MMPC14 2023 SOLVED ASSIGNMENT

Description

Course Code : MMPC-014
Course Title : Financial Management
Assignment Code : MMPC-014/TMA/JAN/2023
Coverage : All Blocks
Note: Attempt all the questions and submit this assignment to the Coordinator of your
study centre. Last date of submission for January 2023 session is 30th April, 2023
and for July 2023 session is 31st October, 2023.

1. Discuss the concepts of ‘Profit maximisation’ and ‘Wealth maximisation’ and analyse which
concept is superior to be an objective of a Firm.
2. Meet the Finance Manager of a company/firm of your choice and discuss with him the
different sources of Working capital available to the firm. Also discuss which source is better
for his firm and why? Write a note on your meeting.
3. Explain the relevance Theories of Dividend and comment which theory is more suited to the
Indian Business Environment.
4. Good garden Company has currently an ordinary share capital of Rs 25 lakh, consisting of
25,000 shares of Rs 100 each. The management is planning to raise another Rs 20 lakhs to
finance a major programme of expansion through one of four possible financing plans. The
options are as under :
(a) Entirely through ordinary shares.
(b) Rs. 10 lakh through ordinary shares, and Rs. 10 lakh through long-term borrowings at
15% interest per annum.
(c) Rs. 5 lakh through ordinary shares, and Rs. 15 lakh through long-term borrowings at 16%
interest per annum.
(d) Rs. 10 lakh through ordinary shares, and Rs. 10 lakhs through preference shares with
14% dividend.
The company’s expected EBIT will be Rs. 8 lakh. Assuming a corporate tax rate of 50%,
determine the EPS in each alternative, and comment on the implications of financial leverage
5. Arun Engineering Co. is considering two investments. Each requires an initial investment of
Rs 1,80,000. The cost of capital is 8%. The total cash inflow after tax and depreciation for
each project is as follows:
Year Project A (Rs.) Project B (Rs.)
1 30,000 60,000
2 50,000 1,00,000
3 60,000 65,000
4 65,000 45,000
5 40,000 —
6 30,000 —
7 16,000 —
Calculate the Payback Period, Profitability Index and Net Present Value of both the projects