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    Gujarat Technological University: Instructions

    Uploaded by

    N-aineel Desai
    This document contains an exam for a strategic financial management course, with 5 questions covering various financial topics. Question 1 defines economic rate of return and effective rate of protection, and explains social cost benefit analysis. Question 2 involves calculating the optimal sales price based on contribution and profit and explains operating, financial, and combined leverage. Question 3 asks students to choose between two investment projects using the coefficient of variation. Question 4 calculates weighted average cost of capital. Question 5 explains Walter's and Gordon's dividend models, defines risk management, and discusses capital structure and time value of money.

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    Gujarat Technological University: Instructions

    Uploaded by

    N-aineel Desai
    72 views2 pages
    This document contains an exam for a strategic financial management course, with 5 questions covering various financial topics. Question 1 defines economic rate of return and effective rate of protection, and explains social cost benefit analysis. Question 2 involves calculating the optimal sales price based on contribution and profit and explains operating, financial, and combined leverage. Question 3 asks students to choose between two investment projects using the coefficient of variation. Question 4 calculates weighted average cost of capital. Question 5 explains Walter's and Gordon's dividend models, defines risk management, and discusses capital structure and time value of money.

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    mba gtu

    Original Title

    2012

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    This document contains an exam for a strategic financial management course, with 5 questions covering various financial topics. Question 1 defines economic rate of return and effective rate of protection, and explains social cost benefit analysis. Question 2 involves calculating the optimal sales price based on contribution and profit and explains operating, financial, and combined leverage. Question 3 asks students to choose between two investment projects using the coefficient of variation. Question 4 calculates weighted average cost of capital. Question 5 explains Walter's and Gordon's dividend models, defines risk management, and discusses capital structure and time value of money.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    72 views2 pages

    Gujarat Technological University: Instructions

    Uploaded by

    N-aineel Desai
    This document contains an exam for a strategic financial management course, with 5 questions covering various financial topics. Question 1 defines economic rate of return and effective rate of protection, and explains social cost benefit analysis. Question 2 involves calculating the optimal sales price based on contribution and profit and explains operating, financial, and combined leverage. Question 3 asks students to choose between two investment projects using the coefficient of variation. Question 4 calculates weighted average cost of capital. Question 5 explains Walter's and Gordon's dividend models, defines risk management, and discusses capital structure and time value of money.

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    SeatNo.

    :________

    EnrolmentNo.______________

    GUJARAT TECHNOLOGICAL UNIVERSITY


    M.B.A.- SEMESTER III EXAMINATION WINTER 2012

    Subject code: 2830201


    Subject Name: Strategic Financial Management
    Time: 10:30 pm 01:30 pm

    Date: 11-01-2013
    Total Marks: 70

    Instructions:
    1. Attempt all questions.
    2. Make suitable assumptions wherever necessary.
    3. Figures to the right indicate full marks.
    Q-1 Explain the following terms in brief:
    (a) (i) Economic Rate of Return
    (07)
    (ii) Effective Rate of Protection
    (b) Explain the concept of Social Cost Benefit Analysis and explain the (07)

    indicators of social desirability of project.


    Q-2 (a) Following are the details of XYZ Ltd. The sales scenario

    with (07)

    alternative price Rs.12 or Rs.13 per unit are as under;


    At Price Rs.12
    At price Rs.13
    per unit
    per unit
    Sales (units)
    probability
    probability
    50000
    0.1
    60000
    0.1
    90000
    0.2
    70000
    0.2
    110000
    0.4
    80000
    0.4
    130000
    0.2
    90000
    0.3
    140000
    0.1
    Variable cost is Rs.9 per unit while Fixed cost p.a. is
    Rs.210000/=Determine the sale price to be selected based on economic
    value of contribution and profit.
    (b) Explain Operating Leverage, Financial Leverage and Combined (07)
    Leverage with help of formula and hypothetical illustrations.
    OR
    Q-2 (b) Discuss Net Present Value and Internal Rate of Return as important

    techniques of capital budgeting and bring out the differences.


    Q-3

    (14)

    Project X & Project Y have similar life and yield.. The initial
    investment is Rs.80 lacs each. Both the projects are new business model
    and hence cash flow cannot be accurately projected.. The probability
    distribution for the first year for both the projects are given below and
    are expected to be same for the entire tenure of the projects.
    Project X
    Project Y
    Cash flow (Rs. Probability
    Cash flow (Rs. Probability
    Lacs)
    Lacs)
    12
    0.1
    8
    0.10
    14
    0.2
    12
    0.25

    16
    0.4
    16
    0.30
    18
    0.2
    20
    0.25
    20
    0.1
    24
    0.10
    Decide which projected to be selected using coefficient of variation.
    ..
    OR
    Q-3 (a) Define Indusrial sickness and discuss the causes of indusrial

    sickness.
    (7)
    (b) Describe the importance of project finance and explain the terms:
    (i) B.O.O. (ii) B.O.T. (iii) E.P.C.
    (7)
    Q-4 There are five un levered projects. Beta and weight of each projects are: (14)
    Projects
    Beta
    Weight
    A
    1.2
    0.10
    B
    0.9
    0.15
    C
    1.5
    0.20
    D
    2.1
    0.25
    E
    1.8
    0.30
    When risk free return is 9% and relevant market return is 14% work our
    expected return of the company and weighted average cost of capital.
    OR
    Q-4 Details of A Ltd. and B Ltd. are given below:

    Q-5 (a)
    (b)

    (a)
    (b)

    Particulars
    A Ltd. (Rs.)
    B Ltd. (Rs.)
    Labilities
    Equity Share Capital (Rs. 10 each) 400,000
    180,000
    General Reserve
    500,000
    100,000
    P.& L. A/c
    300,000
    80,000
    Debenture
    350,000
    -Creditors
    200,000
    100,000
    Bills Payable
    50,000
    40,000
    Total
    1800,000
    500,000
    Assets
    Fixed Assets
    700,000
    300,000
    Investments
    500,000
    -Current Assets
    600,000
    200,000
    Total
    1800,000
    500,000
    A Ltd. Wants to take over B Ltd. Ascertain share exchange ratio
    assuming that above values are market values.
    Explain Walters Dividend model and Gordons Dividend model.
    What is risk management? Describe its objectives and steps to be taken
    in risk management.
    OR
    Define Capital structure and explain Modigliani & Millers irrelevance
    theorem pertaining to capital structure.
    Write a short note on time value of money.
    **************

    (14)

    (7)
    (7)

    (7)
    (7)

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