# SMU MBA ASSIGNMENTS

## Sem2 – MB0045 FINANCIAL MANAGEMENT – Summer 2015

 DRIVE SUMMER 2015 PROGRAM MBA/ MBADS/ MBAFLEX/ MBAHCSN3/ PGDBAN2 SEMESTER II SUBJECT CODE & NAME MB0045 FINANCIAL MANAGEMENT BK ID B1628 CREDITS 4 MARKS 60

ASSIGNMENT

SMU MBA SUMMER 2015-2016 solved Assignments are available now. (10 years of Excellency)

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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.

 Q.No Questions Marks Total Marks 1 Critically analyze the four broad areas of strategic financing decision. Four broad areas of strategic financing decision 10 10 2 What is FVIFA ? Is it different from Sinking fund factor ? A finance company offers to pay Rs. 44,650 after five years to investors who deposit annually Rs. 6,000 for five years. Calculate the rate of interest implicit in this offer. What is FVIFA ? Differentiate FVIFA and Sinking Fund factor Solve the case 5 5 10

 3 A firm owns a machine furnishes the following information :                         The firm follows straight line method of depreciation (permitted by the Income-tax authorities).   The management of the company is now considering selling of the machine. If it does so, the total operating costs to perform the work, now done by the machine, will increase by Rs. 40,000 p.a.   Advise the management. Solve the case. 10 10 4 How will you compute the cost of equity capital using CAPM ?   The Xavier Corporation, a dynamic growth firm which pays no dividends, anticipates a long-run level of future earnings of Rs. 7 per share. The current market price of Xavier’s share is Rs. 55.45. Floatation costs for the sale of new equity shares would average about 10 % of the price of the shares. What is the cost of new equity capital to Xavier Corporation ? How will you compute the cost of equity capital using CAPM ? Solve the case 5 5 10
 Project E Project F Rajrappa, Hazaribagh Tatisilwai, Ranchi Rs. Rs. Initial Outlay 11,87,200 10,06,700 Net Cash Inflow : End of year     1 10,00,000 1,00,000 2 2,00,000 1,00,000 3 1,00,000 2,00,000 4 1,00,000 10,00,000

 Credit period 1 month 2 months 3 months Increase in sales by — 10 % 30 % Bad debts on sales 1 % 2 % 5 %

 5 Jharkhand  Mining  ltd.  has  to  select  one  of  the  two  alternative  projects  whose particulars are furnished below :                         The company can arrange necessary funds @ 8 %. Compute the NPV and IRR of each project and comment on the results. Is  there  any  contradiction  in  the  results  ?  If  so,  state  the  reason  for  such contradictions. How would you propose to resolve the contradictions ? Solve the case 10 10 6 Premier Steel Ltd. has a present annual sales turnover of Rs. 40,00,000. The unit sale price is Rs. 20. The variable costs are Rs. 12 per unit and fixed costs amount to Rs. 5,00,000 per annum. The present credit period of 1 month is proposed to be extended to either 2 or 3 months whichever is profitable. The following additional information is available :           Fixed costs will increase by Rs. 75,000 when sales increase by 30 %. The company requires a pre-tax return on investment of 20 %. Evaluate the profitability of the proposals and recommend the best credit period for the company. Solve the case 10 10