Kuvempu University 2009 M.B.A Second Semester (Distance Mode) iantions - Question Paper

Second Semester M.B.A. (Distance Mode) Degree Examiantions June 2009
(New Scheme)
MBA DP - 203 : FINANCIAL MANAGEMENT

Time : three Hours Max. Marks : 80

part - A (5x2=10)

ans the subsequent ques. in 2 or 3 phrases every 1 carries 2 marks.

1.
a) describe financial management.

b) State 4 important characteristics of financial planning?

c) What do you mean by Capitalization?

d) State the assumptions of NOI approach.

e) describe JIT.

f) describe IRR.

SECTION-B (5x7=35)

ans any 5 question, every ques. carries 7 marks.

2. A firm finances all its investments by 40% and 60% equity. The estimated needed
ROR on equiry is 20% after taxes and that of debt is 8% after taxes. The firm is
considering an investment proposal costing Rs. 40,000/- with an expected return that
will cost forever. What amount (in rupees) must the proposal yield per year so that the
market price of the share does not charge? Show computations and prove your point.

3. A Ltd.is proposing to take up a project which needed an investment of Rs. 40,000/-.
The net income before depreciation and tax is estimated as follows :

Year one two three four 5
Cas flows 10,000 12,000 14,000 16,000 20,000

Depreciation is to be charged on straight line basis. Tax rate is 50% compute ARR
and PBP.

4. "Wealth maximization is always hindered by profit objectives of stake holders"
elucidate.

5. "Cash budgeting or short term cash forecasting is the principal tool of cash
management". explain.

6. The BLM corporation is a new firm that wishes to determine an improper capital
structure. It can problem 8% debt and 6% preferred and has a 50% tax rate. The intial
capitalization of the firm will be Rs. 50 lakhs. The possible capital structure is :

Plan Debt Preferred Equity
one 0 0 100%
two 30% 0 70%
three 30% 20% 50%
four 50% 0% 50%
five 50% 20% 30%

7. The return of 2 assets under few possible states of nature are provided beneath :

State of nature Prob Return Return
Asset one Asset 2
one 0.10 5% 0%
two 0.30 10% 8%
three 0.50 15% 18%
four 0.10 20% 26%

a) What is the SD of returns.
b) compute the covariance.
c) Coefficient of correlation.

part - C

ans the subsequent ques.. ques. No.8 and nine carries TEN marks every and
ques. No.10 carries 15 marks. (2x10+15=35)

8. a) define the scope and different functions of financial management. What is
the changing role of financial manage?

OR

describe factoring. elaborate the process, benefits and kinds of factoring services
available?

9. a) discuss different factors affecting divident policies of a company. What is
optimum capital structure?

OR

XYZ corporation is considering relaxing its current credit policy and is in the
process of evaluating 2 proposed policies. Currently the firm has annual
credit sales of Rs. 50 lakh and accounts receivable turnover ratio of four times
a year. The current level of loss due to bad debt is Rs. 1,50,000. The firm is
needed to provide a return of 25% on the investment in new accounts teceivable.
The company's VC are 70% of the selling price. provided the which is the better choice.

current policy choice I choice II
Annual credit Sales 50,000,000 60,00,000 67,50,000

A/R turnover four times three times 2.4 times

Bad Debts losses 1,50,000 3,00,000 4,50,000

10. a) Prepare a elaborative write up of current status of Indian Financial markets
and give for what potential growth prospects its has.

b) With imaginary figures discuss the concept of divident relevance and divident
irrelevance model.

* * * * * * * * * * *

Earning:   Approval pending.