IGNOU BCOE-143 December 2023 Previous Year Question Paper

Q1.(a) “Wealth Maximisation is an important objective of Financial Management. ” Explain briefly. 10

(b) Discuss the classification of source s of finance.

Q2.(a) Explain the different techniques to measure risk. 10

(b) Discuss the Capital Asset Pricing Model. 10 [ 2 ]

Q3.A company is considering the purchase of two machines with the following details : 20 Machine I Machine II Life estimated 3 years 3 years Capital Cost ` 10,000 ` 10,000 Net Cash flows : ` ` 1st year 8,000 2,000 2nd year 6,000 7,000 3rd year 4,000 10,000 You are required to suggest which machine should be preferred, using :

(a) Pay-back period method

(b) Discounted cash flow method and NPV method (using 10% discount factor).

Q4.(a) What is Leverage ? Discuss the types of Leverages. 10

(b) X Ltd. issues 50000 , 8% debentures of ` 10 each at a premium of 10%. The costs of floatation are 2%. The rate of tax applicable to the company is 60%. Compute the Cost of Debt Capital. 10 [ 3 ]

Q5.(a) What is Dividend ? Discuss the types of dividend policy. 10

(b) What is working capital ? Discuss the types of working capital.

Q6.(a) What is Inventory ? Discuss the techniques of inventory management. 10

(b) Discuss the methods of preparing the Cash Budget.

Q7.The earnings per share of a company are ` 10 and the rate of capitalisation applicable to it is 10%. The company has before it the options of adapting a payout of 20% or 40% or 80%. Using Walt er’s formula , compute the market value of the company’s share if the productivity of retained earnings is

(i) 20% ,

(ii) 10% , and [ 4 ]

Q8.What is Capital Structure ? Discuss the theories of capital structure of a firm.

Q9.Write explanatory notes on any two of the following : 10+10

(a) Weighted Average Cost of Capital

(b) Types of Bonds

(c) Methods of valuation of shares

(d) Optimal capital structure 2023 -143

(ii) ` 10,000 ` 10,0

(00)

Q10.000 2,000

Q11.000 7,000

Q12.000 10,000 NPV 10% 60% 10% 20% 80% [ 8 ]