C F

8C 281 176AA2B B47 829 207 7BF 7DDD8F 378

8 2 7
C2 2817 76A 2B4 478 292 07B BF7 DD 8F3 3788 86C
8 2 2 0 D 8 7 6 2
28 176 6A2 B47 7829 9207 7BF F7D D8F F37 886 C28 8C2
17 A2 B4 82 20 B 7D D8 37 88 C2 C 81
17 6A2 B4 782 920 7B F7D D8 F37 88 6C2 8C 281 76A
6 F 6 2 7
76 A2B B47 7829 9207 7BF 7DDD8F F378 886 C28 8C2 817 6A2 2B4
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78
6A B 78 92 7B F7 D F3 88 C 8C 8 76 2B 47 29
2B 47 29 07 F DD 8F 78 6 28 2 17 A2 4 82 20
2B 478 8292 207 BF7 7DD 8F 378 86C C28C C28 8176 6A2 B47 7829 920 7BF
B 3 8 B 7
B4 4782 2920 07B F7DDD8 8F3 788 6C2 28C 281 176AA2B 478 8292 207 BF7 7DD

57530
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F
47 29 07 F DD 8F 78 6C 28 28 7 A2 4 82 20 B 7D 8 37
8 7 6 7 F
78 292 207B BF7 DD 8F3 3788 86C 28C C281 176 A2B B47 829 9207 7BF 7DDD8F F378 886C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17
DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29

firm.
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D
76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8

(2 / 3 / 4 / 5)
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78

____________.
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C

rewrite. (Any Seven)

29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C

the ____________.
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17
DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
N. B. : (1) All questions are compulsory.

88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7

Page 1 of 4
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D

(present / future / near / current)

76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3 2) Borrowed fund is owner’s capital.
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78

(tax / depreciation / interest / profit)

effective utilisation in the business.
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
result in the highest monetary return.
(5) Use of only simple calculator is permitted.

29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28

unchanged during different time periods.

(4) Proper presentation and neatness is essential.

F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17

(2½ Hours)

considered as a long-term source of fund.

DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
on the left indicate question / sub-question numbers.

6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B

C28C28176A2B47829207BF7DD8F37886
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D
5) Capital budgeting decisions are long-term decisions.

10) In simple interest, interest for every year is the same.

76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3

5) To arrive at CFAT, we need to add back ____________.

B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
(3) Working notes and assumptions shall form part of your answer.

(Board of Directors / employees / government / stockholders)

7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
6) Net present value method considers the time value of money.

4) Present value is the current value of a ____________ amount.

Paper / Subject Code: 45201 / Financial Management-1

F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17

DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
1. (A) State whether the following statements are True or False. (Any Eight)

37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82

(Joseph. L. Massie / Howard and Upton / Ezra Solomon / Phillippatus)

28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 0

efficient use of an important economic resource namely : capital funds.”

81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207
76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07
8) Cost of debt and cost of preference share capital, both, require tax adjustment.

78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF
9) The cost of capital is the required rate of return to ascertain the value of the
considered, the financial manager would select the one which is expected to

3) As bank overdraft is availed by business firms on a regular basis, it may be

7) Time value of money signifies that the value of a unit of money remains
1) To achieve the goal of profit maximisation, for each alternative being
(2) Figures on the right indicate full marks to a question / sub-question whereas figures

2) According to ____________, “Financial Management is concerned with

(B) Complete the following statements by choosing the appropriate alternative and

3) When the investment is compounded quarterly, n is to be multiplied with

4) Financial management basically deals with the procurement of funds and their

1) Wealth maximization, as the goal of the firm, implies enhancing the wealth of
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7
[ Total Marks : 75

