Service charges as Rs. 150 per assignment.
PROGRAM - MBA
SEMESTER II
SUBJECT CODE & NAME - MB0045 FINANCIAL MANAGEMENT
1. Capitalisation of
a firm refers
to the composition
of its long
–term funds debt
and equity. Discuss the theories
of capitalization.
Capitalisation of a firm
refers to the composition of its long-term funds and its capital structure. It has
two components – Debt and Equity.
After estimating the
financial requirements of a firm, the next decision that the management has to
take is to arrive at the value at which the company has to be capitalised.
There are two theories of
capitalisation for the new companies:
·
Cost theory
·
Earnings theory
2. A) The share of Megha Ltd is sold at Rs 500 a
share. The dividend likely to be declared by the company after one year is Rs 25 per share. Hence, the price after one year
is expected to be Rs 550. What is the return at the end of the year on the
basis of likely dividend and price per share?
Answer:
Holding period return
Service charges as Rs. 150 per assignment.
The return at the end of the
year will be 15%.
2. B) A bond of face value of Rs
1000 and a maturity of 3 years pays 15% interest annually. What is the market
price of the bond if YTM is also 15 %.
Answer: -
P = Int*PVIFA (15%, 3y) +
Redemption value*PVIF (15%, 3y)
Service charges as Rs. 150 per assignment.
3. Discuss the
sources of capital
of a company.
Analyse the factors
that affect the
capital structure.
a) Sources
·
Issue of equity shares in the domestic capital market.
·
Issue of equity (depository shares) in the
international capital market.
·
Equity financing from financial institutions
·
Private equity
4. A project costs Rs 50,000. It is expected to generate cash inflows as
shown in table. If the risk free rate is 10%, compute NPV.
|
Year
|
Cash
inflows
|
Certainty
equivalent
|
|
1
|
32000
|
0.9
|
|
2
|
27000
|
0.6
|
|
3
|
20000
|
0.5
|
|
4
|
10000
|
0.3
|
Answer:
Below table shows the
computation of NPV
|
Year
|
Cash
inflows
|
Certainty
equivalent
|
Certain
cash flows
|
PV
factor at 10%
|
PV of
certain cash inflows
|
|
1
|
32000
|
0.9
|
28800
|
0.909
|
26179
|
|
2
|
27000
|
0.6
|
16200
|
0.826
|
13381
|
|
3
|
20000
|
0.5
|
10000
|
0.751
|
7510
|
5. a) Annual demand of a company
is 30,000 units. The ordering cost per order is Rs 20 (fixed) along with a
carrying cost og Rs 10 per unitper anum. The purchase cost
per unit i.e., price per unit is Rs 32
per unit. Determine EOQ, total number of orders in a year and the time gap
between two orders.
Formula:
Service charges as Rs. 150 per assignment.
6. Discuss the dividend policy of
Dabur India Ltd for the last three years.
Answer:
Below is the table which
show the declaration of dividend made by Dabur India Ltd: -
|
Dividend
|
||
|
Year
|
Month
|
Dividend (%)
|
|
2013
|
Oct
|
75
|
|
2013
|
Apr
|
85
|
|
2012
|
Oct
|
65
|
|
2012
|
Apr
|
75
|
|
2011
|
Oct
|
55
|
|
2011
|
Apr
|
65
|
As per Wolter Model :
Service charges as Rs. 150 per assignment.
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