USN Izl/IB.A22

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(10 Marks)

(03 Marks)(07 Marks)

Second Semester MBA Degree Examination, Dec.2013 /Jan.2ol4Quantitative Methods - ll

Time: 3 hrs. Max. Marks:100Note:

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? , ,. ,. , , ,, l)a--,3. Use of statisticsl tables permitted.

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a. What is degeneracy of transportation problem?b. Write the dual of the following LPP.

Maximize Z:3xr 1- 4xz + 7xz

Subject to, X1 * X2 + x3 < 10

4xt *xz-xr > 15

xr i,x: * xt : 7 ; X1 , X2 ) 0, x3 unrestricted.c. A stockiest of a partictrlar commodity makes a profit of '30 on each

same week of purchase; otherwise he incurs a loss of,30 on each item.data are given below:

(i) Find omaximize the profit.

(ii) Calculate the expected value of perfect information.

Define Operations Research.Solve the following game usgame usrng graptuca

B's stratesvbr bz ,,,,b3 bt

A's strategy dt 8 5 -7 9

dz -6 6 4

c. A company manufactures 30 units/day. The sale of these items depends upon demand whichhas the f,otrlowing distribution.

Sales (units.; Probability27 0.1028 0.1529 0.2030 0.3531 0.15)Z 0.0s

The production cost and sale price of each unit are '40 and ' 50 respectively.product is to be disposed off at a loss of ' 15 per unit. There is a penalty of ' 5 per unit if the

demand is not met using the following random numbers, estimate the total profit/loss for thecompany for the next 10 days.

10, 99, 65, 99,95, 01, 79, ll, 16,20If the company decides to produce 29 units per day, what is the advantage or disadvantageof the company? (lo Marks)

No. of items sold within the same week 5 6 7 8 9 10 11

Frequency 0 9 t2 24 9 6 0

t fhe onfimrrm memher of items the stoc kiest slroulc every week

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4 a. Give a general structure of queuing system and explain. Illustrate some queuing situations.(05 Marks)

b. Find the sequence that minimizes the total elapsed time required to complete the following

c. A tlpist at an office receives, on an average 22 letters per day of typing. The typist works

8 hours a day and it takes on an average 20 minutes to type a letter. The company has

determined that the cost of a letter waiting to be mailed (opportunity cost) is 80 paise per

hour and the equipment operating cost plus salary of the typist will be - 40 per day.

(i) What is the tlpists utilization rate?(ii) What is the average number of letters waiting to be typed?(iii) What is the average waiting time needed to have a letter typed?(iv) What is the total cost of waiting letters to be mailed?

jobs on machines Mr, \42 and M: in the order M, (05 Marks)

a. What is the redundant constraint?

b. Explain the steps followed in solving the operations research problems.

c. Consider the following game and solve by algebraic method.Player B

Plaver A 1

2

a. What are the steps/phases in simulation? Explain.

b. Explainthe op€rating characteristics of queuing system.

below:

IziMBA22

(03 Marks)

(07 Marks)

(10 Marks)

(10 Marks)

(05 Marks)

(05 Marks)

c. A small proi ists of activities whichconslsls oI seven aouvllres wnlull are grven

Activity DurationMost Likelv Ootimistic Pessimistic Immediate Predecessor

A aJ 1 7

B 6 2 14 AC

1J J aJ A

D 10 4 22 B.CE 7

1J 15 B

F 5 2 14 D,EG 4 4 4 D

Draw the network, number of nodes, find the critical path, expected project

completion time and the next most critical path.

What project duration will have 95o/o confidence of competition? (10 Marks)

(D

(ii)

Job A B C D E F

Mr 8 J 7 2 5 1

Mz J 4 5 2 6

M: 8 7 6 9 l0 9

aJ 1 4

6 7 1

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/ I2M.BA22

feasible solution of the following transportation problem by least cost(05 Marks)

6 a. Find the initialmethod.

7a.

b. A small maintenance project consists of following jobs whose precedence relationsidentified with their nodes numbers:

Activity Duration(days)

1-2 2

1-3 4

1-4 3

2-53-5 6

4-6 5

5-6

(15 Marks)

Required:(i) Draw project network.(ii1 Find the critical path and total project duration.(iiil Find the earliest and latest start time and earliest and latest finish time.(iv) Find total floal. lree float and independent float.