7 F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF D
8

DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8
37 86 28 C2 17 A B4 782 92 7B 7D D8
88 C2 C 81 6A 2B 78 92 07 F7 D F
6C 8C 28 76 2 47 29 07 BF D 8F
28 28 176 A2 B4 82 20 BF 7D D8 37
C2 17 A B4 78 92 7B 7 D F3
81 6A 2B 78 292 07B F7 DD 8F3 78
7 4
 C F
8C 281 176AA2B B47 829 207 7BF 7DDD8F 378
8 2 7
C2 2817 76A 2B4 478 292 07B BF7 DD 8F3 3788 86C
8 2 2 0 D 8 7 6 2
28 176 6A2 B47 7829 9207 7BF F7D D8F F37 886 C28 8C2
17 A2 B4 82 20 B 7D D8 37 88 C2 C 81
17 6A2 B4 782 920 7B F7D D8 F37 88 6C2 8C 281 76A
6 F 6 2 7
76 A2B B47 7829 9207 7BF 7DDD8F F378 886 C28 8C2 817 6A2 2B4
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78
6A B 78 92 7B F7 D F3 88 C 8C 8 76 2B 47 29
2B 47 29 07 F DD 8F 78 6 28 2 17 A2 4 82 20
2B 478 8292 207 BF7 7DD 8F 378 86C C28C C28 8176 6A2 B47 7829 920 7BF
B 3 8 B 7
B4 4782 2920 07B F7DDD8 8F3 788 6C2 28C 281 176AA2B 478 8292 207 BF7 7DD

57530
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F
47 29 07 F DD 8F 78 6C 28 28 7 A2 4 82 20 B 7D 8 37
8 7 6 7 F
78 292 207B BF7 DD 8F3 3788 86C 28C C281 176 A2B B47 829 9207 7BF 7DDD8F F378 886C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17
DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A

basis.
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7

(ii) quarterly
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D
76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78

(i) semi-annually
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2

Maturity period
Expected return
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28

at the rate of 8.5% p.a.?

of interest is 10 per cent.

F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17

Annual interest rate

5
4
3
2
1
DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4

Year
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7

Page 2 of 4
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D
Obligation / Initial Public Offer)

76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78

12%
15%
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C

OR
9) Cost of capital refers to ____________.

5 years
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17

Face value of the debenture Rs. 1,000

DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
(short-term / mid-term / long-term / no term)

8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
type of capital in the firm’s financial structure.

88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
7) The abbreviation IPO stands for ____________

6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20

4,50,000
5,00,000
4,00,000
6,00,000
4,00,000
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B

C28C28176A2B47829207BF7DD8F37886
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7

PBDT (in Rs.)

81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D
(Book value / Market value / Share value / Par value)

76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3
8) ____________ have fixed dividend on their investment.

B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78

6) Capital budgeting decisions are ____________ decisions.

(D) Find out the present value of a debenture from the following :
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
(flotation cost / dividend / required rate of return / term loan)

7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
Paper / Subject Code: 45201 / Financial Management-1

F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17

DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
will be the future value after 4 years, if the investment is compounded –

88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 0
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207
76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20

(Present values of Re. 1 at 12% are 0.8929, 0.7929, 0.7118, 0.6355 and 0.5674)
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B
(FVIFA @ 10% for 5 years = 6.1051 and FVIFA @ 10% for 10 years = 15.937)

B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07

78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF
thereafter. What will be these savings accumulate at the end of 15 years, if the rate
2. (C) Umesh can save Rs. 20,000 a year for 5 years and Rs. 3,000 a year for 10 years
(B) What is the present value of a sum of Rs. 72,000 for a period of 3 years compounded
2. (A) Mr. Shine deposits in a bank Rs. 5,00,000 for 4 years at 12% rate of interest. What

3. (A) Shailesh Company Ltd. has invested in a machine at cost of Rs. 10,00,000.
(Internal Profitability Option / Initial Public Opening / Investment Pretending

10) ____________ weights use accounting values to measure the proportion of each
(Preference shareholders / Equity shareholders / Debenture holders / Borrowers)

29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF D

Estimated life of the machine is 5 years. The company charges depreciation on SLM 15
7
8
5
10

DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8
37 86 28 C2 17 A B4 782 92 7B 7D D8
88 C2 C 81 6A 2B 78 92 07 F7 D F
6C 8C 28 76 2 47 29 07 BF D 8F
28 28 176 A2 B4 82 20 BF 7D D8 37
C2 17 A B4 78 92 7B 7 D F3
81 6A 2B 78 292 07B F7 DD 8F3 78
7 4
 C F
8C 281 176AA2B B47 829 207 7BF 7DDD8F 378
8 2 7
C2 2817 76A 2B4 478 292 07B BF7 DD 8F3 3788 86C
8 2 2 0 D 8 7 6 2
28 176 6A2 B47 7829 9207 7BF F7D D8F F37 886 C28 8C2
17 A2 B4 82 20 B 7D D8 37 88 C2 C 81
17 6A2 B4 782 920 7B F7D D8 F37 88 6C2 8C 281 76A
6 F 6 2 7
76 A2B B47 7829 9207 7BF 7DDD8F F378 886 C28 8C2 817 6A2 2B4
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78
6A B 78 92 7B F7 D F3 88 C 8C 8 76 2B 47 29
2B 47 29 07 F DD 8F 78 6 28 2 17 A2 4 82 20
2B 478 8292 207 BF7 7DD 8F 378 86C C28C C28 8176 6A2 B47 7829 920 7BF
B 3 8 B 7
B4 4782 2920 07B F7DDD8 8F3 788 6C2 28C 281 176AA2B 478 8292 207 BF7 7DD

57530
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F
47 29 07 F DD 8F 78 6C 28 28 7 A2 4 82 20 B 7D 8 37
8 7 6 7 F
78 292 207B BF7 DD 8F3 3788 86C 28C C281 176 A2B B47 829 9207 7BF 7DDD8F F378 886C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17
DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D

5
4
3
2
1
76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3

Year
Year

B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78

Term Loan
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
PVF @ 8%

20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17
DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A

Retained Earnings
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78

Equity Share Capital

88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29

Tax rate is assumed to be 50%.

1

6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B

Preference Share Capital

0⋅926

C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7

45,000
65,000
45,000
30,000
10,000

Source of finance

Page 3 of 4
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D
Project X
76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3

debentures (after tax) for the company.

B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
2

20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C

OR
OR
OR

and discounting factor are provided below :

7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
0⋅857

(in Rs.)

F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17

DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4

5. (A) Mention the objectives of financial management.

37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
3

20,000
50,000
70,000
90,000

28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B

1,20,000

C28C28176A2B47829207BF7DD8F37886
Project Y

C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7
0⋅794

(in Rs.)
The present value factor of Re. 1 @ 8% is given below:

3,50,000
1,00,000
1,00,000
4,50,000
Amount
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D
After Tax Cash Inflow (CFAT)

76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78

price per share is Rs. 25. Calculate the cost of equity capital.
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
4

20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
0⋅735
Paper / Subject Code: 45201 / Financial Management-1

(B) Explain the advantages of retained earnings as a source of capital.

F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17
DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A

4. (C) The following is the capital structure of Sweeping Success Co. Ltd. :

15
11
13
15
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4

Cost
Present Value (NPV) of the machine, if the present value factor is 8%.

0⋅497
0⋅572
0⋅658
0⋅756
0⋅870

37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78

(in %)
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
1 at 15%

6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82
P. V. of Re.
5

28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92

0⋅681

C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 0
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207

You are required to calculate the weighted average cost of capital of the firm.
76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20
Method. (Assume the cost of capital at 15% for both the investment proposals).

A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF
4. (A) Regal Reform Company Ltd. has issued 10% redeemable debentures od face value
Rank these projects in order of their profitability according to the Profitability Index
3. (B) Caravan Corporation is considering the following investment proposals requiring a

applicable is 40% and the floatation cost of debentures is 5%, calculate the cost of
Rs. 100 each, which are redeemable at par after 10 years. Assuming that the tax rate

(B) A company whose face value per equity share is Rs. 10 has just paid a dividend of
Rs. 4 per share. The expected growth rate of dividend is 12%. The current market
The company lies in the tax bracket of 50%. You are required to compute the Net

29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF D

7
8
15
7
8
net outlay of Rs. 1,20,000 and Rs. 2,40,000 respectively. The after tax cash inflows 15

DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8
37 86 28 C2 17 A B4 782 92 7B 7D D8
88 C2 C 81 6A 2B 78 92 07 F7 D F
6C 8C 28 76 2 47 29 07 BF D 8F
28 28 176 A2 B4 82 20 BF 7D D8 37
C2 17 A B4 78 92 7B 7 D F3
81 6A 2B 78 292 07B F7 DD 8F3 78
7 4
 C F
8C 281 176AA2B B47 829 207 7BF 7DDD8F 378
8 2 7
C2 2817 76A 2B4 478 292 07B BF7 DD 8F3 3788 86C
8 2 2 0 D 8 7 6 2
28 176 6A2 B47 7829 9207 7BF F7D D8F F37 886 C28 8C2
17 A2 B4 82 20 B 7D D8 37 88 C2 C 81
17 6A2 B4 782 920 7B F7D D8 F37 88 6C2 8C 281 76A
6 F 6 2 7
76 A2B B47 7829 9207 7BF 7DDD8F F378 886 C28 8C2 817 6A2 2B4
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78
6A B 78 92 7B F7 D F3 88 C 8C 8 76 2B 47 29
2B 47 29 07 F DD 8F 78 6 28 2 17 A2 4 82 20
2B 478 8292 207 BF7 7DD 8F 378 86C C28C C28 8176 6A2 B47 7829 920 7BF
B 3 8 B 7
B4 4782 2920 07B F7DDD8 8F3 788 6C2 28C 281 176AA2B 478 8292 207 BF7 7DD

57530
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F
47 29 07 F DD 8F 78 6C 28 28 7 A2 4 82 20 B 7D 8 37
8 7 6 7 F
78 292 207B BF7 DD 8F3 3788 86C 28C C281 176 A2B B47 829 9207 7BF 7DDD8F F378 886C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17
DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D
76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
(v) Capital Rationing

7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17
DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
(i) Concept of time value

8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B
(ii) Short term source of finance

C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7

Page 4 of 4
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D
(iv) Scope of financial management

76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
5. (C) Write explanatory notes on. (Any Three)

29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17
DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
(iii) Weighted Average Cost of Capital (WACC)

37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82 20
________________________

28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92 7B

C28C28176A2B47829207BF7DD8F37886
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 07 F7
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207 BF D
76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20 B 7D D8
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B F7 D F3
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07 F7 DD 8F 78
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF DD 8F 378 86C
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF 7D 8 37 86 2
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7 D F3 88 C 8C
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7 DD 8F 78 6C 28 28
Paper / Subject Code: 45201 / Financial Management-1

F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF DD 8F 378 86 28 C2 17

DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D 8 37 86 C2 C2 817 6A
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8 F37 886 C2 8C2 817 6A 2B4
37 86 28 C2 17 A B4 782 92 7B 7D D8 F3 88 C2 8C 81 6A 2B 78
88 C2 C 81 6A 2B 78 92 07 F7 D F 78 6C 8C 28 76 2 47 29
6C 8C 28 76 2 47 29 07 BF D 8F 37 86 28 2 17 A B4 82
28 28 176 A2 B4 82 20 BF 7D D8 37 886 C2 C2 817 6A 2B 78 92
C2 17 A B4 78 92 7B 7 D F3 88 C 8C 81 6A 2B 47 29 0
81 6A 2B 78 292 07B F7 DD 8F3 78 6C 28C 28 76 2 47 829 207
76 2B 47 29 07 F DD 8F 78 86 28 2 17 A2 B4 82 20
A2 4 82 20 B 7D 8 37 86 C2 C2 81 6A B 78 92 7B
B4 782 920 7B F7D D8 F3 88 C2 8C 81 76A 2B 478 292 07
78 92 7B F7 D F3 788 6C 8C 281 76 2B 47 29 07 BF
29 07 F DD 8F 78 6C 28 28 76 A2 4 82 20 BF
20 BF 7D 8 37 86 2 C2 17 A B4 78 92 7B 7
7B 7D D8 F3 88 C2 8C 81 6A 2B 78 29 07 F7
F7 D F3 788 6C 8C 28 76 2B 47 29 207 BF D
15

DD 8F 78 6C 28 28 176 A2 4 82 20 BF 7D
8F 378 86C 28 C28 176 A2 B4 782 920 7BF 7D D8
37 86 28 C2 17 A B4 782 92 7B 7D D8
88 C2 C 81 6A 2B 78 92 07 F7 D F
6C 8C 28 76 2 47 29 07 BF D 8F
28 28 176 A2 B4 82 20 BF 7D D8 37
C2 17 A B4 78 92 7B 7 D F3
81 6A 2B 78 292 07B F7 DD 8F3 78
7 4