mco 21 solved assignment 2022 23

MCO-21 EM Solved Assignment 2022-23

₹ 100.00 Original price was: ₹100.00. ₹ 19.00 Current price is: ₹19.00.

Description

• Reviews (0)

There are no reviews yet.

Your email address will not be published. Required fields are marked *

Your review  *

Name  *

Email  *

Save my name, email, and website in this browser for the next time I comment.

Related products

AMK-01 Solved Assignment 2022-23

Aed-01-em solved assignment 2022-23, banc-133-em solved assignment 2022-23, bane-144-em solved assignment 2022-23.

Add to cart

IGNOU MCO 21 Solved Assignment 2022-23

₹ 100.00 Original price was: ₹100.00. ₹ 19.00 Current price is: ₹19.00.

MCO 21 ? Master of Commerce (MCOM) ? IGNOU Solved Assignment

University: IGNOU

Service Type: IGNOU Solved Assignment (Soft copy/PDF/Downloadable)

Course: MCOM

Language: ENGLISH MEDIUM

Session: 2022-2023

Delivery type: After successful payment, you will be redirected to the download page, now click on the download button and you will be able to download MCO 21 assignment solutions PDF file. You will also receive the download link on your mail. In addition, if you have any query or need any support please contact us on [email protected].

Finding the solutions of assignment questions in IGNOU Study Material is too difficult. Therefore, we create this solved assignment from our IGNOU MCO 21 Help Book strictly based on the IGNOU MCO 21 Assignment Question Paper. Reading of previous year solved assignments gives an idea of the type of questions asked in examinations. For example, this assignment solution will help students gain an understanding of the paper pattern and question forms that will be questioned in the exams. In conclusion, here is your chance to get best IGNOU MCO 21 Solved Assignment from our Guides/Reference Book and it will help you to improve your exam preparations.

You can also get IGNOU HANDWRITTEN ASSIGNMENTS @300Rs per subject

CLICK HERE to get a sample of Handwritten Assignment.

Delivery time: 8?10 working days after payment.

Description

• Reviews (0)

Are you looking for best quality IGNOU Solved Assignment Pdf Booklet? Therefore, we created IGNOU MCO 21 Solved Assignment with fully solved answers for your convenience. This is the perfect IGNOU MCO 21 Solved Assignment in a descriptive way for those students who wish to appear in upcoming TEE Examination and want to submit on their study centre. This IGNOU Solved Assignment MCO 21 is time saving for the students and they will get each and every solutions of the questions asked in the assignment. Answers are well explained and language is easy for better understanding. Above all, buy this MCO 21 Managerial Economics IGNOU Solved Assignment from IGNOU Study Material/Books and get best help for your coming examination.

There are no reviews yet.

Only logged in customers who have purchased this product may leave a review.

Related products

IGNOU MS-11 SOLVED ASSIGNMENT

IGNOU MS-51 SOLVED ASSIGNMENT

IGNOU MS-64 SOLVED ASSIGNMENT

IGNOU MS-63 SOLVED ASSIGNMENT

IGNOU MS-06 SOLVED ASSIGNMENT

Self Gyan Ignou

selfgyanignou.com

MCO-21 EM Solved Assignment 2022-23

₹ 100.00 Original price was: ₹100.00. ₹ 19.00 Current price is: ₹19.00.

Description

• Reviews (0)

There are no reviews yet.

Your email address will not be published. Required fields are marked *

Your review  *

Name  *

Email  *

Save my name, email, and website in this browser for the next time I comment.

Related products

BANE-145 EM Solved Assignment 2022-23

Bane-147 em solved assignment 2022-23, banc-133-em solved assignment 2022-23, babg-171 em solved assignment 2022-23.

Add to cart

Provide details on what you need help with along with a budget and time limit. Questions are posted anonymously and can be made 100% private.

Studypool matches you to the best tutor to help you with your question. Our tutors are highly qualified and vetted.

Your matched tutor provides personalized help according to your question details. Payment is made only after you have completed your 1-on-1 session and are satisfied with your session.

• Homework Q&A
• Become a Tutor

All Subjects

Mathematics

Programming

Health & Medical

Engineering

Computer Science

Foreign Languages

Access over 35 million academic & study documents

Mco 21 2022 23 mcom.

Sign up to view the full document!

24/7 Study Help

Stuck on a study question? Our verified tutors can answer all questions, from basic  math  to advanced rocket science !

Similar Documents

working on a study question?

Studypool is powered by Microtutoring TM

Copyright © 2024. Studypool Inc.

Studypool is not sponsored or endorsed by any college or university.

