Bachelor of Management Studies (B.M.S.) SEM V 2017 18 Nov 2017-18 ELECTIV FIN. STRATEGIC Question Paper - Mumbai University | munotes

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1. Q1 a) Attempt any two questions Shares of Pritam Enterprise engaged in promotion and sales of commercial spaces, is quoted at Rs.500 at the beginning of the year. It has capital expenditure of Rs.300 crore at the year end The cost of equity is 15% and 3crore shares are outstanding Ascertain the value of the firm at the beginning of the year if the anticipated profits for the next ' year is Rs.280 crores and at that time Pritam enterprise declares (a) No dividend (b) Rs.12 per share as dividend 15 marks
   • b) Explain XBRL and state its features
   • c) The following information relates to Maya Itd Earnings of the company Rs. 10,00,000 No. of shares outstanding 2,00,000
   • i. What would be the Market Value per share as per Walter’s Model?
   • ii. What is the optimum Dividend Payout ratio according to Walter’s Model and the Market value of Company Share at that payout ratio?
2. Q2 Attempt any two questions: 15 marks
   • a) From the following details relating to a project, analyse the sensitivity of the project to changes in Initial project cost and.annual cash inflow : Cost of Capital To which of the two. factors, the project is most sensitive? (Use Annuity Factor: 10%=3.169 and 11%=3.102) has an investment budget of lakhs for next year. It has under consideration three projects A , B and C (B are mutually exclusive) of them can be completed within a year. Further details are given as below: Calculate Net Present Value and recommend the best policy to utilize the investment budget, supported by
   • c) Briefly explain the techniques to deal with risk and uncertainty in capital projects
   • Q.P. Code : 19140
3. Q3 Attempt any two questions: 15 marks
   • a) MLK Industries Ltd, is engaged in textile business. Its income balance sheet are given below: Income statement for the year ended 31-3-2016 Balance sheet as on 3 1-3-2016 The Weighted Average cost of capital is 15% and company is listed on BSE and has a P/E ratio of 6 times Calculate (a) value of the firm (b) EVA MV A
   • b) XYZ intending to acquire ABC Ltd (by merger) XYZ Ltd.’s shares are currently traded at Rs.25 per share It has 2, 00,000shares outstanding and its earnings after taxes amount to Rs.4, 00,000. ABC Itd. has 1, 00,000 shares outstanding, its current market price is Rs.12.50 per share and its earnings after taxes is Rs. 1, 00,000. The merger will be effected by means of stock swap (Exchange). ABC Ltd. has agreed to a plan under which XYZ Ltd. will offer the current market price of ABC Ltd. Shares
   • i. What is the pre-merger EPS and P/E ratio of both the companies?
   • ii. What will be XYZ Itd.’s Post-merger EPS if exchange ratio is based on current market price?
   • c) Explain principles of Good Corporate Governance
4. Q4 Attempt any two questions 15 marks
   • a) From the following information find out the amount of provision to be shown in the profit and loss account Sub-standard Advance. (include secured exposures Rs. 1,000 lakhs and | 3.500
   • b) are supplied with the following information in respect of Pradeep Ltd for the year
   • Q.P. Code : 19140 There is a regular production and sales cycle and wages and overhead_accrue evenly. Wages are paid in the next month of accrual and overhead are paid in the same month. Material-are introduced in the beginning of production cycle. Debtors are valued at sales
   • i. Working capital requirement of Pradeep Ltd
   • ii. Permissible Bank Borrowings as per first method of lending (Tandon Committee)
   • c) What are different forms of advances in case of commercial bank?
5. Q5 Case study Delta Ltd. has the following estimates of the present values of future cash flows after tax associated with the investment proposal expanding the plant capacity. It intends to use decision tree approach to get a clear idea about the possible outcomes of the investment. The plant expansion.is expected to cost Rs.30, 00,000. The respective present value of future Cash flow after tax and probabilities are as follows: Advise the company about the feasibility of the project 15 marks

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