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 )
Summer 2017
PROGRAM MBA
SEMESTER II
SUBJECT CODE &
NAME
MBA202 - FINANCIAL MANAGEMENT
Set 1
1 Explain the differences between
wealth maximization and profit maximization.
Explain relation between finance and
accounting
Differences between wealth maximization
and profit maximization
Explanation of relation between finance
and accounting
Answer: Wealth
maximisation vs. profit maximisation
· Wealth maximisation
is based on cash flow. It is not based on the accounting profit as in the case
of profit maximisation.
· Through the process
of discounting, wealth maximisation takes care of the quality of cash flow.
Converting uncertain distant cash flow into comparable values at base period
facilitates better
·
2 Explain about the doubling period and
future value. Solve the below given problem:
Under the ABC Bank’s Cash Multiplier
Scheme, deposits can be made for periods ranging from 3 months to 5 years and
for every quarter, interest is added to the principal. The applicable rate of
interest is 9% for deposits less than 23 months and 10% for periods more than
24 months. What will be the amount of Rs. 1000 after 2 years?
Explanation of doubling period
Solving the problem
Explanation of future value
Answer: Doubling
period
Doubling period
3 Write short notes on:
a) Irredeemable bonds
b) Zero coupon bonds
c) Valuation of Shares
Answer: Irredeemable
bonds or perpetual bonds
Bonds which will never mature are known
as irredeemable or perpetual bonds. Indian Companies Act restricts the issue of
such bonds and therefore, these are very rarely issued by corporates these
days. In case of
Set 2
1 Explain the factors affecting
Capital Structure. Solve the below given problem:
Given below are two firms, A and B,
which are identical in all aspects except the degree of leverage, employed by
them. What is the average cost of capital of both firms?
Details of Firms A and B
Firm A
|
Firm B
|
|
Net operating income EBIT
|
Rs. 1, 00, 000
|
Rs. 1, 00, 000
|
Interest on debentures I
|
Nil
|
Rs.25,000
|
Equity earnings E
|
Rs.1,00,000
|
Rs.75,000
|
Cost of equity Ke
|
15%
|
15%
|
Cost of debentures Kd
|
10%
|
10%
|
Market value of equity S = E/Ke
|
Rs. 6, 66, 667
|
Rs.5,00,000
|
Market value of debt B
|
Nil
|
Rs.2,50,000
|
Total value of firm V
|
Rs. 6, 66, 667
|
Rs,7,50,000
|
Explanation of factors affecting
capital structure
Solution for the problem
Interpretation
Answer: Factors
Affecting Capital Structure
Leverage: The use of sources
of funds that have a fixed cost attached to them, such as preference shares,
loans from banks and financial institutions, and debentures in the capital
structure, is known as “trading on equity” or “
2 Explain the capital Budgeting process
and its appraisals
Solve the below given problem:
Given below are the details on the cash
flows of two projects A and B. Compute payback period for A and B.
Cash flows of A and B
Year
|
Project A cash flows (Rs.)
|
Project B cash flows (Rs.)
|
0
|
(4,00,000)
|
(5,00,000)
|
1
|
2,00,000
|
1,00,000
|
2
|
1,75,000
|
2,00,000
|
3
|
25,000
|
3,00,000
|
4
|
2,00,000
|
4,00,000
|
5
|
1,50,000
|
2,00,000
|
Explanation of capital budgeting
process and its appraisals.
Solution for the problem
Answer: Capital
budgeting process
After the screening of proposals for
potential involvement is over, the company should take up the following aspects
of capital budgeting process:
· A proposal should be
commercially viable. The following aspects are examined to ascertain the
3 Explain the concepts of working
capital. Explain the determinants of working capital.
Explanation of concepts of working
capital
Explanation of determinants of working
capital
Answer: Concepts
of Working Capital
Gross working capital: Gross working capital
refers to the amounts invested in various components of current assets. It
basically refers to the current assets. This concept has the following
practical relevance:
· Management of current
assets
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 )