ROM NO. soecssesessrsnenensessressseteet 19 ‘Sub, Code : (0181319) Exam. Code : fololil6 Bachelor of Commerce 6* Semester (2053) FINANCIAL MANAGEMENT Paper : BCM-602 Time Allowed : Three Hours] [Maximum Marks : 80 UNITH1 1. Attempt any FOUR of the following -— AN What are the qualities of a good financial management ? BT the time of retirement Mr. Goyal has given a choice between two alternatives : (i) Annual pension till death ; (ii) Lump sum payment of Rs. 60,000. If Mr. Goyal expects to live for 15 years and rate of return _ is 15% which alternative should be selected ? =? 2 (© company is planning to purchase a plant costing Ré. 10,00,000. The life of plant is expected to be 5 years and during this tenure it is expected to generate profit after depreciation before tax as follows : yd Calculate the pay back period if tax rate is 40% and v depreciation is charged on straight line method. 0836/PT-29507 1 {Turn over(D) Explain fully hedges bonds. (E) Jalandhar Sports Limited expect the cost of goods sold for 2023 to be Rs. 272 crores, the operating cycle for the planned year to be $4 days. If Company wants to maintain a desired cash balance of Rs. 3 crores, what is the expected working capital requirement for the year 2023 ? (Assume 360 days in a year). (F) If the selling price per unit is Rs. 240, variable cost is Rs, 140 and the fixed cost is Rs. 2,00,000 what is the operating leverage when company produces and sell 12000 units ? 4x5 UNIT—II (Answer any TWO questions.) modem approach to corporate finance is an improvement over the traditional approach”. Comment. Determine the net present value from the following data of two machines X and Y and suggest which machine should be accepted : Cost of Machine Life of Machine Salvage Value Depreciation has been charged on straight line basis and the discounting rate is assumed at 10%. 0836/PT-29507 meas 2AT Paplain the concept of time value of money with suitable 3 —————————S——~“ .;PF.mmmm examples. The capital structure of Madras Ltd. as on 31" March 2022 is as follows : Equity share capital 100 lakh Equity Shares @ Rs. 10 Rs, 10 crore Reserves Rs. 2 crore 14% Debentures of Rs. 100 each Rs. 3 crore For the year ended 31st march 2022, company paid dividend at 20% the growth rate of company is 5% every year. Market Price of equity share is Rs. 80/share; income tax rate is 50% You are required to : Calculate weighted average cost of capital. Company has plan to raise a further Rs. 5 crore by way of long term loan at 16% rate of interest if it do so the market price of share will fall to Rs. 50 per share. What will be new weighted average cost of capital if company implements its plan ? 2x15 UNIT (Answer any TWO questions.) Waite a note on the following :— ™, (a) Debt Securitization (b) ADR ~ (c) Bridge Finance. Explain the theory of Trading on Equity. 8. A company has provided the following information : Rs./unit Sales (two month credit) 50 Raw Material 20 ‘Wages 1 5 Overhead 15 Profit 10 0836/PT-29507 3 [Turn over Fy—__— ~~ Additional Information >— Raw material in stock average progress (completion stage * 50% for labour and overheads) on an average half Finished goods in stock on an average one month. Credit allowed by suppliers is one month. Credit allowed to debtors 25,000. All sales nth, Cash in hand as desired at Rs. is. Prepare a statement showing working evel of 3,00,000 units of arried evenly throughout milarly. Four weeks onsumption. Work in regards t0 matcria\ a month. 2 months ¢ 100% with two mo! are on credit basi: capital needed to finance an activity | production. ‘Assume that producton isc the year and wages and overheads accrue si is equal to one month and 52 weeks is equal to one year. of which the appropriate ly has 1,00,000 shares iz declaration 9. Costal Chemicals belongs to a risk class capitalization rate is 10%. It current selling at Rs. 100 each. The firm is contemplatin; ofa dividend of Rs. 6 per share at the end of the current fiscal year which has just begun. Answer the following questions based on Modigliani and Millar model and assumption of no taxes. (1) What will be the price of shares at the end of the year if a dividend is not declared 2 (2) What will be the price if dividend is declared ? (3) Assume that the firm pays a dividend has net income of Rsi10 lakhs and makes new investments of Rs. 20 lakhs during the period. How many new shares must be issued ? 2x15 : . 12000