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

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 objective.
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 value. The tax rate is 35 percent. presume the firm uses Straight line method of depreciation and the identical is allowed for tax purpose. 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 (a) Book value weight and (b) Market value weights.
2. From the subsequent particulars of PQR Company, compute operating and financial leverage. 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 revenue. 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 leverage. Rs.10 equity and 50 per cent tax rate. (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.
(i) problem of 10% debentures of Rs. 10,000
(ii) problem of 10,000, 15% preference shares of Rs. 10 each,
(iii) problem of 10,000, equity shares Rs. 10 every
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 leverage. (10 Marks)
5. Detail Modigliani-Miller approach to capital structure (10 Marks)
6. discuss various kinds of mergers (10 Marks)

Earning:   Approval pending.