Bachelor Of Management Studies (BMS) SEM III 2017 2018 March 2018 CORPORATE FIN Question Paper - Mumbai University | munotes

Questions asked in this paper

1. Q2 Q.2. to Q.5. having internal options
2. Q3 Figures to right indicate full marks
3. Q4 State your assumptions clearly Multiple choice [Any 8 out of 10]: [8]
   • a) Capital is the capital of a business which is used in its day to day operations
4. Q1 Fixed 2) Working 3) Negative 4) None of these
   • b) At Indifference level of EBIT, different financial plans have
   • c) Repayment of Preference Share or Debenture is termed as
5. Q1 Issue 2) Redemption 3) Net Proceeds 4) None of these
   • d) leverage is created with the help of debt component in the capital structure
6. Q1 Operating 2) 3) Combined 4) None of these
   • e) Method of Capital Budgeting taken into consideration the time value of
7. Q1 Net present value 2) Internal Rate of Return 3) Both 4) None of these
   • f) for
8. Q3 Foreign Development Investment 4) None of these
   • g) is the loan for financing working capital requirement
9. Q1 Cash Credit 2) Advances 3) Letter of Credit 4) None of these
   • h) helps us to determine the present value of a payment that is to be received at a
10. Q1 Discounting 2) compounding 3) Simplification 4) None of these
11. Q1 is known as Creditorship Securities
12. Q1 Equity Shares 2) Preference Shares 3) Debentures 4) None of these
    • j) We include depreciation in cash flows because
13. Q1 It is an unavoidable cost 2) it involves an outflow it reduces tax liability 4) itis acash flow
14. Q1 B) Say True or False :[Any 7out of 10] 7 marks
15. Q1 Corporate Finance is used for expansion and diversification
16. Q2 WACC is the overall cost of capital
17. Q3 NPV does not take into account the time value of money
18. Q4 The main rational behind FDI is participate in the management of the foreign firm
    • Q.P.Code: 30761
19. Q5 Financial Breakeven level occurs when EBIT is Zero
20. Q6 Operating Leverage directly impacts the EBIT
21. Q7 Cost of Debt is same as the rate of interest
22. Q8 Trading on Equity results in decreasing EPS for the shareholders
23. Q10 Debenture holders are the owners of the company Ramon and Damon Ltd., planning an expansion programme which will require Rs. 30 lakhs and can in the funded through one of the three following options:
    • a) Issue further equity shares of Rs. 100 each at par
    • b) Raise loans at 15% interest
    • c) Issue preference shares at 12% Present paid up capital is Rs. 60 lakhs [comprising only of equity shares of 100 each] and average annual EBIT is Rs. 12 lakhs. Assume Income Tax rate at 50%. After the expansion EBIT is expected to be Rs. 15 lakhs per annum Calculate EPS under the three financing options to indicating the alternative giving the highest return to the equity share holders Calculate the operating leverage, financial leverage and the combined leverage for the Production (in unit) 17,500 6,700 31,800 Interest on Loan (Rs.)
24. Q2 Q) Following are the details regarding the capital structure of MILD company: Types of capital Book Value Market Value Specific Cost You are requested to determine the weighted average cost of capital, using: 7 marks
    • a) Book value as weights
    • b) Market value as weights
    • S.Y.B.M.S. (CHOICE BASE) M0286 CORPORATE FINANCE
    • Q.P.Code: 30761 Further Cash Inflow are Find IRR ( by 15% and 16%) when PV factors are as follows: The rate of return of stocks of A under different states of economy are presented below along with the probability of the occurrence of each state of the economy Probability of Occurrence Rate of Return on stock A | 20.0 30.0 50.0 Calculate the expected rate of return and standard deviation of return for stock A Manohar wants to send his brother to US for further studies after 6 years. He would require RS. 25,00,000 at that time (after 6 years). How much should he invest today if the offered interest rate is 14% M/s. Sun and Moon Co. Ltd is considering to select one project out of two alternative projects both with life of 5 (five ) years and following particulars are given : The expected rate of return is 14% p.a. The present value of Rs. lat 14% p.a. from Year | to 5 is as under :
    • Q.P.Code: 30761 You are required to calculate the comparative profitability of the two projects by using net present value method and advise the management suitably Key information pertaining to the proposed new financing plans of Hypothetical Ltd. is Source of Funds Financing Plans Equity 15,000 shares of Rs. 100 30,000 shares of Rs. 100 12% preference share 25,000 shares of Rs. 100 Debentures Rs.5,00,000 at a coupon Rs. 15,00,000 at a rate of If the firm is fairly certain that its EBIT will be Rs. 12,50,000 and tax rate is 50% Which plan would you recommend and why?
25. Q5 P) Explain the Principles of Corporate Finance. 7 marks
    • Q) What do you mean by debentures ? Explain the advantages and disadvantages of
26. Q5 Write short notes on (Any 3) 15 marks
    • a) Cash Credit
    • d) Advantages of FDI

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