ASSIGNMENT

DRIVE WINTER 2017

PROGRAM MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER II
SUBJECT CODE & NAME MBA202 – FINANCIAL MANAGEMENT
BOOK ID B1628
NUMBER OF ASSIGNMENTS, 2, 4 Credits, 30 marks each
CREDITS & MARKS

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. Set - I Total
Marks
No Questions Marks
From the below details, show the effect of the dividend policy on the market price of company
1
XYZ Ltd. shares using the Walter’s Model.
Equity capitalisation rate Ke is 10%
Earnings per share is given as Rs. 10
ROI (r) may be assumed as follows: 10% and 15%
Show the effect of the dividend policies on the share value of the firm for three different levels
of r, taking the DP ratios as 20%, 40%, 60%, 80% and 100%.

Explain the concepts of Working capital

Explanation of concepts of working capital 5
10
Solution of the above problem 5
2 Explain the Cash Flow Estimation Principles.
Cash Flow Estimation Principles. 10 10
Financial planning means deciding in advance the financial activities to be carried on to
3
achieve the basic objective of the firm. Explain the factors that affect financial planning.
Factors affecting Financial Plan 10 10

Q. Set - II Total
Marks
No Questions Marks
1 “Book value is an accounting concept”. Explain the factors of this concept.
Calculate the worth of the value of one share from the below details of Company ABC :
Current dividend is Rs. 10.
It expects to have a supernormal growth period running to 6 years during which the growth
rate would be 30%.
The company expects normal growth rate of 10% after the period of supernormal growth
period. The investor’s required rate of return is 18%.
 factors explaining the concept of book value 5
10
Solution to the problem 5
Explain the capital Budgeting process and its appraisals
Solve the below given problem:
Given below are the details on the cash flows of two projects A and B.
Compute pay-back period for A and B.
Cash flows of A and B
Year Project A cash flows (Rs.) Project B cash flows (Rs.)
2 0 (4,50,000) (5,50,000)
1 3,00,000 2,00,000
2 1,50,000 2,50,000
3 50000 3,00,000
4 2,00,000 3,50,000
5 1,00,000 2,00,000
Explanation of capital budgeting process and its appraisals. 5
10
Solution for the problem 5
Explain EOQ and Re – order point.

A manufacturing company has an expected usage of 1,00,000 units of a

certain product during the next year. The cost of processing an order is
3
Rs 200 and the carrying cost per unit per annum is Rs 2. Lead-time for
an order is five days and the company will keep a reserve of two days
usage.
Calculate EOQ and Re – order point. Assume 250 days in a year.
Explanation of EOQ and Re – order point 5
10
Calculation of EOQ and Re – order point 5