Exam Details

Subject corporate finance and tax management
Paper
Exam / Course m.b.a. (cm)
Department
Organization Alagappa University Distance Education
Position
Exam Date December, 2017
City, State tamil nadu, karaikudi


Question Paper

DISTANCE EDUCATION
M.B.A. DEGREE EXAMINATION, DECEMBER 2017.
Fourth Semester
CORPORATE FINANCE AND TAX MANAGEMENT
(2013 2014 Academic Year and 2014 Calendar Year
Onwards)
Time Three hours Maximum 100 marks
SECTION A — X 8 40 marks)
Answer any FIVE questions.
1. What are the goals of financial management?
2. Discuss the sources of long term finance.
3. A company has the following capital structure:
Securities Book value

After Tax Cost
(in per cent)
Equity Capital
Retained Earnings
Preference Capital
Debentures
8,50,000
2,25,000
1,50,000
10,00,000
15
10
18
6
22,25,000
From the above information, you are required to find out
the weighted average cost of capital of a company.
4. Discuss the types of leverage.
5. Explain the various techniques of capital budgeting.
Sub. Code
42
DE-3342
2
Sp 6
6. Discuss the tax consideration in remittances and
purchases.
7. What are the determinants of working capital?
8. Describe the Gordon dividend theory with a suitable
example.
SECTION B — × 15 60 marks)
Answer any FOUR questions.
9. Discuss the functions of finance manager.
10. Explain the book building process.
11. Explain the various capital structure theories.
12. A firm in the business of manufacture of automobile
components is considering two mutually exclusive
technologies for manufacture of hydraulic brakes. These
two technologies are designated as Option A and Option
B with project costs of Rs. 1,600 lakh and Rs. 1,850 lakh.
Depending upon various features of the product
obtainable from the two technologies the firm has
developed a forecast of cash flows for 5 years i.e. the life
of each project. These cash flows are as below:
Year Option A Option B
1 350.00 675.00
2 475.00 575.00
3 625.00 725.00
4 575.00 350.00
5 350.00 400.00
DE-3342
3
Sp 6
Option A is a familiar technology and therefore the firm
feels that the current cost of capital of 13% is the
appropriate discount rate. However, Option B is
considered riskier than the Option A and therefore firm
would like to use a discount rate of somewhat
higher than the current cost of capital.
Find out the following:
NPVs of the Option A and B
IRR of the Option A and B
Which option would you consider with NPV rule and
IRR rule?
13. What are the factors affecting dividend decisions?
14. Explain the dividend theories.
15. X Y Ltd is desirous to purchase a business and has
consulted you, and one point on which you are asked to
advice them, is the avenge amount of working capital
which will be required in the first year's working.
You are given the following estimates and are instructed
to add 10 percent to your computed figure to allow for
contingencies.
Particular Amount for the
year
Rs.
Average amount backed up
for stocks:
Stocks of finished product 5,000
Stocks of stores and materials 8,000
Average credit given:
Inland sales, 6 weeks' credit 3,12,000
Export sales, 1.5 weeks, credit 78,000
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Sp 6
Average time lag in payment of wages
and other outgoings:
Wages, 1.5 weeks 2,60,000
Stocks and materials, 1.5 months 48,000
Rent and royalties, 6 months 10,000
Clerical staff, 0.5 month 62,400
Manager, 0.5 month 4,800
Miscellaneous expenses, 1.5 months 48,000
Payment in advance:
Sundry expenses (paid quarterly in
advance) 8,000
Undrawn profits on an average
throughout the year 11,000
Set up your calculations for the average amount of
working capital required.



Subjects

  • business environment
  • business laws
  • business research
  • company law and practice
  • corporate accounting
  • corporate audit and compliance management
  • corporate finance and tax management
  • corporate governance
  • corporate restructuring
  • corporate social responsibility and ethics
  • corporate strategic management
  • financial and management accounting
  • global business and mncs
  • growth management
  • it for corporate management
  • management concepts
  • managerial economics
  • organisational behaviour
  • quality management
  • quantitative methods
  • securities laws and financial markets