Sikkim-Manipal University of Health Medical and Technological Sciences (SMUHMTS) 2007 M.B.A Financial and Management Accounting - university paper

A) Cost of additional funds B) Cost of existing funds
C) Cost of funds D) All

28. ______ is the cheapest source of finance
A) Debt B) Loan
C) Equity D) Preference


29. Minimum rate of return expected by the equity share holders is called ____
A) Cost of the capital B) Marginal cost
C) Cost of preference D) Cost of equity

30. Net income Approach is provided by:
A) Miller B) David Durand
C) Gordan D) Walter

31. the act of buying & selling similar security simultaneously in various market to earn is known as
A) Arbitrager B) Gambling
C) Speculator D) Arbitrage

32. Growth firm is 1 where
A) R < K B) R = K
C) R > K D) R < K

33. Stock dividend is also called
A) Bonus shares B) Capital gains
C) Right shares D) None

34. The situation where the true capitalization of a company is much less than its
Capitalization is
A) Capitalization B) overcapitalization
C) Under D) All

35. The term_________ confirms itself to only long term sources of finance
A) Capital B) Capitalization
C) Share capital D) fund

36. ______ is a situation where a constraint is placed on the total size of capital
Investment during a particular period
A) capital structure B) capital rationing
C) Over capitalization D) under capitalization

37. The ____ investment decisions can be handled through the technique of tree analysis
A) Long term B) Short term
C) Complex D) option

38. _____ assets of the company are called ‘crown jewels’
A) precious B) Fixed
C) Current D) None

39. Which statement follows the principle “if you try eat me I will eat you first”
A) Poison pills B) Pac man
C) White knights D) Green Knights

40. FFL stands for
A) 1st financial leverage B) favorable financial leverage
C) Fact financial leverage D) Fixed financial leverage





51. Cost of equity is equal to
A) Yield on the bonds + risk premium B) Price per Share + Dividend
C) Both A) and B) D) None

52. A firm sells its product for Rs 100 per unit. The variable cost is Rs 60 per unit and fixed cost is Rs. 30,000. What is the operating profit when the firm sells 1000 units?
A) 40,000 B) 60,000
C) 30,000 D) 10,000

53. For the above issue what is the operating leverage?
A) 1.5 B) 3
C) 4 D) 6.2

54. Combined Leverage is equal to
A) DLO * DLF B) DOL * DFL
C) EBIT / EBIT – one D) None

55. ______ Risk arising from the problem of debt capital
A) Business Risk B) Financial Risk
C) Both A) and B) D) None

56. Traditional theory strikes a balance ranging from _____ and _____ approach.
A) MM, NI B) NI, NOI
C) NOI, MM D) None

57. The modern approach of financial management deals with
A) What is the total quantity of funds an enterprise should commit?
B) What specific assets should an enterprise acquire?
C) How should the funds needed be financed?
D) All of the above

58. What is compounded value When Rs. 1,000 is invested for three years and the interest on it is compounded at 10 % P.A, Semi-annually?
A) 1340 B) 1430
C) 430 D) None of these

59. Mrs. Shubhan, principal wishes to insitiute a scholarship of Rs. 5,000 for an outstanding learner every year. She wants to know the current value of investment which would yield Rs. 5,000 in perpetually at 10%
A) 25,000 B) 50,000
C) 10,000 D) 60,000

60. ABC Ltd. is expected to pay a dividend at Rs. 40 per share. Dividends are expected to grow perpetually at 10%. What is the market value of the share if capitalization rate is 15%?
A) 400 B) 600
C) 800 D) 890

Q.No. 66 - 69
A Company is considering an investment proposal to install new rolling controls. The project will cost Rs. 50,000. The facility has a life expectancy of five years and no salvage value. The company’s tax rate is 55% and no investment allowance is allowed. The firm uses straight line method depreciation. The estimated CFBT are as follows:
Year
CFBT
Discount factor at 10%
1
10,000
0.909
2
11,000
0.826
3
14,000
0.751
4
15,000
0.683
5
25,000
0.621

66. What is the payback period?
A) 5.238 B) 8.428
C) 4.328 D) 3.823

67. What is the ARR?
A) 9% B) 10%
C) 11% D) 12%

68. What is the NPV?
A) -4486 B) -4648
C) -5420 D) None

69. What is the Profitability Index?
A) 0.607 B) 0.707
C) 0.809 D) 0.907
Q.No. 70 – 73:-
Prajna Pvt.Ltd. makes on an avg. 20 % on sales. In working out the profit margin, depreciation is added to the cost of production. The company maintains 1 month’s stock for raw- materials and also for finished products.
In order to maintain a minimum degree of solvency and liquidity, the company does not allow the cash balance to drop beneath Rs. 1,50,000. The management desires to carry a 20% safety margin in managing working capital.
Other yearly estimates of the company are as follows:
Sales at two months credit
Rs 30,00,000
Material to be consumed ( suppliers extended 1 month credit)
Rs 7,00,000
Wages ( time lag 1 month)
Rs. 6,00,000
Manufacturing expenses payable at the end of the year (these are paid 1 month in arrears)
Rs. 60,000
Total administrative expenses for the year ( these are paid 1 month in arrears)
Rs. 2,60,000
Advertising and promotional expenses ( Payable in advance)
Rs. 1,00,000

The company pays Income tax in four equal installments: 1 installment is paid in the next year. The total Income tax liability for the years amounts to Rs. 3,20,000
70. What is the total current assets on cash cost basis?
A) 4,98,333 B) 5,98,000
C) 6,98,933 D) None of the above

71. What is the total current liabilities on cash cost basis?
A) 1,70,000 B) 2,70,000
C) 2,40,000 D) 2,50,000

72. What is the Net working capital on cash cost basis?
A) 5,10,333 B) 5,48,333
C) 4,78,333 D) None

73. What is the avg. working capital on cash cost basis?
A) 5,30,000 B) 5,74,000
C) 6,34,000 D) 7,14,000

Earning:   Approval pending.