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Summer
2013
Master
of Business Administration - MBA Semester 2
MB0045
- Financial Management - 4 Credits
(Book
ID: B1628)
Note: Answer
all questions. Kindly note that answers for 10 marks questions should be
approximately of 400 words. Each question is followed by evaluation scheme.
Q1. Analyze
the financial requirements of a FMCG company.
(explanation
of FMCG- 2 marks, explanation of the financial requirements of a firm- 8 marks)
10 marks
Answer : Explanation of FMCG:
FMCG companies
are those companies that produce Fast Moving Consumer Goods (FMCG). Fast Moving
Consumer Goods are the sorts of products generally sold in a supermarket, but
can also include things like cheap electronics and over-the-counter medicines.
They are 'fast moving' because they are purchased frequently and consumed
quickly, as distinct from more durable goods such as appliances, which are
generally replaced only every few years.
Q2. If you
are an investor and are interested in finding out the value of an amount of Rs
10,000 to be received after 15 years, when the interest offered by bank is 9%, how
would you calculate?
(Formula- 3
marks; calculation of present value-6 marks; Summary-1 mark) 10 marks
Answer
:Formula to calculate present value :
Calculation
Using the PV Formula:
The present
value formula for a single amount is:
PV = FV (1 +
i)-n (or) PV = FV x [ 1 ÷ (1 + i)n ]
Here PV =
present value = To be calculated
Here FV = Future
value
i
= interest rate
n = Time period
Q3. Explain
how NPV leads to better investment decisions rather than other criteria.
(explanation
of NPV- 5 marks; explanation of difference of other techniques- 5marks) 10
marks
Answer : Explanation of NPV:
In finance, the
net present value (NPV) or net present worth (NPW)[1] of a time series of cash
flows, both incoming and outgoing, is defined as the sum of the present values
(PVs) of the individual cash flows of the same entity.
In the case when
all future cash flows are incoming (such as coupons and principal of a bond)
and the only outflow of cash is the purchase price, the NPV is simply the PV of
future cash flows minus the purchase price (which is its own PV).
Q4. List out
the various risks that Tata Nano project has faced.
(explanation
of sources of risk in capital budgeting- 5marks; explanation of risks faced by
Nano-5 marks) 10 marks
Answer : Tata Nano Project
has faced various risks including the risk in capital budgeting , which is
faced by most of the organisations. It is described below :
Sources of
risk in capital budgeting:
A project's
required rate of return is the combination of your cost of capital plus any
additional return for the riskiness of the project. Riskier projects need a
higher rate of return to be deemed profitable.
Q5. Discuss
how a firm can maintain adequate working capital.
(explanation
of components of working capital- 3 marks, concepts of working capital-4 marks;
objectives and need of working capital –3marks;) 10 marks
Answer :
Components of working capital :
1. Cash:
Cash is one of
the most liquid and important components of working capital. Holding cash
involves cost because the worth of cash held, after a year will be less than
the value of cash as on today.
2. Marketable
Securities:
These securities
also don't give much yield to the business because of two reasons,
Q6. Annual
consumption of raw materials is 40,000 units. Cost per unit is Rs 16 along with
a carrying cost of 15% per annum. The cost of placing an order is given as Rs
480. Calculate the EOQ.
(formula- 2
marks; Calculation of EOQ- 6marks; interpretation-2 marks) 10 Marks
Answer : Formula to calculate EOQ :
Economic Order
Quantity is the optimal order size to minimize all inventory costs.
Variables:
C= Carrying cost
* Cost per unit =Carrying cost per unit per year
F=Fixed cost per
order
D=Demand in
units per year
So Economic
Order Quantity (EOQ) Formula:
Dear students get fully solved assignments
Send your semester & Specialization name to our
mail id
->
help.mbaassignments@gmail.com
or
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