MASTER OF COMMERCETerm-End Examination

June,2OO8

Mco'07 : FINANC|AL MANAGEMENTTime : 3 hours Maximum Marks : 100

Note : Attempt any fiue quesffons. AII questions carryequal marks.

1- Define the scope of financial management. What roleshould the financial manager play in a modern enterprise ? 20

2- (a) Find the present value of following cash flows,assuming 5o/o interest rate . 70

Year Cash flows

1 Rs. 2,000

2 Rs. 4,000

3 Rs. 5,000

(b) Explain YTM (Yreld to Maturity) method withexample. rc

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3. (a)

(b)

4. (a)

{b}

5. (a)

(b)

6. (a)

(b)

How is the cost of debt eomputed ? How doesdiffer from the cost of preference capital ?

What is the CAPM {Capita} -Asset Pricing Model}approach for calculating the cost of equity ?

Explain the concept of risk. How can risk be

measured ?

Discuss different Capital Budgeting Methods-

How has the company managed its working capital

in the past ?

What is the role of credit terms and credit standards

in the credit policy of a firm ?

it1 2

7 0

1 0

What is Economic Order Quantity ? Whatassumptions are made in determination of EOQ ?

Suppose a TV manufacturer plans to manufacture25,000 CTVs for the year 2006, It purchases colourpicture tubes from other manufacturers. Its annualrequirement of calour picture tubes is 25,000 units.The purchase cost is Rs. 3,500 per colour picturetube. The ordering cost is Rs. 530 per order andcarrying cost per annum is 10%0. Determine the EOQ.

10+10

1 0

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1 0

7 . Calculate the Working CaPitalfollowing information :

(i) Raw Materials(ii) Direct Labour(iiil Overheads

(excluding DePreciation)Total cost

Additionsl lnf ormation

Selling Price

OutPut

Raw Material in stock

Work-in-progressConsume 50% comPletionstage with full materialconsumPtion

= Finished goods in stock

Credit allowed bY creditors

Credit allowed bY debtors

Cash at bank exPected to beproduction is sustained at an52 weeks of the Year. All sales

any other assumPtion that Youcomputing.

Requirement using the

Cost Per unit

Rs. 400

Rs. 150

Rs. 300

R s . 8 5 0

Rs. 1,000 Per unit

52,000 units Per annum

Averag e 4 weeks

Averag e 2 weeks

Averag e 4 weeks

Averag e 4 weeks

Averag e 8 weeks

Rs. 50,000. Assume thateven Pace during the

are on credit basis. Statemight have made while

20

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8' (a) Explain the three principal motives for holding cash . j0(b) Discuss the sources of long term finance. j0

9' Write explanatcry notes on any twoof the following : ;.0+j0{i} Projeet financing{ii} Capital strueture{iii} Operating leveragetiv) Foreign exchange market

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