NIFTEM-FINANCIAL MANAGEMENT-FBM 221- midterm + End Semester Question Paper June2018- 4th Sem
The information shared below is only to get a rough idea of NIFTEM’s end semester question paper pattern. However, questions proportion from the syllabus topics may vary every semester.
MIDTERM
Important points-
- Time- 1:30 hours
- Total Marks- 50
- Three parts A, B & C, in which Part A is compulsory of (15 marks) having Objective questions, MCQs, Fill in the blanks and matching type questions. Students have to answer the questions from Part-A on the paper itself. Time allotted for Part-A is 25 minutes
- Part B & part C consists of 25 marks and 10 marks respectively. Have to attempt -Part B- 5 questions of 5 marks each & Part C- 1 Questions of 10 marks. Time for Part-B and C is total of 01:05 hours.
PART B
Answer any 8 questions from the following-
1. List the key functions of the Financial Controller and Treasurer In an organization?
2. Your company has received a $30,000 loan from an industrial finance company. The annual payments are $6,202.70. If the company is paying 9 percent interest per pear, how many loan payments must the company make?
3. In order to send your first child to Law School when the time comes, MH Wan accumulate $40,000 at the end of 18 years.
Assuming that your savings account will pay 6% compounded annually, how much would you have to deposit if-
(a) You want to deposit an equal amount at the end of each year.
(b) You want to deposit one large lump sum today?
4. Why is NPV considered as superior to IRR for project evaluation?
5. Design Quilters is considering a project with the follow ing cash flows:
Initial Outlay = $126,000
Cash Flows:
Year 1 = $44,000, Year 2 = $59,000, Year 3 = $64,000
If the appropriate discount rate is 11.5%, should the project be accepted?.
6. What are the limitations of the Payback period?
7. Name and explain the motives for capital expenditures in a business enterprise?
.
PART C
Answer any 1 question from the following-
1. Company K is considering two mutually exclusive projects. The cash flows of the projects are as follows:
Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
Project A | -2,00,000 | 5,00,000 | 5,00,000 | 5,00,000 | 5,00,000 | 5,00,000 | 5,00,000 | 5,00,000 |
Project B | -2,00,000 | 56,50,000 |
Calculate the NPV and IRR for the above two projects. assuming a 12% required rate of return.
2. Discuss the concept of relevant cash flows in Capital Budgeting?
3. Briefly explain the factors influencing the funding decision of an organization.
END SEM
Important points-
- Time- 3:00 hours
- Total Marks- 100
- Three parts A, B & C, in which Part A is compulsory of (30 marks) having Objective questions, MCQs, Fill in the blanks and matching type questions. Students have to answer the questions from Part-A on the paper itself. Time allotted for Part-A is 40 minutes
- Part B & part C consists of 40 marks and 30 marks respectively. Part B- 8 questions of 5 marks each & Part C- 3 Questions of 10 marks each. Time for Part-B and C is total of 2:20 hours.
PART B
Answer any 8 questions from the following-
1. Define the scope of financial management. What role should the financial manager play in a modern enterprise?.
2. In what ways is the wealth maximizing objective superior to the profit maximization objective? Explain.
.
3. ‘Generally, individuals show a time preference for money.’ Give reasons for such a preference.
4.‘An individual’s time preference for money may be expressed as a rate.’ Explain.
5. Define the cost of capital? Explain its significance in financial decision making.
6. The equity capital is cost-free.” Do you agree? Give reasons?
7. What is capital budgeting? Why is it significant for a firm?
8. Explain the merits and demerits of the time-adjusted methods of evaluating investment projects.
9. What is an EBIT-EPS analysis? Illustrate your answer.
10. Explain the nature of the factors which influence the dividend policy of a firm?
PART C
Answer any 3 questions from the following-
1. Explain the Treasury and controlling functions of finance.
2. Explain the mechanics of calculating the present value of cash flows.
3. The Servokon Company Limited has the following Capital Structure on 31st March 2018
Equity Shares ( 200000 Shares) Rs 40,00,000
10% Preference Share Capital Rs 10,00,000
14% Debentures Rs 30,00,000
Total Rs 80,00,000
The shares of the company sell for Rs 20. It is expected that the company will pay next year a dividend of Rs 2 per share, which is expected to grow @ 7% forever. Assume 50% tax rate.
Then you are required to:-
Compute the weighted average cost of capital on the basis of the existing capital structure.
4. Infosys Ltd is anticipating to start a project of making consumable working goods which will require an initial investment in the fixed assets amounting to Rs 45 lakh. The fixed working capital requirement of the firm will be Rs 6 lakh which will be released at the end of the project. The preliminary cost of the firm will be Rs 1 lakh. The cash salvage value of the fixed assets after 8 years is likely to be Rs 3 lakh. The project is expected to yield the cash inflow
for 8 years as under-
Year |
Cash Inflow
(in lakhs) |
1 | 12 |
2 | 14 |
3 | 15 |
4 | 13 |
5 | 8 |
6 | 9 |
7 | 7 |
8 | 5 |
The company’s cost of capital is 12%. You are required to calculate-
(a) Net Present Value
(b) Payback Period
(c) Discounted Payback Period
(d) Profitability Index
The present value factors @ 12% are :- 0.893, 0.797, 0.712, 0.636, 0.567, 0.507, 0. 452, 0.404
5. A firm has sales of Rs 10.00,000. The variable cost of Rs 700,000 and Fixed Costs of Rs 200,000 and debt of Rs 500,000 at 10% rate of interest. What are the Operating, Financial & Combined Leverage? If the firm wants to double its earnings before interest and tax (EBIT), how much of a rise in sales would be needed in a percentage basis??
Best of Luck !!
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Source- Question Papers collected and provided by Soumen Roy