1. Izl/IB.A22
USN
Second Semester MBA Degree Examination, Dec.2013 /Jan.2ol4
Quantitative Methods - ll
Time: 3 hrs.
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(03 Marks)
What is degeneracy of transportation problem?
Write the dual of the following LPP.
Maximize Z:3xr 1- 4xz + 7xz
Subject to, X1 * X2 + x3 < 10
4xt *xz-xr > 15
(07 Marks)
xr i,x: * xt : 7 ; X1 , X2 ) 0, x3 unrestricted.
A stockiest of a partictrlar commodity makes a profit of '30 on each sale made within the
same week of purchase; otherwise he incurs a loss of,30 on each item. The data on the past
data are given below:
8
9 10 11
No. of items sold within the same week 5 6 7
0
0 9 t2 24 9 6
Frequency
(i) Find o t fhe onfimrrm memher of items the stoc kiest sl roulc buy every week in order to
maximize the profit.
(10 Marks)
(ii) Calculate the expected value of perfect information.
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(03 Marks)
(07 Marks)
Define Operations Research.
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Solve the following game usrng graptuca
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A company manufactures 30 units/day. The sale of these items depends upon demand which
has the f,otrlowing distribution.
Sales (units.;
Probability
27
28
29
30
0.10
0.15
0.20
0.35
0.15
0.0s
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production cost and sale price of each unit are '40 and ' 50 respectively.
The
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 the
company for the next 10 days.
10, 99, 65, 99,95, 01, 79, ll, 16,20
If the company decides to produce 29 units per day, what is the advantage or disadvantage
(lo Marks)
of the company?
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2. IziMBA22
a.
b.
c.
What is the redundant constraint?
(03 Marks)
Explain the steps followed in solving the operations research problems.
(07 Marks)
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?
is the average waiting time needed to have a letter typed?
(iv) What is the total cost of waiting letters to be mailed?
(iii) What
(10 Marks)
4 a.
Give a general structure of queuing system and explain. Illustrate some queuing situations.
b.
Find the sequence that minimizes the total elapsed time required to complete the following
(05 Marks)
jobs on machines Mr, 42 and M: in the order M,
B
C
D
E
F
A
Job
2
5
1
J
7
8
Mr
(05 Marks)
Mz
5
2
8
7
6
9
6
l0
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Consider the following game and solve by algebraic method.
Player B
Plaver
a.
b.
c.
4
M:
c.
J
A
a
1
J
1
2
6
7
(10 Marks)
4
1
What are the steps/phases in simulation? Explain.
(05 Marks)
Explainthe op€rating characteristics of queuing system.
(05 Marks)
aouvllres wnlull
ists oI
A small proi conslsls of seven activities which are grven below:
Duration
Activity
Ootimistic Pessimistic Immediate Predecessor
Most Likelv
a
7
1
J
A
14
A
2
B
6
a
1
J
J
A
J
C
22
B.C
4
10
D
1
E
7
J
15
B
F
5
2
14
D,E
G
4
4
4
D
(D
Draw the network, number of nodes, find the critical path, expected project
(ii)
completion time and the next most critical path.
What project duration will have 95o/o confidence of
2 of3
competition?
(10 Marks)

3. I2M.BA22
/
6 a.
Find the initial feasible solution of the following transportation problem by least
cost
(05 Marks)
method.
Sunnliers
Wz
Wr
60
56
140
Fz
Wr
48
45
55
53
260
F:
50
65
60
360
220
F1
Fa
b. A small maintenance
52
64
55
Demand
200
320
250
project consists of following jobs whose precedence relations
identified with their nodes numbers:
Activity
Duration
(days)
1-2
2
1-3
4
1-4
2-5
3-5
4-6
5-6
3
6
5
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.
7a.
b.
(15 Marks)
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 TPM
model. 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-il
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are 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
d.
(05 Marks)
correct? Why?
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 you
(05 Marks)
suggest an optimal solution?
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 either
portfolio set at'75000. The first portfolio has an average return of 70Yo, whereas the second has
20Yo, in terms of risk factors associated with these portfolios, the first has a rating of 4 (on a
scale from 0 to 10), and the second has 9. Since you want to maximize your return, you will not
accept an average rate ofreturn below l2oh or a risk factor above 6. Hence, you then face the
important 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.
