# Sikkim-Manipal University of Health Medical and Technological Sciences (SMUHMTS) 2009 B.B.A BB0011 - Managing Financial Resources - Assignments for spring session - Question Paper

Sunday, 09 June 2013 10:15Web

ASSIGNMENT

BB0011 Semester 2

(4 Credits)

SET 1

MARKS 60

Managing Financial Resources

1.Explain with schematic diagram the framework of financial management ( 10 Marks)

2.Explain in detail why wealth maximization objective is superior to profit ( 10 Marks)

maximization objectiv

**e.**

3.Answer the following:

a.Mr. Arnab – deposited Rs.1,00,000 in SBI saving bank accounts for a period (5 Marks)

3 years. The prevailing interest rate is 4.5% p.

**a.**what is her accumulated interest?

b.Mr. Yusuf invested Rs. 50,000 in HDFC term deposit for a period of five years. (5 Marks)

compute the future value .if the interest rate is 9%.

c.Shilpa a home maker does the subsequent saving over a period of five Years (5 Marks)

Year

Savings

1

2000

2

2500

3

3000

4

3700

5

3900

What would be the accumulated savings at the end of five years if the interest rate is 8% compounded annually?

d.Mr. Prasad expects to get bones to get 2, 00,000 after one year. If the (5 Marks)

discount rate is 11% compute the current value.

4.Describe the importance of capital budgeting , elaborate steps involved in (10 Marks)

capital budgeting process.

5.A company is considering an investment proposal to install new milling controls at a cost of Rs.50,000. The facility has a life expectancy of five years and no salvage valu

**e.**The tax rate is 35 percent. presume the firm uses Straight line method of depreciation and the identical is allowed for tax purpos

**e.**The estimated cash flows before depreciation and tax (CFBT) from the investment proposal are as follows. (10 Marks)

Year

CFBT

1

10,000

2

10,692

3

12,769

4

13,462

5

20,385

Calculate: Payback period, avg. rate of return, internal rate of return, Net current value at 10% discount rate, Profitability index at 10% discount rate.

ASSIGNMENT

BB0011 Semester 2

(4 Credits)

SET 2

MARKS 60

Managing Financial Resources

1.A company’s after tax, cost of capital of the specific sources is as follows : (10 Marks)

Source of finance

Book value (Rs.)

Market value (Rs.)

Specific Costs (%)

Equity Capital

16,00,000

30,00,000

17

Retained earnings

4,00,000

Preference capital

8,00,000

10,80,000

14

Debt capital

12,00,000

10,80,000

8

40,00,000

50,00,000

calculate WACC based on

**(**Book value weight and

**a)****(**Market value weights.

**b)****2.**From the subsequent particulars of PQR Company, compute operating and financial leverag

**e.**The company’s current sales revenue is Rs. 15, 00,000 lakh and sales are expected to increase by 25 per cent. Rs.9, 00,000 incurred on variable expenses for generating Rs. 15 lakh sales revenu

**e.**The fixed cost is Rs. 2, 50,000. The company has Rs. 20 lakh equity shares capital and Rs. 20 lakh, 10 per cent debt capital. compute operating leverage and financial leverag

**e.**Rs.10 equity and 50 per cent tax rat

**e.**(10 Marks)

**3.**Reliance Ltd has a share capital of Rs. two lakh divided into shares of Rs. 10 every. It has a major expansion programme requiring an additional investment of Rs. 1, 00,000. The management is considering the subsequent options.

**(**problem of 10% debentures of Rs. 10,000

**i)****(**problem of 10,000, 15% preference shares of Rs. 10 each,

**i****i)****(**problem of 10,000, equity shares Rs. 10 every

**i****i****i)**The company’s current EBIT is Rs. 60,000 p.

**a.**compute the EPS for the above 3 option financial plans presuming.

a)EBIT continues to be the sane and

b)EBIT increases by Rs. 20,000. Tax rate is 50% (10 Marks)

**4.**Distinguish ranging from financial leverage ad operating leverag

**e.**(10 Marks)

**5.**Detail Modigliani-Miller approach to capital structure (10 Marks)

**6.**discuss various kinds of mergers (10 Marks)

Earning: Approval pending. |