Special Studies in Finance Prelims Question Paper 2014 by Ganesha Classes

PRELIM-II /SSF/17/10/2014

2 ½ Hours                                          Ganesha Classes                              Total Marks:75

N.B.:      1)      Q.2. to Q.4. having internal option.

2)   All Questions are compulsory

3)   Specify notes and assumption (if any)

Q.1. Answer the following (Any TWO) –                                                                                         (15)

1. a) From the following data pertaining to Ojha Ltd. for the year ended 31st march, 2010, you are required

to calculate missing figures.

 Sales Value Income Average Investment Sales Margins Capital turnover(Times) ROI% Economic Valued Added Rs. Weighted Average cost of capital Rs.20,00,000 Rs.4,00,000 Rs. 5,00,000 ? ? ? ? 8%

1. b) Sunshine limited reported income after tax Rs.90,000 for the financial year 2013-2014. Compute the provision for income tax and deferred tax asset/liability. The following data are provided.
 Rent received in advances Rs.16,000 Income from exempted government bonds Rs.20,000 Depreciation deducted for income tax purpose in excess of depreciation reported for accounting income. Rs.10,000 Income tax rate 35%

1. c) Discuss the Steps in Initial Public Offering?

Q.2. Answer the following (Any TWO) –                                                                                         (15)

1. a) On January 1, 2003 a railway company buys on the hire purchase system a truck for Rs.48,000 payable

Rs.12,000 down and three annual instalments of Rs.12,000 each combining principle and interest the

latter being at the rate of 5% p.a. Reference to the table shows that the present value of the annuity of one rupees for the three at 5% is Rs.2.72335. Show calculation of Interest

1. b) Ram Prasad takes an asset on finance lease from Shyam Prasad the terms of which are given below:

Lease term:                                                             4 years

Fair value at the inception of the lease:                  Rs.12,50,000

Lease rent:                                                              Rs.4,00,000 at the end of year

Guaranteed residual value                                      Rs.85,000

Expected residual value                                         Rs.1,88,900

Implicit rate of interest                                           15%

You are required to show how the accounting is done in the books of lessor.

Q.3. Answer the following (Any TWO) –                                                                                         (15)

1. a) On 1st January, 2004, Masoom Ltd; an Indian Importer, purchased \$ 2,50,000 worth goods from the Genius Trading Company of USA.

The payment for the import was made as follow:

On 10th February, 2004                    –           \$ 1,00,000

On 15th March, 2004                        –           \$    75,000

On 20th April, 2004                          –           \$    75,000

Masoom limited closes its book on 31st March every year.

The exchange rate for 1\$ was follow:-

1st January 2004                               –           Rs.49.00

10th February, 2004                          –           Rs.49.50

15th March, 2004                              –           Rs.47.60

31st March, 2004                              –           Rs.45.00

20th April, 2004                                –           Rs.46.75

Prepare Foreign Exchange Account for the year 2003-04, 2004-05, in the books of Masoom Ltd.

1. b) Explain needs and importance of project Report

1. c) Discuss in Brief pre-issues and post-issue function of Merchant Bankers.

Q.4.  Answer the following – (Any TWO) –                                                                                     (15)

1. a) The Chief Accountant of LMN Ltd. Gives the following data regarding its six segments.
 Segments=> M N O P Q R Total Segment assets 4 8 3 2 2 1 20 Segment results 5 -19 1 1 -1 3 -10 Revenue 30 62 8 6 8 6 120

The chief accountant is of the opinion that segment “M” and “N” alone should be reported. Is he justified in his view? Discuss

1. b) What is underwriting? Explain the Method of Underwriting.

1. c) Explain briefly the main Credit Rating Agencies in India?

Q.5.   Silver Line Chemical Pvt. Ltd proposes to set up a chemical plant at Banaras for processing the industrial waste into a marketable product BHU. The product has a demand for 40,000 litres.

The processing cost includes variable cost Rs.6 per litres and fixed cost (excluding depreciation) Rs.25,000 p.a. Advertisement expenses are also expected to be Rs.12,000 p.a. which is not included in fixed cost.

BHU can be sold at Rs.15 per litres. Raw material (input) is available at Rs.1.50 per litres. The Capital investment is Rs.12,00,000. The Company has applied to IFCI for a loan of Rs.9,00,000 for a term of 6 years that is over life of the asset. Loan is repayable in 6 equal installment along with interest at the end of each year. Rate of Interest is 10% p.a.

Income tax rate @ 30%.

You are required to –

1. Give cash flow generated by the above project for the first 5 year only. (05)
2. Calculate Debt Service Coverage ratio for the above 5 years. (05)
3. Prepare Flash Report presenting the above information to the Financial Institutions. (05)

All the best…..

……. Ganesha Classes

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