Bachelor Of Management Studies (BMS) SEM III 2022 2023 Oct 2023 S CORPORATE FINANCE Question Paper - Mumbai University | munotes

Questions asked in this paper

1. Q1 Fill in the blanks. (any 8) are the creditors of the company 8 marks
   • a. Debenture holders
   • b. Equity shareholders
   • c. Preference shareholders
   • 2. Fixed return is not paid to
   • a. Debenture holders
   • b. Equity shareholders
   • c. Preference shareholders
   • 3. The combination of long-term sources of funds equity capital, preference : capital, retained earnings & debentures in the firm’s capital are known as
   • a. Cost of capital
   • b. Capital structure
   • c. Leverage
   • 4. Corporate finance is the study of sources of _& how to use the money raised
   • a. Finance
   • b. Material
   • c. Labour
   • 5. The process of remedying is very painful
   • a. Capitalization
   • b. Over — capitalization
   • c. Under — capitalization
   • 6. Fixed capital stays in the business for a time
   • a. Long
   • c. Moderate
   • 7. Seasonal working capital is the amount of working capital to meet the demand of
   • a. Special :
   • b. Seasonal
   • c. Peak VCD/ (FIN) /SEM TIVCORPORATE FINANCE/2.5 HRS/75 MARKS
   • 8. Working capital cycle is also known as cycle
   • a. Operating
   • c. Permanent
   • 9. preference shares are given the option to convert shares into equity
   • a. Redeemable
   • b. Participating
   • c. Convertible
   • 10. period is defined as the number Of years required to recover the original
   • a. Return
2. Q2 B) State whether True or False. (Any 7) Interest rate risk refers to the risk that arises due to fluctuation of interest rates 7 marks
   • 2. Agreement under which accounts receivable are generally sold to a financial institution is called as Factoring
   • 3. IF NPV >equal to zero, then project is acceptable otherwise project has to be rejected,
   • 4. Retained earning is one of the source of short term finance of the company
   • 5.Equity shareholders are creditors of the company
   • 6. GDR stands for Global Depository Receipt
   • 7. WACC is the overall cost of capital
   • 8.Different sources have same cost of capital
   • 9.Credit purchase can be a good source of short-term finance
   • 10. In India, commercial papers can be issued for any amount and for any duration VCD/ /SYBMS (FIN) /SEM FINANCE/2.5 HRS/75 MARKS
3. Q2 A) Calculate the degree of operating leverage, financial leverage & combined leverage for the following firms : (8) Production (in units) 6,700 A i Interest on loan 75,000 { Q.2 B) A company issues Rs. 3,00,000, 10% debentures of Rs. 100 each and realises Rs 2,94,000 after allowing 2% commission to brokers. The debentures are redeemable after the expiry of fixed period of 10 years. The company is in 30% tax bracket. Calculate the cost of
4. Q2 P) A company needs Rs. 12 lakhs for the installation of a new factory which would yield an annual EBIT of Rs. 2,00,000. The company has the objective of maximizing the earnings per share. It is considering the possibility of issuing equity shares plus raising a debt of Rs 2,00,000, Rs. 6,00,000, or Rs. 10,00,000. The current market price per share is Rs. 40 which is expected to drop to Rs. 25 per share if the market borrowings were to exceed Rs. 7,50,000 Cost of borrowings are indicated as under : Assuming a tax rate of 50 %, workout the EPS & the scheme which would meet the objective of the management. (15) / Q.3 A) The following items have been extracted from the liability side of the balance sheet of / 5,00,000 equity shares of Rs. 10 each 50,00,000 Other information about the company as relevant is given below : Cost of Equity — 15% Cost of Reserve — 15% You are required to calculate the weighted average cost of capital
5. Q3 B) Find the present value of Rs. 1,00,000 to be received at the end of 5 years at 12%
6. Q3 P) A machine costs Rs. 280000 & is expected to produce the following cash flows : If the cost of capital is 12%, Calculate NPV & suggest it is worth buying the machine Bs, Q.4 A) The following information given (8) (FIN) /SEM FINANCE/2.5 HRS/75 MARKS 15 marks
7. Q4 B) Find the present value of Rs. 1,00,000 to be received at the end of 5 years at 12% / Q.4 P) Reliance Ltd. is considering project Y. It has useful life of 5 years & the cost of capital is 10%. The initial outlay is Rs. 2,00,000 (15) Calculate Internal Rate of Return
8. Q5 A) Explain Types of Working Capital. 8 marks
   • B) Explain Types of preference shares 7
9. Q5 Write short notes (any 3) 15 marks
   • 1. Public Deposit
   • 2. Need of FDI
   • 3. Feature of GDR
   • 4. Private Placement of Securities
   • 5. Equity Shares

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