B.Com. (Financial Management) SEM V 2018 19 Nov 2018-19 T.Y.FIN.MGT.SEM V (CHOICE BASE) FIN.MGT Question Paper - Mumbai University | munotes

Questions asked in this paper

1. Q1 (A) State whether the following statements are True or False. (Any Eight) 8 marks
2. Q1 To achieve the goal of profit maximisation, for each alternative being considered, the financial manager would select the one which is expected to result in the highest monetary return
3. Q2 Borrowed fund is owner’s capital
4. Q3 As bank overdraft is availed by business firms on a regular basis, it may be considered as a long-term source of fund
5. Q4 Financial management basically deals with the procurement of funds and their effective utilisation in the business
6. Q5 Capital budgeting decisions are long-term decisions
7. Q6 Net present value method considers the time value of money
8. Q7 Time value of money signifies that the value of a unit of money remains
9. Q8 Cost of debt and cost of preference share capital, both, require tax adjustment
10. Q9 The cost of capital is the required rate of return to ascertain the value of the
11. Q10 In simple interest, interest for every year is the same
    • (B) Complete the following statements by choosing the appropriate alternative and rewrite. (Any Seven) 7
12. Q1 Wealth maximization, as the goal of the firm, implies enhancing the wealth of (Board of Directors employees government stockholders)
13. Q2 According to , “Financial Management is concerned with efficient use of an important economic resource namely : capital funds.” (Joseph. L. Massie Howard and Upton Ezra Solomon 3). When the investment is compounded quarterly, n is to be multiplied with
14. Q4 Present value is the current value of a amount
15. Q5 To arrive at CFAT, we need to add back
16. Q6 Capital budgeting decisions are decisions (short-term mid-term long-term no term)
17. Q7 The abbreviation IPO stands for
18. Q8 have fixed dividend on their investment
19. Q9 Cost of capital refers to _ (flotation cost dividend required rate of return term loan) 3 marks
20. Q10 weights use accounting values to measure the proportion of each type of capital in the firm’s financial structure
21. Q2 (A) Mr. Shine deposits in a bank for 4 years at 12% rate of interest. What will be the future value after 4 years, if the investment is compounded — 10
    • (i) semi-annually
    • (ii) quarterly
    • (B) the present value of a sum of for a period of 3 years compounded at the rate of 8.5% p.a. 5
22. Q2 (C) Umesh can save Rs. 20,000 a year for 5 years and Rs. 3,000 a year for 10 years thereafter. What will be these savings accumulate at the end of 15 8 of interest is 10 per cent (FVIFA @ 10% for 5 years = 6.1051 and FVIFA @ 10% for 10 years = 15.937) Find out the present value of a debenture from the following : Face value of the debenture Rs. 1,000 7 (Present values of Re. 1 at 12% are 0.8929, 0.7929, 0.7118, 0.6355 and 0.5674)
    • (A) Shailesh Company Ltd. has invested in a machine at cost of Rs. 10,00,000 Estimated life of the machine is 5 years. The company charges depreciationonSLM 15 The company lies in the tax bracket of 50%. You are required to compute the Net Present Value (NPV) of the machine, if the present value factor is 8% The present value factor of Re. | @ 8% is given below:
23. Q3 (B) Caravan Corporation is considering the following investment proposals requiring a net outlay of Rs. 1,20,000 and Rs. 2,40,000 respectively. The after tax cash inflows 15 and discounting factor are provided below : After Tax Cash Inflow (CFAT) P. V. of Re Year (in Rs.) Lat 15% Rank these projects in order of their profitability according to the Profitability Index Method. (Assume the cost of capital at 15% for both the investment proposals)
24. Q4 (A) Regal Reform Company Ltd. has issued 10% redeemable debentures od face value Rs. 100 each, which are redeemable at par after 10 years. Assuming that the tax rate 8 applicable is 40% and the floatation cost of debentures is 5%, calculate the cost of debentures (after tax) for the company
    • (B) A company whose face value per equity share is Rs. 10 has just paid a dividend of Rs. 4 per share. The expected growth rate of dividend is 12%. The current market 7 price per share is Rs. 25. Calculate the cost of equity capital
25. Q4 (C) The following is the capital structure of Sweeping Success Co. Ltd. Source of finance Amount Cost 15 (in Rs.) (in % ) Tax rate 1s assumed to be 50% You are required to calculate the weighted average cost of capital of the firm
26. Q5 (A) Mention the objectives of financial management. 8 marks
    • (B) Explain the advantages of retained earnings as a source of capital. 7
27. Q5 (C) Write explanatory notes on. (Any Three) 15 marks
    • (i) Concept of time value
    • (ii) Short term source of finance
    • (iii) Weighted Average Cost of Capital (WACC)
    • (iv) Scope of financial management
    • (v) Capital Rationing

Read from the scan above, so a character or two may differ. The scan is the original.