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1. Dear students get fully solved
Send your semester & Specialization name to our mail id :
“ help.mbaassignments@gmail.com ”
or
Call us at : 08263069601
PROGRAM
BACHELOR OF BUSINESS ADMINISTRATION (BBA)
SEMESTER
V
SUBJECT CODE & NAME
BBA502 – FINANCIAL MANAGEMENT
Qus:1 Explain the limitations of Profit Maximization. What is Risk-return Trade-off and
Risk-free rate?
Answer: It suffers from the following limitations:
• It is vague
• It ignores the timing of returns
• It ignores risk
It is vague: The precise meaning of the profit maximization objective is unclear. The definition
of the term profit is ambiguous. Does it mean short- or long-term profit? Does it refer to profit
before or after tax? Total profits or
Qus:2 Write short notes on:
a) Budgeting and forecasting
b) Financial Budgets
c) Cost Centre

2. Answer: a) Budgeting and forecasting
A budget is not the same thing as a forecast. A forecast is the likelihood of events happening,
given the past data and expected changes. There is no assumption regarding the commitment
of management for realizing the forecast.
A budget is an expression of the management’s intentions of achieving forecasts through
positive and conscious actions and influencing the events. It embodies the managerial
commitment of ensuring the attainment of stated objectives. It involves a process of
negotiation, approval and review.
Qus:3 Explain cost of Internal Equity and cost of External Equity.
Answer: Cost of Internal Equity: Dividend-growth Model
A firm’s internal equity consists of its retained earnings. The opportunity cost of the retained
earnings is the rate of return foregone by equity shareholders. The shareholders generally
expect dividend and capital gain from their investment.
The required rate of return of shareholders can be determined from the dividend valuation
model.
Constant-Growth Model and the Cost of Equity
Qus:4
Solve the problem:
Determine the degree of operating leverage from the following
data:
S Ltd R Ltd
Sales 2,50,000 3,00,000
Fixed costs 75,000 1,50,000
Variable expenses is 50% of sales for firm S and 25% for firm R.
Answer:

3. VC = Variable cost
Qus:5 Explain the phases of Capital Investment Planning and Control. Why is Net
Present Value (NPV) important?
Answer: Capital Investment Planning and Control
There are five phases of capital expenditure planning and control, which are:
1. Identification (or origination) of investment opportunities
2. Development of forecasts of benefits and costs
3. Evaluation of the net benefits
Qus:6 Explain the Advantages and Disadvantages of Leasing.
Answer: Disadvantages of Leasing
We can now examine the disadvantages of leasing. Leasing does not provide 100 per cent
financing: One misconception about leasing is that it provides 100 per cent financing for the
asset as the lessee can avoid payment for acquiring the asset. The lessee, it is assumed, can
preserve his liquid resources for other purposes. When a firm borrows to buy an asset, cash
increases with borrowing and decreases by the same
Dear students get fully solved
Send your semester & Specialization name to our mail id :
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or
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