Attempt all the questions

1. (a) Describe the three broad areas of financial decision making. (10) (b) Discuss the role and challenges of the financial manager in India. (10)

2. (a) What is an annuity? Explain and illustrate how is future value of an annuity determined. (3+7) (b) What are capital budgeting decisions? How is cost of capital relevant in capital budgeting decisions? (5+5)

3. The following are the details of a firm: Particulars Amount ( ) Sales 85,00,000 Variable Cost 52,00,000 Fixed Cost 7,00,000 Debts 55,00,000 (9%) Equity Capital 65,00,000 Calculate its operating, financial and combined leverage. What will be its new EBIT if sales drop to `60,00,000. (20)

4. (a) What is dividend irrelevance view? What are the assumptions used by Modi Giliani and Miller in support of the irrelevance of dividends? (4+6) (b) Discuss the determinants of divided payout ratio. (10)

5. (a) Explain the different methods of ascertaining working capital requirement. (10) (b) What is economic order quantity? Discuss the process of its determination. (5+5)