B.Com. (Financial Management) SEM IV 2022 2023 March 2023 CORPORATE FINANCE Question Paper - Mumbai University | munotes

Questions asked in this paper

1. Q1 (a)State whether the following statements are true or false: (any 8) 8 marks
2. Q1 The objective of a credit policy is to curtail the credit period allowed
3. Q2 The lessee enjoys the salvage value of the asset
4. Q3 Commercial paper is a secured form of finance
5. Q4 In case of hire purchase transactions cash price includes interest
6. Q5 IRR is easy to calculate
7. Q6 At the point of is positive
8. Q7 The ratio of debt and equity must be equal
9. Q8 Variable cost per unit varies with the increase in the volume of output
10. Q9 Overcapitalisation does not have any adverse effects
11. Q10 Cost of equity is zero
12. Q1 (b) Match the column : (any 7) 7 marks
13. Q1 Cost of debt a. Highest
14. Q2 Interest on debt b. Overall cost of capital
15. Q4 Traditional Method d. Mobilization of funds
16. Q5 Cost of equity e. Lowest
17. Q7 Financing Decisions g. Deployment of funds
18. Q10 Flotation costs j. Issue of new securities
19. Q2 (a) Calculate the weighted average cost of capital from the following data. Ignore Equity shares of (Rs 100 F.v) A dividend of 10% a year has been paid on the equity shares in recent years. All of the above company’s securities are quoted on the local stock exchange. The prices of these securities VCD SYFMG Sem: IV CORPORATE FINANCE Marks: 75 Time: 2% Hrs have been at par. (7)
    • (7) Q.2 (b) A co. Itd wishes to buy a machine costing Rs. 2,00,000. The life of this machine is 10 years and its scrap value would be Rs. 5,000 . The following details are provided Calculate:Pay back period,Payback profitability, Accounting Rate of Return (8)
20. Q2 A company is considering the two mutually exclusive projects. The finance director considers that the project with higher NPV should be chosen whereas the managing Director thinks that one with higher rate of return should be considered . Both projects have a useful life of 5 years and the cost of capital is 10% . The initial outlay is Rs 2 lakhs The future cash inflow from Project X and Y are as under: You are required to evaluate the projects and explain the inconsistency, if any, in the ranking
21. Q3 (a) A company produces and sells 1,000 units of a product per month at the rate of Rs If the variable cost is Rs 12 per unit and fixed cost is Rs 3,000 per month. Calculate Break point in rupees. (ii) If the selling price is reduced by 20% . Calculate new Break even point in units. (iii) Calculate the number of units to be sold at the reduced selling price to earn a profit of Rs 4,000. (07) 20 marks
22. Q3 (b) The sales and profits during two years were as follows: Calculate a) P/V Ratio (b) Fixed Cost (c) Break Even Point (d) Profit when sales are Rs 7,50,000 (e) If co wants profit of Rs 12,000 what should be the level of sales? (08)
23. Q3 Calculate P/V ratio,the margin of safety and the break even point (in units rupees) J What is the current Profit? How much should the company sell to earn a target profit of Rs Total no. of units manufactured and sold 15 marks
24. Q4 (a)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 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 and the scheme which would meet the objective of the management. (15)
25. Q4 (b) Company has currently an ordinary share capital of Rs 25 lakhs, consisting of shares of Rs 100 each. The management is planning to raise another Rs 20 lakhs to finance a major programme of expansion through one of four possible financing plans
26. Q2 Rs 10 lakhs through ordinary shares and Rs 10 lakhs through Long term Borrowing at
27. Q3 Rs 5 lakhs through ordinary shares and Rs 15 lakhs through long term borrowing at
28. Q4 Rs 10 lakhs through ordinary shares and Rs 10 lakhs through preference shares with The company's expected earning before interest and tax (EBIT) will be Rs 8 lakhs.Assuming @ corporate tax rate of 50%,determine the earning per share (EPS) in each alternative and comment on the implications of financial leverage. (15)
29. Q5 (a) Distinguish between Lease Financing and Hire Purchase F inancing. 8 marks
    • (b) Define the term Corporate Finance, Explain its features ? 7
30. Q5 Short Notes: (any 3): 15 marks
31. Q1 Qualities of Finance Manager
32. Q2 Features of Marginal costing
33. Q3 Advantages of payback period
34. Q4 Features of preference shares
35. Q5 Watered Capital

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