IGNOU MCO-07 June 2018 Previous Year Question Paper

Q1.(a) Discuss the three important decision making areas of financial management. 10, 10

(b) What do you understand by 'risk' and 'return' ? What are the different measures of return ? Explain.

Q2.(a) "Capital budgeting expenditure is usually 5+5 an expenditure on a project". Elucidate how do you classify different kinds of projects ?

(b) What is NPV method ? How do you assess 5+5 the desirability of any project based on this method ?

Q3.(a) While computing cash flows of a project how do we treat the following items. 4+4+4

(i) Interest on debt

(ii) Salvage value

(iii) Taxes

(b) What is weighted average cost of capital ? 8 Explain with example. What is dividend ? Explain why do firms pay dividend. 10, 10 Explain the concept and rationale of 'share buy back' . What is the need for holding inventory ? What are the costs involved in holding inventory ? 10, 10 What is cash forecasting and how does it help in improving cash management ? Calculate Gross Working Capital and Net Working Capital from the information given below : 12, 8 Particulars

Q4.Raw material 8,00,000

Q5.Work in process : Raw Material 3,80,000 Direct labour 70,000 Overheads 7,00,000

Q6.Finished goods stock 9,00,000

Q7.Debtors 20,00,000

Q8.Cash at Bank 3,00,000

Q9.Creditors 4,00,000

Q10.Wages Unpaid 20,000 Explain the different forms of informal credit arrangements. Techno Ltd issues 100 face value 12 preference shares with a dividend of 12% repayable after 10 years. The net amount realised per share in 92. Calculate cost of preference capital.

Q11.What are the functions of a 'forex market' ?

Q12.What are bonds ? Explain the different types of 20 bonds and their advantages.

Q13.Write explanatory note on any two of the following : 10, 10

(a) Lease financing

(b) Role of stock exchanges

(c) Financial Leverage

(d) Project financing arrangements MCO-007 3 1T.it3it-007 al ul,314 tliich Tut wry ( TT. ) Tr-Ifff TRIATT 2018 711:11311.-007 : Peril q VT 3l-fiw -ff7T 31 : 100 twig : 3 EP4 : 70% : Ph-6 r/ra Trafr Mq-/T afw Fr/TV g/

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Q21.lictcht : olvall I TIM 3,80,000 31Mq 70,000 kcgiq 7,00,000

Q22.iR Jim teiq, 9,00,000

Q26.31-<u Tr -40 20,000

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(b) fir? rar-P-10-1 'VAR auk wlfq7 I

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