University Of Pune Question Paper
B. B. A. ( Semester - VI ) Examination - 2013
(A) CASES IN FINANCE
(Specialisation - IV : Finance)
(New 2008 Pattern)
Time : 2 Hours] [Max. Marks : 50
Instructions :
(1) All questions are compulsory.
(2) Figures to the right indicate full marks.
Q.1) Existing Capital Structure of HPS Co. Ltd. is as follows :
Equity Share Capital (2,00,000 Shares) Rs. 20,00,000
5% Preference Shares Rs. 5,00,000
6% Debentures Rs. 15,00,000
The market price of the company's equity share is Rs. 20. It is expected
that the company will pay current dividend of Rs. 3 per share which will grow at 8% for ever. The tax rate applicable may be assumed at 50%.
The company wants to raise an additional Rs. 10,00,000 debt by
issuing 8% debentures. But this would result in increasing the expected
dividend to Rs. 4 and growth rate will remain the same and market
price of the equity share will fall to Rs. 15 per share.
Management wants to know :
(a) What is Weighted Average Cost of Capital under existing Capital
Structure and Revised Capital Structure ?
(b) What will be effect on Weighted Average Cost of Capital after
addition of Rs. 10,00,000 debt by issue of 8% debentures. [15]
[4372]-610 1 P.T.O.
Seat
No.
Q.2) Manufacturing Company wants to apply for working capital finance
to the bank. As a Finance Manager of the Company, you have to give
information about the Net Working Capital Requirement of your
company from the information available as follows :
Particulars Cost per unit (Rs.)
Raw Material 350
Direct Labour 250
Overhead (Excluding Depreciation) 200
Selling Price 1,000
Following additional information is available :
Production 52,000 units per annum
Raw Material in Stock Average 4 weeks
Work-in-Progress and Finished Goods Average 2 weeks
(Assume 50% completion stage with full material consumption)
Credit allowed by Suppliers Average 3 weeks
Credit allowed to Debtors Average 4 weeks
20% of the total sales is on cash basis.
Cash balance expected to be Rs. 50,000. Assume production carried
out evenly during the year and 52 weeks in the year. Calculate Net
Working Capital requirement, assuming 10% margin. [15]
Q.3) MSJ Company is considering new project to increase its production
capacity machine. Two alternative projects have been suggested each
costing Rs. 1,00,000. Earnings after tax are expected to be as follows :
Year Project 1 Project 2
1 30,000 10,000
2 40,000 30,000
3 50,000 40,000
4 30,000 60,000
5 20,000 40,000
[4372]-610 2 Contd.
Company has a target return on capital of 10% and present value of
Re. 1 @ 10% as follows :
Due in 1st year 0.91 Due in 4th year 0.68
Due in 2nd year 0.83 Due in 5th year 0.62
Due in 3rd year 0.75
As a Finance Manager, evaluate the above projects under Pay Back
Period, Discounted Pay Back Period, Net Present Value and Profitability
Index and give your opinion to the management about the option which
is financially more preferable. [20]
OR
Q.3) ABC Ltd. has currently evaluating a proposal of the Machine which
will yield the returns in the coming 5 years. The information available
is as follows :
Cost of the Machine is Rs. 2,00,000. Income Tax Rate applicable is
50%. Cash Flow after depreciation and tax is as under :
Year Cash Flow
1 60,000
2 56,000
3 54,000
4 55,000
5 70,000
As company is raising the funds at the average cost of 10%,
Management would like the know whether you recommend accepting
the project under the Internal Rate of Return Method. The Present
Value of Re. 1 at 10% and 15% p.a. is as under :
Year PV factor @ 10% p.a. PV factor @ 15% p.a.
1 0.91 0.88
2 0.83 0.77
3 0.75 0.67
4 0.68 0.59
5 0.62 0.52
Also consider the project under pay back period and NPV@ 10% p.a. [20]
B. B. A. ( Semester - VI ) Examination - 2013
(A) CASES IN FINANCE
(Specialisation - IV : Finance)
(New 2008 Pattern)
Time : 2 Hours] [Max. Marks : 50
Instructions :
(1) All questions are compulsory.
(2) Figures to the right indicate full marks.
