TUTOR MARKED ASSIGNMENT

Course Code : MCO - 07

Course Title : Financial Management

Assignment Code : MCO – 07/TMA/2017-18

Coverage : All Blocks

Maximum Marks: 100

Attempt all the questions.

1. a) What is weighted average cost of capital? Examine the rationale for using weighted

average cost of capital?

b) Calculate the cost of equity for a firm whose share price in Rs 120. The dividend at

the end of year is expected to be Rs 9.72/Share and growth rate is 8%.

2. a) What is financial leverage ? Examine the impact of financial leverage on the EPS.

Does the financial leverage always increase EPS? Explain.

b) The information relating to X & Co. is given below:-

EBIT = Rs 11, 20,000

PBT = Rs 3, 20,000

Fixed Cost = Rs 7, 00,000

Calculate the change in EPS if sales are expected to increase by 5%.

3. a) What do you understand by stable dividend policy? Why should the firms

follow it?

b) Explain the internal and external factors that influence in the company’s capital

structure.

4. a) Investment decisions and finance decisions are interrelated, comment.

b) Define financial management. Explain its basic objectives.

5. a) What are the reasons to hold inventory?                                               

b) Discuss the techniques available to monitor the receivables with examples.