Financial management 2021 Bangalore university question paper|B.Com Third Semester

- January 22, 2022

lll Semester B.Com. Examination, April/May 2021

(F + R) (CBCS) (2015 - 16 and Onwards)

COMMERCE

3.4 : Financial Management

Time : 3 Hours Max. Marks : 70

Instruction : Answers should be written completely either in Kannada or in English.

SECTION -A

1. Answer any five sub-questions. Each sub-question carries two marks. (5 x 2=10)

a) Give the meaning of Finance.

b) What is financial planning ?

c) What do you mean by investment decision ?

d) What is time value of money ?

e) What is combined leverage ?

f) Calculate the present value of Rs.80,000 received after 6 years, if the discount rate is 9%.

g) Initial investment Rs. 20,00,000, residual value Rs.4,00,000, working life 10 years. Additional working capital Rs.2,00,000. Calculate average investment.

General English 2021 question paper

SECTION - B

Answer any three questions. Each question carries six marks.

2. Explain the principles of financial planning.

3. Mention the functions of financial management.

4. A firm has sales of Rs. 20,00,000, variable cost of Rs.14,00,000, fixed cost Rs. 4,00,000, 10% debt capital of Rs.10,00,000. Calculate operating, financial and combined leverage.

5. Calculate the future value at the end of five years of the following series of payments @ 10% rate of interest.

Rs. 4,000 at the end of 1 year

Rs.5,000 at the end of 2 years

Rs. 6,000 at the end of 3 years

Rs.7,000 at the end of 4 years

Rs. 8,000 at the end of 5 years.

6. Calculate the payback period of the following projects. Each requiring a cash outlay of Rs. 1,00,000. Suggest which project is acceptable if the standard payback period is 5 years.

Year 1 2 3 4 5

Cash inflows A 30,000 30,000 30,000 30,000 30,000

B 30,000 40,000 20,000 10,000 5,000

SECTION - C

Answer any three questions. Each question carries fourteen marks. (3 x 14=42)

7. Briefly explain the factors determining working capital requirements.

8. what is dividend policy ? Discuss the various forms of dividend.

9. KPMG Ltd. has currently an ordinary share capital of Rs. 25,00,000, consisting of 25000 shares of Rs. 100 each. The management is planning to raise another Rs.20 lakhs to finance a major programme of expansion through one of the four possible financial plans.

i) Entirely through ordinary shares.

ii) Rs.10,00,000 through ordinary shares and Rs.10,00,000 through long-term borrowings at 8% interest.

iii)Rs. 5,00,000 through ordinary shares and Rs. 15,00,000 through long term borrowings at 9% interest.

iv) Rs.10,00,000 through ordinary shares and Rs.10,00,000 through preference shares with 5% dividend.

The company's expected EBIT will be Rs. 8,00,000. Assuming a corporate tax rate of 46%, determine the EPS in each alternative and suggest which alternative is best and why ?

10. A firm's cost of capital is 10%. It is considering two mutually exclusive projects J and K. The details are given below.

Net cash flow(t) J

Project J Project K

lnvestments Rs.2,80,000 Rs.2,60,000

Year J K

1 80,000; 1,60,000

2 1,20,000 80,000

3 1,80,000 40,000

, 4 2,40,000 40,000

5 6,60,000 5,50,000

Compute :

a) Payback period b) Net present value c) Profitability index