There are 4 plants with capacity I00, 150,204,50 units and 4 warehouses with demand 50,150, 100, 100. The marketing manager is assigning new MBA graduate joined to use TPMmodel. Without altering the data is it possible to apply transportation model? Why?

A social entrepreneur is tretplng 2 persons who are pfaying a game. Player "

*J'i,Xll-ilare under assumption that the loss of one person will be a benef,it to social entrepreneur?How do you convince the player? (05 Marks)Three operators are to be assigned to three machines based on the operational time.Supervisor suggest to use OR techniques, whereas operator wants experience base. Who is

-;;: * Marks)

b.

correct? Why? (05 Marks)d. Customers in a bank always complaint about delay in service extended. Bank manager has a

problem of resource for appointing more employees. IF you are consultant, how do yousuggest an optimal solution? (05 Marks)

Assume you have inherited - 100000 fiom your father in law that can be invested in a

combination of only two stock portfolios, with the maximum investment allowed in eitherportfolio set at'75000. The first portfolio has an average return of 70Yo, whereas the second has20Yo, in terms of risk factors associated with these portfolios, the first has a rating of 4 (on ascale from 0 to 10), and the second has 9. Since you want to maximize your return, you will notaccept an average rate ofreturn below l2oh or a risk factor above 6. Hence, you then face theimportant question, how much you invest in each portfolio. You are required to:(i) Formulate this as a linear programming problem. (ii) Solve i ical method.

Wr Wz Wr Sunnliers

F1 48 60 56 140

Fz 45 55 53 260F: 50 65 60 360

Fa 52 64 55 220

Demand 200 320 250

USN 12MBA25

leverage, financial leverage and composite leverage from the following

Second Semester MBA Degree Examination, Dec.2013/Jan.20l4Financial Management

Time: 3 hrs. Max. Marks:100Note: 1. Answer any TI{REEfull questionsfrom Q.No.l to 6.

" 2. Q.No.7 and Q.No.8 ure compulsory.

, 3. Use of time value tubles is permitted.

1 a. Mention any three factors influencing capital structure. ' :, (03 Marks)

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b. Calculate operatingdata:

Sales (100000 units) : ' 2,00,000Fixedcost:-65000

Variable cost per unit: '0.70

Interest chargei: ' 15000 (07 Marks)

c. From the following:inf,ormation you are required to estimate the net working capital:Cost per unit (')

Raw materials ,, 400Direct labor 150

Overhead (excluding deprbciation) 300850

Additio nal information:Selling price : ' 1000 per unitOutput: 52000 unit P.A.Raw materials stock: Average 4 weeksWork-in-progress : Average 2 weeks

[Assume 50% completion stage with full material consumption]Finished goods in stock : Average 4 weeksCredit allowed to debtors : Average 4 weeksCredit allowed to cieditors: Average 8 weeks

Assume that production is sustained at an even pace during the 52 weeks of the year. Allsales are on credit basis. State any other assumption you might have lrads while .

,?fillllfl;,

a-

b.

c.

.....

What are the 3 functions of financial management?

Explain the factors affecting dividend policy of an organization.

Consider the cash flows of the following investment decision and rankvalue. Profitabilit index oayback period and accountins rate of return met

Investment Co Cr Cz C: C,{ Cs

A 20000 7000 6000 6000 5000 4000B 20000 5000 6000 7000 7000 8000

(03 Marks)

(07 Marks)

them on net presentethod.

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The required rate of return is 10%.

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(10 Marks)

3 a. A firm sells products for ' 1000 P.A. It has variable costs of '400 P.A and

cost of '5,00,000 per yeal. Show how EBIT would change if the firm sells

2000 units.

Write a brief note on the Indian financial system, its institutions and markets.

An investor hold the following portfolioShare Reta InvestmentAloha 0.6 '300000

Beta 1.0 1 80000

Carrot 1.2 120000

b.

c.

12MBA25

fixed operating1000 units and

(03 Marks)

(07 Marks)

(05 Marks)

Wh[i is the expected rate of return onthis portfolio, if the risk free

return on rnarket portfolio rs l5Yo?

...,'.

is'6% and the expected,, , (10 Marks)

4a.b.

c.

What is Red piospective and Green shoe option, ...,,. ,,

" " (03 Marks)

Explain in brief the,types of Hybrid o*".]ir_^ ^^^ .,,o.^.,,. .