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4. 12MBA25
USN
Second Semester MBA Degree Examination, Dec.2013/Jan.20l4
Financial Management
Max. Marks:100
Note: 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.
Time: 3 hrs.
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1 a.
b.
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Mention any three factors influencing capital
data:
Sales (100000 units)
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: ' 2,00,000
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(03 Marks)
(07 Marks)
From the following:inf,ormation you are required to estimate the net working capital:
Cost per unit (')
400
Raw materials
,,
150
Direct labor
Overhead (excluding deprbciation) 300
850
Additio nal information:
Selling price : ' 1000 per unit
Output: 52000 unit P.A.
Raw materials stock: Average 4 weeks
Work-in-progress : Average 2 weeks
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[Assume 50% completion stage with full material consumption]
: Average 4 weeks
Finished goods in stock
Credit allowed to debtors : Average 4 weeks
Credit allowed to cieditors: Average 8 weeks
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Assume that production is sustained at an even pace during the 52 weeks of the year.
sales are on credit basis. State any other assumption you might have lrads while
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Variable cost per unit: '0.70
Interest chargei: ' 15000
Fixedcost:-65000
c.
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Calculate operating leverage, financial leverage and composite leverage from the following
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structure.
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a-
What are the 3 functions of financial management?
(03 Marks)
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b.
Explain the factors affecting dividend policy of an organization.
(07 Marks)
c.
Consider the cash flows of the following investment decision and rank them on net present
ethod.
value. Profitabilit index oayback period and accountins rate of return met
Cs
Cr
Cz
C:
C,{
Investment
Co
20000 7000 6000 6000 5000 4000
A
20000 5000 6000 7000 7000 8000
B
(10 Marks)
The required rate of return is 10%.
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5. 12MBA25
3 a.
of '400 P.A and fixed operating
cost of '5,00,000 per yeal. Show how EBIT would change if the firm sells 1000 units and
A firm sells products for ' 1000 P.A. It
has variable costs
2000 units.
(03 Marks)
b.
Write a brief note on the Indian financial system, its institutions and markets.
(07 Marks)
c.
An investor hold the following portfolio
Aloha
Reta
0.6
Beta
Investment
'300000
1.0
Share
80000
120000
1
...,'.
1.2
Carrot
onthis portfolio, if the risk free is'6% and the expected
Wh[i is the expected rate of return
,, ,
(10 Marks)
return on rnarket portfolio rs l5Yo?
4a.
What is Red piospective and Green shoe option,
b.
Explain in brief the,types of Hybrid
c.
i)
ii)
iii)
5a.
b.
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(03 Marks)
(07 Marks)
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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?
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.
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
(10 Marks)
compounded annually. goW r,nu0h he need to invest in both the cases?
(05 Marks)
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
8,00,000 ,,.,. ,,,,
Debentures (- 100 per debenture)
2,00.000
100 Per share)
Prefttence share
' l0-00-0.00
Equity share (' 10 per share)
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'
'2 per share,
In addition, the dividend expected on the equity share at the end of the year is
the anticipated growth rate in dividends is 7oh and the firm has the practice of paying all its
(15 Marks)
earnings in the form of dividends. The corporate tax rate is 35 percent.
2 of3

6. I
I2MBA25
6a.
"Retained earnings is a cost free source of fund". Comment.
(05 Marks)
b.
Bring out the difference between mergers and acquisitions.
(05 Marks)
U.
Define derivatives. Explain the different types of derivatives.
(10 Marks)
.
7"a.
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)
b.
ABC Ltd. is planning to invest in a project. The
manag_er has used_lhe accounting
(PAT) from the projected financial statements and calculated NPV and decided
information
to go ahead with the investment. But the managing director is not convinced about the
(05 Marks)
decision. Which other tool(s) would the manager use? Why?
RDP Ltd. has taken a loan from ICICI for its capital project. While claiming exemption they
have taken the entiro equated annual installment as expense. Is this treatment comect?
(05 Marks)
Justifu.
d.
NMS Ltd. is worried about a very high level of operating leverage anL-Epla_1ning to reduce
the total leverage to the maximum po ss i b le exte nt. H o w can, h.v
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Case Study:
a
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of an old
Ojus Enterprises is determining the cash flow for a project involvi
machine 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 remaining
life of five years after which its net salvage value is expected to be - 160000. It is being
depreciated annually at a rate of 25 percent under the written down value method. The working
capital 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 the
written 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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