OLD MODEL QUESTION OF FINANCE GRADE XII (12) 2069 2012

Model Question 2069 (2012)

finance

Subject: Finance | F.M.: 100 | P.M.: 35

Group A

Attempt all questions.

  1. Write in brief about finance functions. [5]
  2. What do you understand by Nepal Stock Exchange? Mention the functions of Nepal Stock Exchange. [2+3=5]
  3. Clarify the meaning of cash flow statement. Write about the cash flow from investment and financing activities with illustrations. [4+6=10]
  4. A Company needed Rs. 5,00,000 to increase working capital. It has three alternatives of financing available. [4+3+3=10]

a. Forgo cash discounts, granted on a basis of “2/10, net30”.

b. Borrow from the bank at simple interest rate of 10 percent, with compensating balance of 15 percent.

c. Issue commercial paper at 12 percent. The cost of placing the issue would be Rs. 5,000 each six months.

Required: Calculate annual percent cost for each alternative.

5. Define common share capital. Also mention the rights and privileges of common stockholders. [3+2=5]

6. Following information are provided: [2+2+1=5]

Common shares outstanding : 20,000 shares

Par value per share : Rs. 100

Share premium : Rs. 5,00,000

Retained earnings : Rs. 15,00,000

Total debt : Rs. 30,00,000

Required:

a. Total book value of equity.

b. Book value per share.

c. Debt equity ratio.

7. A Company plans to issue 5,000 preference shares of Rs. 100 each with a 12 percent dividend. [2+3=5]

Required:

a. Calculate cost of preference shares if it is selling at par.

b. Calculate cost of preferences shares if it is selling on the market for Rs. 120 and incurs Rs. 5 floatation cost per share.

8. The net cash flows to two proposed proposals are: [5+5=10]

Years 0 1 2 3 4
Proposal ‘A’ (Rs.) (20,000) 7,000 7,000 7,000 7,000
Proposal ‘B’ (Rs.) (20,000) 10,000 5,000 8,000 5,000

The cost of capital for each project is 10%

Required: Payback period and net present value.

9. a. State the importances of working capital.

b. The following information are provided:

Sale per day : 5,000 units

Selling price per unit : Rs. 10

Inventory conversion period : 20 days

Receivable conversion period : 30 days

Payable deferred period : 10 days

Required:

a. Cash conversion cycle period

b. Working capital

10. State the imporatnces of cash budget.

11. The following information is provided: [4+6=10]

Annual requirement : 80,000 units

Purchasing price per unit : Rs. 20

Carrying cost per unit 20% of purchasing price

Ordering cost per order : Rs. 400

Required: Economic order quantity by using formula method and tabular method.

12. The following information is provided: [2.5+2.5=5]

Days sales outstanding : 29 days

Annual sales : 20,000 units

Selling price per unit : Rs. 25

Required:

a. Average daily sales

b. Average accounts receivable

13. Write in brief about factors influencing dividend decision. [5]

14. What do you mean by multinational company? Distinguish between multinational financial management and domestic financial management. [5+5=10]

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