Financial Management PART A (Descriptive Type) = 32 PART B (Case Study) = 4 PART C (Multiple Choice) = 160 Instant Downloadable Solution from AiDLo.com PART A Descriptive Type Question Question 1a: Should the titles of controller and treasurer be adopted under Indiancontext? Would you like to modify their functions in view of the company practice inIndia? Justify your opinion?Question 1b: firm purchases a machinery for Rs. 8, 00,000 by making a downpayment of Rs.1,50,000 and remainder in equal installments of Rs. 1,50,000 for sixyears. What is the rate of interest to the firm?Question 2a: Explain the mechanism of calculating the present value of cash flows.What is annuity due? How can you calculate the present and future values of anannuity due? Illustrate Question 2b: "The increase in the risk-premium of all stocks, irrespective of theirbeta is the same when risk aversion increases" Comment with practical examplesQuestion 3a: How leverage is linked with capital structure? Take example of a MNCand analyze.Question 3b: The following figures relate to two companies (10)P LTD.Q LTD(In Rs. Lakhs)Sales 500 1,000Variable costs 200300-------------Contribution Fixed costs300700Fixed Cost150400-------------150400Interest50100-------------Profit before tax100200You are required to: Calculate the operating, financial and combined leverages forthe two companies; and Comment on the relative risk position of them
Question 4a: Define various concepts of cost of capital. Explain the procedure ofcalculating weighted average cost of capital.Question 4b: The following items have been extracted from the liabilities side of thebalance sheet of XYZ Company as on 31st December 2005.Paid up capital:4,00,000 equity shares of Rs each 40,00,000Loans:16% non-convertible debentures 20,00,00012% institutional loans 60,00,000Other information about the company as relevant is given below:31stdec Dividend Earning average market price2005 Per share per share per share7.2 10.50 You are required to calculate the weighted average cost of capital, using bookvalues as weights and earnings/price ratio as the basis of cost of equity. Assume19.2% tax rateQuestion 5a: A company has issued debentures of Rs. 50 Lakhs to be repaid after 7years. How much should the company invest in a sinking fund earning 12% in orderto be able to repay debentures? Show the procedure of loan amortization andcapital recovery through an example.Question 5b: A bank has offered to you an annuity of Rs. 1,800 for 10 years if youinvest Rs. 12,000 today. What is the rate of return you would earn? Question 6: The proforma of cost-sheet of HLL provides the following data:Cost (per unit):Rs.Raw materials52.0Direct labour19.5Overheads39.0Total cost (per unit):110.5Profit19.5Selling price130.0The following is the additional information available: 65 .
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