Rashtrasant Tukadoji Maharaj Nagpur University 2009 M.B.A Financial Management Specialisation - I( Gr - B- ) PROJECT PLANNING AND FINANCIAL STRATEGY - II - Question Paper

MDN/KS/09 - 1878
2nd Semester Master of Business
Administration (MBA) exam
(New Course)
Specialisation - I( Gr - B- Financial Management)
PROJECT PLANNING AND FINANCIAL
STRATEGY
Paper - II
Time : 3 Hours ] [Max. Marks : 80
N. B. : (1) Attempt 5 ques. ; atleast 2 ques.
from every part are compulsory. (2) All ques. carry equal marks.
part A
1. discuss the steps in planning of a new project.

2. `'Takeover strategy for expansion will be a craze inCorporate World". - Elucidate.


3. A company is considering 2 exclusive projects Xand Y, project X costs Rs. 30,000 and project Y R.s. 36,000. You have been provided beneath the net current value probability distribution for every project.
Project - X Project - Y
NPV Probability NPV Proability
(Rs.) (Rs.)
3,000 0.1 3,000 0.2
6,000 0.4 6,000 0.3

12,000 0.4 12,000 0.3
15,000 0.1 15,000 0.2

(i) calculate the expected net current value of project X and Y.
(ii) calculate the risk attached to every project.
(iii) Which project do you consider more risky and why %
(iv) calculate the profitability index of every project.

4. discuss the concept of optimal capital structure. explain MM approach and Traditional position of capital structure valuation.

5. JBC Ltd. sells goods- on a gross profit of 25%. Depreciation is considered as a part of cost of production. The subsequent are the annual figurers provided to you


.


Particulars Amount
Sales (2 months credit) Rs. 18,00,000
Material (1 month credit) 4,50,000
Wages paid
(1 month lag in payment) 3,60,000
Cash Manufacturing Expenses
(1 month lag in payment) 4,80,000
Administrative Expenses
(1 month lag in payment) 1,20,000
Sales Promotion Expenses
(Paid quarterly in advance) 60,000



The company keeps 1 month's stock every of Raw materials and finished goods. It also keeps Ks. 1,00,000 in cash. You are needed to estimate the working capital requirements of the company on cash cost basis, assuming I:i% safety margin.

part B

6. "Efficient Cash Management will aim at Maximizing the availability of cash inflow by decentralizing collections and decelerating cash out flow by centralizing the disbursement" % explain and discuss.
7. What is the Memorandum of Understanding (MOU) : What were its objectives : Do you subscribe to the view that MOVs in PSEs have led to their better performance ?

8. explain different aspects of calculation of Economic Value Added (EVA) and its application in business planning and evaluation.

9. DLP .I'vt. Limited is considering the possibility of purchasing a multipurpose machine which costs Rs. 10,00,000. The machine 'has an expected life of five years. The machine generates Rs. 6,00,000 per year before depreciation and tax and the management wishes to dispose the machine at the end of five years which will fetch Rs. 1,50,000. The depreciaion allowable for the machine -i-,25% on written down value and the company tax- -rate is, 50%. The company approached a NBFC for a 5 year lease for financing the asset which quoted arate of Rs. 28 per thousand per month. The company wants you to evaluate the propo--sal withpurchase choice. The cost of capital of the company is 12% and for lease choice it wants your to consider a discount rate of 16%.

10. A trader whose current sales are Rs. 15,00,000 per Annum and avg. collection period is 30 days wants to pursue a more liberal credit policy to improve sales. A study made by a consultant firm reveals the subsequent info.


Credit Policy Increase in Increase
Collection Period in sales
one five days Rs. 60,000
B 30 days 90,000
C 45 days 1,50,000
D 60 days 1,80,000
E 90 days 2,00,000

The selling price per unit is Rs. 5. avg. cost per unit is 4_and variable-cost per unit is
Ks. 2.75. The needed rate of return on additional investment is 20%. presume 3(i0 days a year and also presume that there are no bad~ cleats. Which of the above policies would you recommend for adoption?

Earning:   Approval pending.