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ASSIGNMENT
| DRIVE | WINTER 2014 |
| PROGRAM | Bachelor of Commerce in Information System |
| SUBJECT CODE & NAME | BM0021-Financial Management |
| SEMESTER | 5 |
| BK ID | B0082 & B0083) |
| CREDITS | 4 |
| MARKS | 60 |
Answer all the questions. Each question carries 10 Marks.
1. Without proper administration and effective utilization of finance, no business enterprise can utilize its potentials for growth and expansion. Discuss
Answer : Small business and entrepreneurship form an integral part of a healthy national economy. The valuable contributions of small businesses are widely recognized by all sectors of society, as can be seen by the many efforts to aid small businesses taking place at the federal, state, and local level. Yet, in spite of this increased awareness access to capital continues to be the most difficult challenge for small business owners. The often cited
2. An investor can profitably employ a rupee received today to give him a higher value to be received tomorrow or after a certain period. Explain.
Answer : ‘Money has time value´. i.e, the value of money changes over a period of time The value of a rupee received today is different from the value of a rupee to be received after a year. A rupee today has value than a rupee after a year.
Factors contributing to the Time Value of Money
3. Mr. Ramanathan deposited Rs.5000 at the end of every year for 5 years in his savings account paying 4% interest compounded annually. Determine how much sum of money he will have at the end of the 5th year.
Answer : The formula to be used here is as follows:
A = P (1 + i)n, Where A = Amount, P
4. X ltd has issued 8% preference shares of Rs.100 each. The preference shares are redeemable after 5 years. The appropriate capitalization rate is 8%.
Answer : Here the question is not clear – but apparently the examiner wants you to calculate the value of the share which is calculated as follows:
5. Mr. Rao holds an equity share that gives him an annual dividend of Rs.20. He expects to the share price would be Rs.200 at the end of the year. Calculate the value of the share if the discount rate (required rate of return) is 12%. Should he hold / sell it?
Answer : To calculate the value of the equity share the following formulae has to be adopted:
Po = D1/(1+r) + P1/(1
6. Briefly explain Capital Budgeting Process.
Answer : The steps involved in the capital budgeting process are:
(i) Project Generation
(ii) Project Evaluation
(iii) Project Selection
(iv) Project Execution.
(i) Project Generation:
Investment proposals of various types may originate at different levels within a firm. The investment proposals may fall into one of the following categories:
1. (a) Proposals to add new product to the product line.
(b) Proposals to expand capacity in existing product lines.
2. Proposals designed to reduce costs in the output of existing products without altering the scale of operation.
The investment proposals of any type can originate at any level from top management level to the worker’s level. The proposal may originate systematically or haphazardly. In view of the fact that enough investment proposals shou
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
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or
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(Prefer mailing. Call in emergency )