Q.1) Existing Capital Structure of HPS Co. Ltd. is as follows :
Equity Share Capital (2,00,000 Shares) Rs. 20,00,000
5% Preference Shares Rs. 5,00,000
6% Debentures Rs. 15,00,000
The market price of the company's equity share is Rs. 20. It is expected
that the company will pay current dividend of Rs. 3 per share which will grow at 8% for ever. The tax rate applicable may be assumed at 50%.
The company wants to raise an additional Rs. 10,00,000 debt by
issuing 8% debentures. But this would result in increasing the expected
dividend to Rs. 4 and growth rate will remain the same and market
price of the equity share will fall to Rs. 15 per share.
Management wants to know :
(a) What is Weighted Average Cost of Capital under existing Capital
Structure and Revised Capital Structure ?
(b) What will be effect on Weighted Average Cost of Capital after
addition of Rs. 10,00,000 debt by issue of 8% debentures. [15]
[4372]-610 1 P.T.O.
Seat
No.
Q.2) Manufacturing Company wants to apply for working capital finance
to the bank. As a Finance Manager of the Company, you have to give
information about the Net Working Capital Requirement of your
company from the information available as follows :
Particulars Cost per unit (Rs.)
Raw Material 350
Direct Labour 250
Overhead (Excluding Depreciation) 200
Selling Price 1,000
Following additional information is available :
Production 52,000 units per annum
Raw Material in Stock Average 4 weeks
Work-in-Progress and Finished Goods Average 2 weeks
(Assume 50% completion stage with full material consumption)
Credit allowed by Suppliers Average 3 weeks
Credit allowed to Debtors Average 4 weeks
20% of the total sales is on cash basis.
Cash balance expected to be Rs. 50,000. Assume production carried
out evenly during the year and 52 weeks in the year. Calculate Net
Working Capital requirement, assuming 10% margin. [15]
Q.3) MSJ Company is considering new project to increase its production
capacity machine. Two alternative projects have been suggested each
costing Rs. 1,00,000. Earnings after tax are expected to be as follows :
Year Project 1 Project 2
1 30,000 10,000
2 40,000 30,000
3 50,000 40,000
4 30,000 60,000
5 20,000 40,000
[4372]-610 2 Contd.
Company has a target return on capital of 10% and present value of
Re. 1 @ 10% as follows :
Due in 1st year 0.91 Due in 4th year 0.68
Due in 2nd year 0.83 Due in 5th year 0.62
Due in 3rd year 0.75
As a Finance Manager, evaluate the above projects under Pay Back
Period, Discounted Pay Back Period, Net Present Value and Profitability
Index and give your opinion to the management about the option which
is financially more preferable. [20]
OR
Q.3) ABC Ltd. has currently evaluating a proposal of the Machine which
will yield the returns in the coming 5 years. The information available
is as follows :
Cost of the Machine is Rs. 2,00,000. Income Tax Rate applicable is
50%. Cash Flow after depreciation and tax is as under :
Year Cash Flow
1 60,000
2 56,000
3 54,000
4 55,000
5 70,000
As company is raising the funds at the average cost of 10%,
Management would like the know whether you recommend accepting
the project under the Internal Rate of Return Method. The Present
Value of Re. 1 at 10% and 15% p.a. is as under :
Year PV factor @ 10% p.a. PV factor @ 15% p.a.
1 0.91 0.88
2 0.83 0.77
3 0.75 0.67
4 0.68 0.59
5 0.62 0.52
Also consider the project under pay back period and NPV@ 10% p.a. [20]
![Lucknow University B.A./B.Sc. (Part-III) (Back Paper) MATHEMATICS [ Third Paper ] Numerical Analysis and Programming in C - 2018 Question Paper](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSRFF5B8mgwVKJswFbXFVMbYPkwZ5huZNYCbcvphN2nQ2jOctgxD-2OCGkKWECevFXYTdxUFbTDJhx7JzU880M-lNAV3yJhbPerY9N4OWHvh54NGmgoYOfAy9GWFzvBsiTMVcvjNuGYIs/s72-w640-c-h458/97+1.png "Lucknow University B.A./B.Sc. (Part-III) (Back Paper) MATHEMATICS [ Third Paper ] Numerical Analysis and Programming in C - 2018 Question Paper")
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