Question 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%.

Question 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%.

Question 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.

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

b) Define financial management. Explain its basic objectives.

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

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

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