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BBC 422

decision technique exam prepration note

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28 views3 pages

BBC 422

decision technique exam prepration note

Uploaded by

Saheel Razz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Date:10/06/2022 Enrolment No.

:___________________

RK UNIVERSITY
BBA/SEM-IV/SUPPLEMENTARY/REMEDIAL/JUNE-2022

BBC422: PRINCIPLES OF FINANCE

Time: 10:30 AM TO 01:30 PM Total Marks: 100

Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
4. Programmable calculator is not permissible.

SECTION – I

Q.1 (a) What is Financial Management? Discuss major Decision Areas 08


of Financial Management.
(b) What is the optimum capital structure? Discuss it with the 08
features of Optimum Capital Structure.

Q.2 (a) Give the meaning of Preference Shares. Discuss its Advantages 08
& Disadvantages.
(b) An investor invests 500, 1000, 1500, 2000 and 2500 at the end 08
of each year. Calculate the compound value at the end of 5 years
compounded annually when interest is charged at 5% per
annum.
OR
Q.2 (a) How Role of Finance Manager has changed as compared to 08
Traditional times? Explain with relevant examples.
(b) What are the objectives of Financial Management and Financial 08
Decision Making in a firm? Explain with traditional and
modern thought.

Q.3 (a) Mr. Rohan borrows from bank for 5 year worth ₹ 10, 00,000 to 09
buy a new car named Honda city. If Mr. Rohan wants to pay an
equal annual instalment at the end of every year, and if the rate
of interest is 10%, calculate the amount of instalment every
year. Also prepare loan amortization schedule.
(b) VST corporation has sales of ₹ 40 lakhs, variable cost 70% of the 09
sales and fixed cost is ₹ 8, 00,000. The firm has raised ₹ 20
lakhs funds b issue of debenture at the rate of 10%. Compute
operating, financial and combined leverage.
OR
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Q.3 (a) What is the present value of an income stream which provides ₹ 09
1000 at the end of the year one, ₹ 2500 at the end of year two
and ₹ 5000 during each of the year 3 through 10, if the discount
rate is 12%.
(b) From the following particulars of PQR company calculate 09
operating and financial leverage. The company’s current sales
revenue is ₹ 15, 00,000 and sales are expected increase by 25%.
₹ 9, 00,000 incurred on variable expenses for generating ₹ 15
lakhs sales revenue. The fixed cost is ₹ 2, 50,000. The company
has ₹ 0 lakhs equity share capital and ₹ 0 lakhs, 10% debt
capital. ₹ 10 per equity share and 50 % tax rate.

SECTION – II

Q.4 (a) What is investment decision? Briefly discuss about capital 08


budgeting techniques available to business for investment
decisions.
(b) Discuss various factors or determinants for Dividend Policy 08
Decisions.

Q.5 (a) Write a Short Note on - Cash Conversion Cycle & Operating 08
Cycle.
(b) Investment of the project is 100,000 and cost of capital is 12% 08
the expected cash flow of the project is as follows. Calculate PI,
NPV.
Year Cash flow
1 20,000
2 30,000
3 40,000
4 50,000
5 30,000
OR
Q.5 (a) “There are multiple factors which determine the level of 08
requirement of working capital for a particular business.”
Justify.
(b) Why Dividend Decision is so important for a business? Discuss 08
the Rationale behind the same.

Q.6 (a) George field ltd. has to make a choice between three investment 09
projects i.e. A, B and C. Immediate cash outlays for each is Rs.
1,10,000. Each project will continue for 5 years and the discount
rate is 12%. Which proposal is to be selected by using Net
present value and Profitability Index? Why?

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Projects
Year
A B C
1 10,000 20,000 30,000
2 20,000 30,000 40,000
3 30,000 50,000 35,000
4 40,000 30,000 25,000
5 50,000 20,000 20,000

(b) Explain Major Components and Types of Working Capital in 09


detail.
OR
Q.6 (a) Project cost ₹ 40,000 and its EBDIT (Earing before depreciation 09
interest and tax) during 1 to 5 years is expected to be ₹ 10,000, ₹
12000, ₹ 14000, ₹ 16000, and ₹ 20,000. Assume 50% tax rate and
depreciation on SLM. Calculate projects ARR.
(b) Shah brothers requires help in calculating their working capital 09
requirements;
a. If the value of raw material is 1,60,000; Inventory (work-in-
progress) is of 1,25,000; Inventory (Finished goods) is of
3,40,000 and required cash is 12,500 then calculate the value of
Gross working capital.
b. If Working Capital is 6,78,000 and 14% safety working
capital is to be maintained then calculate amount of safety
working capital.

*************

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