Executive MBA Corporate Finance June 2007 Paper

For More Papers Visit http://www.IGNOUGuess.com IGNOU Papers -IGNOU Forum – IGNOU Articles @IGNOUGuess.com COMMONWEALTH EXECUTIVE MBA /MPA PROGRAMME Term -End Examination June, 2007 E-10: CORPORATE FI NANCE Time: 3 hours Maximum Marks: 100 (Weight age 70%) Note: Attempt any three questions from Section A. Section B is compulsory, All questions carry equal marks. Present value and annuity tables would be provided if asked for; SECTION A 1. (a) What aye the various forms of business organizations ? Explain their advantages and disadvantages. (b) Explain the concept of agency problem and discuss the ways and means to control the same. 2. (a) What set of ratios will you use to find out: (i) Effective utilization of resources? (ii) Value of an organization for investment purpose? Discuss. (b) What factors are taken into consideration while making lease or buy decision? Discuss fully. 3. What are Convertible Securities? Explain the process of Valuation of convertible securities. 4. What are mergers and acquisitions? What are the synergies created by mergers and acquisitions? 5. "Many of the decisions made in a domestic company and an international company are the same, but the risks involved may be quite different.” Explain this statement and describe the risks involved in case of international companies. SECTION B 6. A lesser may purchase equipment for Rs. 1, 00,000. It has a five-year life and the lease will be for 5 years. The projected salvage value is Rs.10, 000 to be discounted at 25%. The company is earning 10% (after taxes) on its marginal For More Papers Visit http://www.IGNOUGuess.com IGNOU Papers -IGNOU Forum – IGNOU Articles @IGNOUGuess.com investments. Determine the annual lease payments made at the start of each year and than at the end of each year. 7. Prepare cash budget of a company for April, May and June 2006 in a columnar from using the following information: Months Sales Purchases Wages Expenses January 80,000 45,000 20,000 5,000 (Actual) February 80,000 40,000 18,000 6,000 (Actual) March 75,000 42,000 22,000 6,000 (Actual) April 90,000 50,000 24,000 7,000 (Budgeted) May 85,000 45,000 20,000 6,000 (Budgeted) June 80,000 35,000 18,000 5,000 (Budgeted) You are further informed that: (i) 10% of the purchases and 20% of the sales are for cash. (ii) The average collection period of the company is ½ month and the credit purchases are paid off regularly after one month. (iii) Wages are paid half-monthly and the rent of Rs.500 included in expenses is paid monthly. (iv) Case and bank balances as on April 1st was Rs. 15,000 and the company wants to keep it at the end of every month below Rs. 15,000 (but not less than Rs. 14,000), the excess cash being put in fixed deposits in multiplies of Rs. 1000.