MASTER

OF COMMERCE
Term-End
Examination
June, 2OO8
Mco' 07
: FINANC|AL
MANAGEMENT
Time : 3 hours
Maximum Marks : 100
Note : Attempt
any
fiue
quesffons.
AII questions
carry
equal marks.
1- Define
the scope of financial
management.
What role
should the financial
manager play
in a modern enterprise ? 20
2-
(a)
Find the present
value of following cash flows,
assuming
5o/o interest
rate .
70
Year
Cash flows
1
Rs. 2, 000
2
Rs. 4, 000
3
Rs. 5, 000
(b)
Explain
YTM (Yreld
to Maturity) method with
example.
rc
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3.
(a)
(b)
4.
(a)
{b}
5.
(a)
(b)
6.
(a)
(b)
How is the cost of debt eomputed
? How does
differ from the cost of
preference capital ?
What is the CAPM
{Capita}
-Asset
Pricing Model}
approach for calculating the cost of equity ?
Explain the concept of risk. How can risk be
measured ?
Discuss different Capital Budgeting Methods-
How has the company managed its working capital
in the
past ?
What is the role of credit terms and credit standards
in the credit
policy of a firm ?
it
12
70
1 0
What is Economic Order
Quantity
? What
assumptions are made in determination
of EOQ ?
Suppose a TV manufacturer
plans to manufacture
25,000 CTVs for the year 2006, It purchases colour
picture tubes from other manufacturers.
Its annual
requirement of calour
picture tubes is 25,000 units.
The
purchase cost is Rs. 3,500
per colour
picture
tube. The ordering cost is Rs. 530
per order and
carrying cost per annum is 10%0. Determine the EOQ.
10+10
1 0
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1 0
7 . Calculate
the Working
CaPital
following
information
:
(i) Raw
Materials
(ii) Direct
Labour
(iiil Overheads
(excluding DePreciation)
Total
cost
Additionsl
lnf ormation
Selling
Price
OutPut
Raw Material
in stock
Work-in-progress
Consume
50%
comPletion
stage
with full material
consumPtion
= Finished
goods in stock
Credit
allowed
bY creditors
Credit
allowed
bY debtors
Cash
at bank
exPected
to be
production
is sustained
at an
52 weeks
of the
Year.
All sales
any other
assumPtion
that
You
computing.
Requirement
using
the
Cost
Per
unit
Rs.
400
Rs. 150
Rs. 300
Rs. 850
Rs.
1,000
Per
uni t
52,000
units
Per
annum
Averag
e 4 weeks
Averag
e 2 weeks
Averag
e 4 weeks
Averag
e 4 weeks
Averag
e 8 weeks
Rs. 50,000.
Assume
that
even
Pace
during
the
are
on credit
basis.
State
might
have
made
while
20
P. T. o.
MCO- 07
8' (a)
Explain
the three principal
motives
for
holding
cash .
j0
(b)
Discuss
the
sources
of long
term
finance. j0
9'
Write
explanatcry
notes
on any twoof
the following
: ;.0+j0
{i}
Projeet
financing
{ii} Capital
strueture
{iii} Operating
leverage
tiv)
Foreign
exchange
market
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