B.Com In Banking & Insurance (BCBI) Sem IV 2016 2017 March 2017 FINANCIAL MANAGEMENT Question Paper - Mumbai University | munotes

Questions asked in this paper

1. Q1 All questions are compulsory
   • A) True or False : (Any 8) 8
2. Q1 Cost of capital refers to required rate of returns
3. Q2 Equity shares capital has the highest cost of
4. Q3 Operating profit and EBIT is same
5. Q4 DPS is depend upon the profitability of the company 1 5) Financial leverage is depend up on the operating leverage
6. Q6 Dividend on ref shares is always fixed
7. Q7 Net present value is always negative
8. Q8 for pergonal investment
9. Q10 Prepaid expenses is a example of current Assets
   • B) Match the following (any 7): 7
10. Q5 NPV v) Sources of W. capital
11. Q7 Dividend policy vii) Over all cost of capital
12. Q8 Cost of equity viii) Straight live method
13. Q9 Cost of dest ix) Original cost + W. Capital 2.2 You are given two financial plans of a company which has two financial situations. The detailed information are as under Actual production and sales 50% of capacity structure of the company is as follows: to calculate OL, FL and CL of both the plans
14. Q2 The data relating to two companies are as given below: Output (in units) 60,000 15,000 You,are required to calculate the OL, FL and CL of two companies
15. Q3 has to make a choice between two possible investment projects 'X' and 'Y' the immediate cash out flow on each being 50,000. Each will continue for 5 years and it has be decided that a discount rate of 10%. The cash inflows are as follows: Which project would you recommend and why?
16. Q3 An enterprise can make either of two investment of the beginning of 2017. Evaluate the investment proposals under
    • i) Pay back period ii) Average rate of return Cost of investment 40,000 56,000 Life (in years) 4 5 Net profit before depreciation and tax Depreciation is provided under the straight line method Tax rate to be considered at 50% Raj Ltd, has equity shares capital of 10,00,000 divided into shares of 100 each. It plans to raise further 6,00,000 for expansion. 15 The company plans the following financing alternatives
    • i) By issuing equity shares only
    • ii) By raising term loan only at 10% p.a
    • iii) 50% issue of equity shares and 50% issue of 10% Debt (Loan) you are required to suggest the best alternative giving your comments assuming that the estimated EBIT after expansion is 3,00,000 and tax is 35% There companies P, Q and R are in the same type of business and hence have similar operating risks. However the capital structure of each of them is different and the following are Equity share capital of 10 each 8,00,000 5,00,000 10,00,000 12% debentures of 100 each — 1,00,000 2,50,000 Assume that the current level of dividends are generally expected to continue indefinitely and the income tax rate at 50% You are required to compute WACC of each company @5 A) Explain in brief types of leverages. (8 Marks)
    • B) Explain in brief types of working capital. Short Notes: (any three) (15 Marks) Component of working capital rate of return and pay back period of W. capital finance 7

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