8/3/2019 finan mngmnt

1/2

[Type text] [Type text] Nov 2010

Master of Business Administration - MBA Semester 2MB0045 Financial Management - 4 Credits

(Book ID: B1134)Assignment Set- 1 (60 Marks)Note: Each question carries 10 marks. Answer all the questions.Q.1 What are the 4 finance decisions taken by a finance manager.Q.2 What are the factors that affect the financial plan of a company?Q.3 Show the relationship between required rate of return and coupon rate on the value of abond.Q.4 Discuss the implication of financial leverage for a f irm.Q.5 The cash flows associated with a project are given below:Year Cash flow0 (100,000)1 25000

2 400003 500004 400005 30000Calculate the a) payback period.b) Benefit cost ratio for 10% cost of capitalQ6. A companys earnings and dividends are growing at the rate of 18% pa. The growth rate isexpected to continue for 4 years. After 4 years, from year 5 onwards, the growth rate will be 6%forever. If the dividend per share last year was Rs. 2 and the investors required rate of return is10% pa, what is the intrinsic price per share or the worth of one share. [Type text] [Type text]Nov 2010

8/3/2019 finan mngmnt

2/2

Master of Business Administration - MBA Semester 2MB0045 Financial Management - 4 Credits(Book ID: B1134)

Assignment Set- 2 (60 Marks)Note: Each question carries 10 Marks. Answer all the questions.

Q.1 Discuss the objective of profit maximization vs wealth maximization.Q.2 Explain the Net operating approach to capital structure.Q.3 What do you understand by operating cycle.Q.4 What is the implication of operating leverage for a firm.Q.5 A company is considering a capital project with the following information:The cost of the project is Rs.200 million, which consists of Rs. 150 million in plant a machineryand Rs.50 million on net working capital. The entire outlay will be incurred in the beginning. Thelife of the project is expected to be 5 years. At the end of 5 years, the fixed assets will fetch anet salvage value of Rs. 48 million ad the net working capital will be liquidated at par. Theproject will increase revenues of the firm by Rs. 250 million per year. The increase in costs willbe Rs.100 million per year. The depreciation rate applicable will be 25% as per written downvalue method. The tax rate is 30%. If the cost of capital is 10% what is the net present value of

the project.Q.6 Given the following information, what will be the price per share using the Walter model.Earnings per share Rs. 40Rate of return on investments 18%Rate of return required by shareholders 12%Payout ratio being 40%, 50%, or 60%.