# SMU MBA ASSIGNMENTS

## sem 2 winter 2013

MB0045- FINANCIAL MANAGEMENT

ASSIGNMENT

 DRIVE WINTER 2013 PROGRAM MBADS/ MBAFLEX/ MBAHCSN3/ MBAN2/ PGDBAN2 SUBJECT CODE & NAME MB0045- FINANCIAL MANAGEMENT SEMESTER 2 BK ID B1628 CREDITS 4 MARKS 60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

1 Capitalisation of a firm refers to the composition of its long —term funds debt and equity. Discuss the theories of capitalization.

Answer : Capitalisation of a firm refers to the composition of its long-term funds and its capital structure. It has two components — Debt and Equity.

After estimating the financial requirements of a firm, the next decision that the management has to take is to arrive at the value at which the company has to be capitalised.

There are two theories of capitalisation for the new companies:

1.       Cost theory

2.       Earnings theory

2 A) The share of Megha Ltd is sold at Rs 500 a share. The dividend likely to be declared by the company after one year is Rs 25 per share. Hence, the price after one year is expected to be Rs 550. What is the return at the end of the year on the basis of likely dividend and price per share?

Answer : The share of Megha Ltd

Holding period return = (D1 +

B) A bond of face value of Rs 1000 and a maturity of 3 years pays 15% interest annually. What is the market price of the bond if YTM is also 15 %.

P = Int*PVIFA (15%, 3y) + Redemption

3 Discuss the sources of capital of a company. Analyse the factors that affect the capital structure.

Grants and incentives

There is a wide variety of grants and incentives available to help eligible small businesses grow in New Zealand.

4 A project costs Rs 50,000. It is expected to generate cash inflows as shown in table. If the risk free rate is 10%, compute NPV.

 Year Cash inflows Certainty equivalent 1 32000 0.9 2 27000 0.6 3 20000 0.5 4 10000 0.3

5 a) Annual demand of a company is 30,000 units. The ordering cost per order is Rs 20 (fixed) along with a carrying cost og Rs 10 per unit per anum. 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.

6 Discuss the dividend policy of Dabur India Ltd for the last three years.

Answer : Dabur India Ltd for the last three years

10-28-2013

Dabur India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on October 28, 2013, inter alia, to consider and approve the audited financial results for the Half Year ended on September 30, 2013 (Q2). With reference to the earlier announcement dated October 03, 2013 with respect to financial