(07 Marks)

i) A bank finance a,c4r purchase up to - 2,50,000 at lZYt interest per annum, fot a period

of 5 yrs. How much equated monthly installments can be fixed in this case?

ii) An executive is about to retire at the age of 60. His employer has offered him two post

retirement options.(a) 20,00,000 ' lumpsum (b) 2,50,00O'RS for 10 years. Assuming 10oZ interest, which

is a better option.iii) Mr. Raja requires ' 10 lakhs aftei'5 years He considers the following 2 options.

(a) To invest a single amouff of l0%o rate (b) TO invest annually at a rate of l}Yo

compounded annually. goW r,nu0h he need to invest in both the cases? (10 Marks)

5a.b.

What is working capitalmahagement? Explain opeiating cycle.

As a financial analybt,of a large electronics compalr, you are required to determine the

weighted average Coit of capital of the company using (a) book value weight (b) market

vahie weigtrt, f[e following information is available for youf'pe?sua1.

The company's present book value capital structure is

Debentures (- 100 per debenture)

Prefttence share (' 100 Per share)

' 8,00,000 ,,.,. ,,,, ,.,' 2,00.000

Equity share (' 10 per share) ' l0-00-0.00

all these securities are traded in the capital market recent prices are:

Debentures, ' 1 10 per debenture, Preference shares, ' 120 per share and equity shares '22 per

share.Anticipated external financing opportunities are :

(i) - 100 per debenture redeemable at par; 10 year maturity, 110% coupon rate, 4 percett

flotation cost, sale Price -

100.

(ii) ' 100 preference share redeemable at par; 10 year maturity, l2o/o dlrdendrate,5o/o

flotation costs, sale Price ' 100.

(iii) Equity shares :' 2 per share flotation costs, sale price : - 22'

In addition, the dividend expected on the equity share at the end of the year is '2 per share,

the anticipated growth rate in dividends is 7oh and the firm has the practice of paying all its

earnings in the form of dividends. The corporate tax rate is 35 percent.

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(15 Marks)

I I2MBA25

(05 Marks)

(05 Marks)

(10 Marks)

6a.b.

U..

7"a.

"Retained earnings is a cost free source of fund". Comment.

Bring out the difference between mergers and acquisitions.

Define derivatives. Explain the different types of derivatives.

b.

MSR Ltd. is in existence for the past 120 years. Majority of its shareholders are in the age

group of 70-80, who are very traditional. The finance manager thinks of giving a higher

dividend though his ROCE is greater than its cost of capital. Do you agree with him? Marks)

ABC Ltd. is planning to invest in a project. The manag_er has used_lhe accounting

information (PAT) from the projected financial statements and calculated NPV and decided

to go ahead with the investment. But the managing director is not convinced about the

decision. Which other tool(s) would the manager use? Why? (05 Marks)

RDP Ltd. has taken a loan from ICICI for its capital project. While claiming exemption theyhave taken the entiro equated annual installment as expense. Is this treatment comect?

Justifu. (05 Marks)

d. NMS Ltd. is worried about a verythe total leverage to the maximum

high level of operating leverage anL-Epla_1ning to reducepo ss i b le exte nt. H o w can, h.v i$ffiF.ilo,J.*,,u,,

, 4/ \'r.' '-'.^/€,69t{TrtAr- \-t.'LTBBA&v 7-,8 Case Study:

Ojus Enterprises is determining the cash flow for a project involvi of an oldmachine by a new machine. The old machine bought a lew years ago haST-Uoot value of- 400,000 and.it can be sold to realize a post tax salvage value of '500,000. It has a remaininglife of five years after which its net salvage value is expected to be - 160000. It is beingdepreciated annually at a rate of 25 percent under the written down value method. The workingcapital required for the old machine is '400"000.

The new machine costs -

1600000. It is expected to fetch a net,salvage of '800000 after 5

years when it will no longer be required. The depreciation rate applicable to it is 25oh under thewritten down value method. The net working capital required for the ne.w machine is '500000.

The new machine is expected to bring a saving of '300,000 annually in manufacturing costs(other than depreciation). The tax rate applicable to the frm is 40oh.

Ouestion:

Should the old machine be replaced by the new machine (Assuming cost of capital to be 107o)(20 Marks)

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