AEREN
FOUNDATION’S Maharashtra
Govt. Reg. No.: F-11724
SUBJECT : Financial
Management
COURSE :
MBA 2nd semester
Total Marks : 80
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Question
– A (1)
Mr. Nimish holds the following
portfolio.
Share Beta
Investment
Alpha 0.9 Rs.12,
00,000
Beta 1.5 Rs.
3, 50,000
Carrot 1.0 Rs.
1, 00,000
What is the expected rate of return on his
portfolio, if the risk rate is 7 per cent and the expected return on the market
portfolio is 16 per cent?
Answer – A (1): For given bata (β), the required rate of
return is obtained as
E(rp) = rf + β (rm – rf)
Question – A (2) A
share is selling for Rs.60 on which a dividend of Rs.4 per share is expected at
the end of the year. The expected market price after dividend declaration is to
be Rs.70. Compute the following: -
(i)
The return on investment ® in shares.
(ii)
Dividend yield
(iii)
Capital Gain Yield
Answer – A (2):
(i)
Return on Investment per share =
Net profit after taxes – Dividend X 100
Average
ordinary share or net worth
Dividend Yield = Dividend
per ordinary share (DPS) X 100
Market
Value per Share
(ii)
Capital Gain Yield = Earnings per share (EPS) X 100
Market value per share
Question
– B: DIC Ltd. provides the following data:
Comparative trial balance
March 31 year 2 March 31 year 1
Increase(Decrease)
Debit Balance
Cash
20 10 10
Working capital (other than cash) Rs.190 Rs. 90 Rs.100
Investment (Long term) 100 200 (100)
Building and equipment 500 400 100
Land
40
50 (10)
Total 850 750 100
Credit
Accumulated Depreciation 200 160 40
Bonds 150 100 50
Reserves 350 350 ---
Equity Shares 150 140 10
Total 850 750 100
Income Statement
For the period
ending March 31, year 2
(Amount
in Rs lakh)
Sales Rs.1000
Cost of Goods Sold 500
Selling Expense Rs.50
Administrative Expenses 50 100
Operating Income 400
Other charges
Gain on sale of
building and equipment Rs 5
Loss on sale of
investments (10)
Interest (6)
Taxes (189) (200)
Net Income after
taxes 200
Notes: (a) The depreciation charged for the year
was Rs.60 Lakh
(b)
The Book value of the building
and equipment disposed was Rs 10 Lakh
Prepare a Cash Flow Statement (Based on AS-3)
Answer – B:
Cash
Flow Statement of DIC Limited (Indirect Method)
|
Particulars
|
Amount in Rs. Lakh
|
|
|
Cash flow from
operating activities:
|
|
|
|
Net profit before taxation and
extraordinary items
|
389
|
|
|
Adjustment for
|
|
|
|
Depreciation
|
60
|
|
|
Gain on sale of building and
equipment
|
(5)
|
|
|
Interest expense
|
6
|
|
Question – C
(1) - A. Ltd.
produces a product which has a monthly demand of 4,000 units. The product
requires a component X which is purchased at Rs.20. For every finished product
one unit of component is required. The
ordering cost is Rs.120 per order and the holding cost is 10 per cent per
annum. You are required to calculate:
(i)
Economic order quantity
(ii)
If the minimum lot size to be supplied is 4, 000 units, what is the
extra cost, the company has to incur?
(iii)
What is the minimum carrying cost, the company has to incur?
Answer – C (1):
(i)
Determination of EOQ
Determination of EOQ
EOQ = 2
AB A
= Annual usage of inventory (units)
C B
= Buying cost per order
C
= Carrying cost per unit
Question – D - A
stock is currently trading for Rs.29. The risk less interest is 7 % p.a
continuously compounded. Estimate the value of European call option with a
strike price of Rs.30 and a time of expiration of 4 months. The standard
deviation of the stock’s annual return is 0.45. Apply BS model.
Answer – D:
|
Spot price of the share
|
S
|
Rs. 29.00
|
Dear students get fully solved
assignments
Send your semester &
Specialization name to our mail id :
“ help.mbaassignments@gmail.com ”
or
Call us at : 08263069601
(Prefer mailing. Call in emergency )
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