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1. Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
help.mbaassignments@gmail.com
or
call us at : 08263069601
DRIVE
Winter 2017
PROGRAM
MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER
II
SUBJECT CODE & NAME
MBA202 – FINANCIAL MANAGEMENT
Assignment Set -1
1. From the below details, show the effect of the dividend policy on the market price of
company XYZ Ltd. shares using the Walter’s Model.
Equity capitalisation rate Ke is 10%
Earnings per share is given as Rs. 10
ROI (r) may be assumed as follows: 10% and 15%
Show the effect of the dividend policies on the share value of the firm for three different
levels of r, taking the DP ratios as 20%, 40%, 60%, 80% and 100%.
Explanation of concepts of working capital
Answer:K Ke 10%, EPS 10, r 10%, DPS=20
2. Explain the Cash Flow Estimation Principles.
Cash Flow Estimation Principles.
Answer: Principles of Cash Flow Estimation
Separation principle: The essence of this principle is the necessity to treat investment element
of the project separately (i.e. independently) from that of financing element. The financing cost
is computed by the cost of capital. Cost of capital is the cut off rate and rate of return expected
on implementation of the project. Therefore, we separately compute cost of funds for execution
of project through the financing ]
3. Financial planning means deciding in advance the financial activities to be carried on
to achieve the basic objective of the firm. Explain the factors that affect financial
planning.
Factors affecting Financial Plan
Answer: Factors Affecting Financial Plan

2.  Nature of the industry – The first factor affecting the financial plan is the nature of the
industry. Here, we must check whether the industry is a capital-intensive or labour-
intensive
Set 2
1. “Book value is an accounting concept”. Explain the factors of this concept.
Calculate the worth of the value of one share from the below details of Company ABC :
Current dividend is Rs. 10.
It expects to have a supernormal growth period running to 6 years during which the
growth rate would be 30%. The company expects normal growth rate of 10% after the
period of supernormal growth period. The investor’s required rate of return is 18%.
Factors explaining the concept of book value
Solution to the problem
Answer: Book value is an accounting concept. Value is what an asset is worth today in terms of
its potential
2. Explain the capital Budgeting process and its appraisals
Solve the below given problem:
Givenbelow are the details on the cash flows of two projects A and B. Compute pay-back
period for A and B.
Year Project A cash flows (Rs.) Project B cash flows (Rs.)
0 (4,50,000) (5,50,000)
1 3,00,000 2,00,000
2 1,50,000 2,50,000
3 50,000 3,00,000
4 2,00,000 3,50,000
5 1,00,000 2,00,000
Explanation of capital budgeting process and its appraisals.
Solution for the problem
Answer: Capital Budgeting Process
 A proposal should be commercially viable. The following aspects are examined to
ascertain the commercial viability of any investment proposal:
 Market for the product
 Availability of

3. Explain EOQ and Re – order point.
A manufacturing company has an expected usage of 1,00,000 units of a certain product
during the next year. The cost of processing an order is Rs 200 and the carrying cost per
unit per annum is Rs 2. Lead-time for an order is five days and the company will keep a
reserve of two days usage.
Calculate EOQ and Re – order point. Assume 250 days in a year.
Explanation of EOQ and Re – order point
Calculation of EOQ and Re – order point
Answer: Economic order quantity (EOQ)
Economic order quantity (EOQ) refers to the optimal order size that will result in the lowest
ordering and carrying costs

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Send your semester & Specialization name to our mail id :
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