Business Finance Old Question Paper Year 2017

Brief answer questions: [10*1=10]

Indicate whether the following statements are “True’ or ‘False’. Support your answer with reason.

Wealth maximization goal is superior to profit maximization.
Present value of Rs.1,000 due in four year, at 10 percent discount rate isRs.683.
If the equity multiplier is 2.0, the debt ratio must be 04.
Value of short-term bond changes more than the value of long-term bond for a given change in discount rate.
Return on equity (ROE) is the product of net profit margin and total asset turnover.
Value of Rs.100, 12 percent preferred stock at 10 percent required rate will be Rs.83.33
When IRR equals to cost of capital, NPV equals to zero.
Higher day’s sales outstanding (DSO) is desirable.
If we combine positively correlated assets, we can eliminate the significant portion of risk.
A firm’s current asset and fixed assets are Rs.100,000 and Rs.200,000respectively. If firm’s current liabilities is Rs.70,000 amount of net working capital will be Rs.30,000