Master of Business Administration (MBA) - Semester II Descriptive Practice Question Paper MBA Financial Management MB0045 Book ID (B1628)

(4 Credits)

Sl. No. 1.

Question

Marks

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer 10 Goods Company with a heritage of over 75 years in India and touches the lives of two out of three Indians. Do you think that HUL has preferred the profit maximisation approach over the wealth maximisation approach? Justify your answer.
Refer Unit 1 A bond with a face value of Rs. 100 provides an annual return of 8% and pays Rs. 125 at the time of maturity, which is 10 years from now. If the investors required rate of return is 12%, what should be the price of the bond? Refer Unit 4

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Discuss why NPV leads to better investment decisions than other criteria. A project costs Rs.25000 and is expected to generate cash inflows. The cost of capital is 12%. Compute the NPV of the project. Table: Cash Inflows Year 1 2 3 4 5 Refer unit 8 Cash inflows 10,000 8,000 9,000 6,000 7,000

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A jewellery company has the items of following stocks. Diamonds, Platinum, Gem stones, gold and silver. Classify them as per ABC principles. (5 marks) Annual demand of a company is 30,000 units. The ordering cost per order is Rs. 20(fixed) along with a carrying cost of Rs. 10 per unit per annum. 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. (5 marks) Refer unit 13

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Set- 2 Sl. No. 1. Question If you have subscribed to the recurring deposit scheme of a bank requiring you to pay Rs. 5000 annually for 10 years, this stream of payouts can be called annuities. Annuities require calculations based on regular periodic contribution of a fixed sum of money. Mr. Ram Kumar deposits Rs. 3000 at the end of every year for five years into his account. Interest is being compounded annually at a rate of 5%. Determine the amount of money he will have at the end of the fifth year. Refer Unit 3 How do you think the trend of capital structure across the Indian corporates affect the economy as a whole? What proportion of debt and equity should be taken up in the capital structure of a firm? Discuss the theories that are propounded to understand the relationship between financial leverage and value of the firm. Refer unit 7 3. List the various risks that Tata Nano as a project has faced? Examine risk adjusted discount rate as a technique of incorporating risk factor in capital budgeting. 10 Marks 10

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Refer unit 9 4. Discuss the typical cash inflows and cash outflows of a a) Manufacturing firm b) Service firm (5 marks) A firms annual cost requirement is Rs. 20000000. The opportunity cost of capital is 15% per annum. Rs. 150 is the per transaction cost of the firm when it converts its short-term securities to cash. Find out the optimum cash balance. What is the annual cost of the demand for the optimum cash balance? (5 marks) Refer unit 12 10