ratio in the case of equity, preference and debentures financing would be Which of the three financial alternatives would you recommend and why? Futura Ltd. is considering a new project of metro rail construction. The project requires capital investment of Rs. 60 crores. For financing the required funds it has the following two alternatives Finance the entire requirement by the issue of equity shares
    • ii. Finance the requirement by issue of debentures and ordinary shares in the ratio of 3:1 The equity shares will have face value of Rs. 10
    • ii. The debentures will carry interest rate of 12% and FV Rs. 100 ili. Corporate taxation rate is 40% You are required to:
11. Q1 Calculate the financial indifference point of both the options Verify your answers by calculating the EPS Genstar Ltd has a project under consideration which requires an initial cash outflow of Rs. 10,00,000 It is projected that the project will generate the following cash inflow: Its cost of capital is 10%. Determine:
    • a. Payback Period,
    • d. Profitability Index Calculate form the following information of Rashtriya Ltd. [15]
    • a. Payback Period
    • b. Payback Profitability
    • c. Average Rate of Return Cost of machine is Rs. 2,00,000, Salvage Value Rs. 20,000, Rate of depreciation @ 10%under basis, effective income tax rate is 40% and annual profit before depreciation and tax for the Following are the details relating to capital structure of Oreo Ltd. (15) You are required to calculate the weighted average cost of capital, using
    • a. Book Weights Calculate Economic value added from the following information relating to Amar Ltd Cost of equity: 20% Cost of Debt: 12% (After Tax) Return on capital employed: 25% Find the effective rate of 12% if the interest is compounded:
    • a. Yearly
    • b. Half yearly
    • c. Quarterly
    • d. Monthly
    • A. What are the determinants of capital structure? 8
    • B. What should be the qualities of efficient finance manager? 7
12. Q5 A Short Notes: (Attempt any Three) 15 marks
13. Q1 Hybrid Financing
14. Q2 Concept of Free cash flow
15. Q3 Weighted average cost of capital
16. Q4 Walter Model
17. Q5 Accounting rate of return

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