University of Delhi 2010-2nd Year B.Sc PMCS (Physics, Mathematics, Computer Science) Prog FINANCIAL MANAGEMENT UNIVERSITY - Question Paper

This question paper contains 2 printed pages.

Your Roll No

5230

B.Sc. (Prog.) / II / NS

Paper EL 21 (VI) FINANCIAL MANAGEMENT (N.C. Admissions of 2005 onwards)

Time : 2 hours    Maximum Marks : 38

(Write your Roll No. on the top immediately on receipt of this question paper.)

Question No. / is compulsory.

Attempt any three questions from the rest

Use of non-scientific calculator is permitted.

Financial tables be provided.

I. State whether the following statements are TRUE or FALSE:

(a)    The total interest received will be same irrespective of the fact whether compounding is done yearly or semi-annually

(b)    Financial risk refers to variability in operating profit due to changes in Sales.

Discounted cash flow techniques take mto account the time value of money

(d)    Different sources of funds have a specific cost of capital related to that source only

(e)    EBIT is also known as operating profits

(1 *5 = 5)

II (a) Why do firms follow a Policy of Stable Dividends?

(3)

(b) Find out 1RR on the basis of following data:

Details    Amount (Rs)

Cost of the Project    4,00,000

Cash Inflows.

Year I    1,00,000

Year II    1,50,000

Year III    1,25,000

Year IV    1,25,000

Year V    1,00,000

Salvage Value    N 1 L

(8)

III. (a) What is capital budgeting⁹ Explain various types of capital budgeting proposals.    

(b) There are two identical firms AE and AD. The firm AD has 10% Debentures of Rs. 8,00,000 while the firm AE has no debt. EBIT of each firm is Rs. 2,00,000. The cotf of equity of firm AD is 16% and that of firm AE is 13%. Find the market value of the firm AE and AD, and the overall cost of capital of each firm

Turn aver

IV. (a) (i) Explain the arbitrage process of MM model in support of irrelevance of dividends

(4)

IV. (a) (ii) What is an operating cycle''" How is it important for the management of working capital?

(2 + 2-4)

IV. (b) Calculate the present value of Rs 8000 (i) Received at the end of five years, (n) Received one year from now and (iii) Received at the end of twenty years Assume a 8% time preference rate.

(3>

V The Balance sheet of Grow More Limited is as under

[ Liabilities j Amount (Rs) Assets Amount (R?............................ j Equity Capital 15,00,000 Fixed Assets 35,00,000 I Retained Earnings 5,00,000 i Current Assets 15,00,000 1 1 10% Long Term j Debt 20,00,000 j Current liabilities 10,00,000 j Total 50,00,000 IfSai n 50,00,000 > I MIII ...................-............ J

The companys total assets turnover is 3 2, its fixed costs are Rs. 26,00,000 and its variable cost ratio is 40% The tax rate is 40%, Calculate for the company different types of Leverages given that the face value of each equity share is Rs 100

(H)

Attachment: university-of-delhi-2010-b-sc-pmcs--physics--mathematics--computer-science--35215-1.pdf

Earning:   Approval pending.