Skip to main content

CAPITAL INVESTMENT AND FINANCIAL DECISION

MANAGEMENT PROGRAMME


Term-End Examination


June, 2010


MS-42 : CAPITAL INVESTMENT AND


FINANCIAL DECISION




Time : 3 hours                                                              Maximum Marks : 100


                                                                                              (Weightage 70%)


 

Note :

  • Attempt any five

  • All questions carry equal   

  • Present value tables would be provided, if asked for.

  • Use of calculators is allowed.


 

  1. A Limited Company has the following Capital Structure :


 

Equity Share Capital                    Rs. 40,00,000

(2,00,000 Shares)

6% Preference Shares                10,00,000

8% Debentures                        30,00,000 80,00,000

The market price of the company's equity share is Rs. 20. It is expected that company will pay a current dividend of Rs. 2 per share which will grow at 7% for ever. The tax rate may be presumed at 50%. You are required to compute the following:

  • A weighted average cost of capital based on existing capital structure.

  • The new weighted average cost of capital if the company raises an additional Rs. 20,00,000 debt by issuing 10% debentures. This would result in increasing the expected dividend to Rs. 3 and leave the growth rate unchanged, but the price of share will fall to Rs. 15 per share.

  • The cost of capital if in (b) above the growth rate increases to 10 percent.



  1. Discuss the relationship between EBIT and EPS.


 

  1. What is Work Breakdown Structure ? Explain in what ways may the Work Breakdown Structure be used as a key document to monitor and control a project ?



  1. What are the three main types of control systems ? What questions should a control system answer ?



  1. Write explanatory notes on any four :



  • Sensitivity analysis

  • Monte Carlo Simulation

  • Game Theory

  • The expected utility approach

  • Objectives of social benefit analysis

  • Net operating income approach of capital Structure.


 

  1. What are the major global sources of financing ?


 

  1. Discuss the major non traditional sources of Long-term financing and explain their significance as a source of financing.



  1. What is meant by dividend stability ? Explain about the types of dividends and the factors which influence the dividend policy of a firm.


 
Labels:

Comments

Post a Comment

Popular posts from this blog

MANAGEMENT RESEARCH -I

POST GRADUATE DIPLOMA IN TEACHING AND RESEARCH IN MANAGEMENT   Term-End Examination June 2010   PGDTRM-03: MANAGEMENT RESEARCH -I Time: 3 hours                                                              Maximum Marks: 100 Note:   (i) There are two Sections A and B .             (ii) Attempt any three questions from Section A . All questions  carry 20 marks each.             (iii) Section B i s compulsory. And carries 40 marks.                                                SECTION – A                                  3x20=60   What is meant by the term "research design" ? Examine some of the commonly used research designs. Distinguish between probability and non-probability sampling. Explain the different methods used in both types of sampling. Examine the importance of ethics in research with special reference to the rights and responsibilities of participants. Briefly discuss the different methods of research. Also mention the situations in which they are appli...
Post a Comment
Read more

OPERATIONS MANAGEMENT

COMMONWEALTH EXECUTIVE MBA/MPA PROGRAMME   Term-End Examination June 2010 C-4: OPERATIONS MANAGEMENT Time: 3 hours                                                              Maximum Marks: 100                                                                                               (Weighting 70%)   Note:    Section-A has five questions of 20 marks each. Attempt any three  Questions from Section-A . Section-B is compulsory   40 marks. SECTION – A (a) Discuss the process of launching a new product in the market. Explain with the help of suitable examples.    10+10=20    (b) A manufacturing firm has three proposals for a product. Either it can be       purchased from an outside vendor at Rs. 4.00 per unit or it can be manufactured in-plant. There are two alternatives for in-plant manufacturing. Either, a fully automatic unit is procured, involving fixed cost of Rs.30,000 and variable cost of Rs. 2.75 per  unit. Alternatively a semi-automatic unit would cost Rs. 20,000 as fixed...
Post a Comment
Read more

Steps in starting up the small-scale business

Steps in starting up the small-scale business. A potential entrepreneur has to pass through various stages for setting up small scale unit. These are as follows:- The decision to be self-employed: - An educated person has to decide between two option either to work for other as employees or to work for himself as an entrepreneur. If the person possesses the right of knowledge, skill, experience and aptitude the best option for him is to set his own enterprise. This would give him best opportunity to invest, to innovate and  to give the best shape of this ideas. Identification of opportunity: - The viability of units means the business should identify the market needs. The entrepreneur has to do, but the consumer wants he has to produce according to needs and demands of the consumer. Selection of product on the basis of the market survey: - An entrepreneur has to select the product on the basis of the market survey, An entrepreneur should select the product keeping in view his own ca...
Post a Comment
Read more