IGNOU MCO-07 June 2020 Previous Year Question Paper

Q1.(a) Explain profit maximisation and wealth maximisation objectives of the firm. 10

(b) Examine the inter-relationship among investment, financing and dividend decisions. ,

(a) What is Capital Budgeting? Briefly explain the steps involved in capital budgeting process. 4+6

(b) What are cash flows? How are they different from profit? What is their importance in capital budgeting decisions? 2+5+3 Discuss the different appr -oaches to the valuation of equity shares.

Q2.What is meant by inventory control? Explain the techniques of inventory control. 4+16 MC0-07 / 12910 / 6 (11 1111111111111111111111 •

Q3.Following is the information of 'X' and 'Y' companies : Particulars (Rs. Lakhs) (Rs. Lakhs) Sales 500 1,000 Variable Cost 200 300 Contribution 300 700 Fixed Cost 150 400 EBIT 150 300 Interest 50 100 PBT 100 200 You are required to calculate

(a) operating leverage

(b) financial leverage of both the companies and

(c) comment on their relative position in respect of risk. 8+8+4

Q4.(a) What are the important factors to be considered in planning a capital structure of a firm? 10

(b) Explain the M & M view on corporate dividend decisions. What are its basic assumptions?

Q5.(a) What is the importance of determination of cost of capital? 8

(b) Shipra Ltd. issues Rs. 100 face value preference shares with a dividend of 12% MC0-07 / 12910 / 6 repayable after 10 years. The net amount realized per share is Rs. 92. Calculate the cost of preference share capital. 12 What is cash budget? What is the method of preparing cash budget and what are its advantages? 4+10+6

Q6.Write notes on any two of the following : 10+10

(a) Capital asset pricing model

(b) Concept of risk and return

(c) Trade credit

(d) Lease financing. MCO-07 / 12910 /

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