Ongoing Conversations

Access over 35 million study documents through the notebank

Get on-demand Q&A study help from verified tutors

Read 1000s of rich book guides covering popular titles

Sign up with Google

Sign up with Facebook

Already have an account? Login

Login with Google

Login with Facebook

Don't have an account? Sign Up

MCOM FIRST & SECOND SEMESTER 2022-23 – IGNOU – Solved Assignment Free Download (Updated)

MASTER OF COMMERCE – MCOM Solved Assignments for January 2022 and July 2022 Admission Cycles for all semesters i.e. (1st) First Semester, (2nd) Second Semester, (3rd) third Semester, (4th) Forth Semester

MCOM Tutor Marked Solved Assignment

M.COM FREE Solved Assignment for First, Second, Third and Forth Semester 2022 for IGNOU. These answers are compiled by experienced faculties. These assignments are for reference purpose and can help you in fetching goods marks.

Click Here to Buy Assignment Contact us For Hand Written Assignments Looking for MCOM 2021-22 Solved Assignments??? Click Here

MCOM FIRST SEMESTER 2022 MCO-01 : Organization Theory and Behaviour MCO-04 : Business Environment MCO-05 : Accounting of Managerial Decisions MCO-021 : Managerial Economics FIRST SEMESTER ASSIGNMENT QUESTION PAPER

MCOM SECOND SEMESTER 2022-23 MCO-06 : MARKETING MANAGEMENT MCO-22 : QUANTITATIVE ANALYSIS & MANAGERIAL APPLICATION MCO-23 : Strategic Management MCO-024 : Business Ethics and Corporate Social Responsibility SECOND SEMESTER ASSIGNMENT QUESTION PAPER

Note: These assignments are valid for two admission cycles (January 2022 and July 2021). Validity of assignments is given below: 1. Those who are enrolled in January 2022, it is valid upto June 2022 Term End Examination and you must submit assignment to the Coordinator of your study centre latest by 15th March 2022. 2. Those who are enrolled in July 2022, it is valid upto December 2022 Term End Examination and you must submit assignment to the Coordinator of your study centre latest by 15th September 2022.

In case you are unable to view above buttons in your device properly, you can access solved assignment through following links.

M.Com FIRST SEMESTER (1st Sem) & SECOND SEMESTER (2nd Sem)

DSpace JSPUI

Egyankosh preserves and enables easy and open access to all types of digital content including text, images, moving images, mpegs and data sets.

• IGNOU Self Learning Material (SLM)
• 07. School of Management Studies (SOMS)
• Master's Degree Programmes
• Master of Commerce (M.COM) English-New

MCO-021 Managerial Economics Community home page

Collections in this community, block-1 introduction to management economics, block-2 demand and revenue analysis, block-3 production and cost analysis, block-4 pricing decisions.

• 4 Pandey, Anupriya

• ignou assignment 2022-23

IGNOU MCO 01 Solved Assignment 2022-23

MCO 01 Solved Assignment 2022-23

ORGANISATION THEORY AND BEHAVIOUR

COURSE CODE : MCO 01

COURSE TITLE : ORGANISATION THEORY AND BEHAVIOUR

ASSIGNMENT CODE : MCO 01/TMA/2022

COVERAGE : ALL BLOCKS

Maximum Marks: 100

Attempt all the questions:

1. What are various principles of management ? How are modern organization different from typical classical organizations, in terms of practices of various principles of management?

2. (a) What do you mean by organizational behaviours? Explain meaning and scope of organizational behaviour. (b) What is effective communication? Discuss the significance of communication in an organization.

3. Comment briefly on the following statement: (a) Personality is shaped by the phsical structure of the body. (b) Stress is both physiological and psychological. (c) Job satisfaction has both positive and negative impacts. (d) Job design is essentially a strategy of human resource management.

4. Differentiate between the following: (a) Job enrichment and Job enlargement (b) Homogeneous groups and heterogeneous groups (c) Project organization and Matrix Organization (d) Approach approach conflict and approach avoidance conflict.

5. Write short notes on the following: (a) Role of reinforcement (b) Organizational culture (c) Group cohesiveness (d) Resistance to change

MCO 01 Solved Assignment 2022-23:  FREE IGNOU Assignment You can Get All students of university who needs to submit assignments should download old assignments of the respective course of 2022 available above and submit at the concerned study center. The last dates will be 30th April and 30th October of every year until their registration is valid. New assignments will not be available any more for students as course was revised.

How can we submit IGNOU assignment?

IGNOU MCO 01 Solved Assignment 2022-23:  Now students have to submit their assignments online to Madhyam before the scheduled date. You can submit your annual assignment through the online link. Through the online submission links issued by the university, you can submit your assignment from home.

How can I submit IGNOU assignment online 2022?

The email must carry the following details of the sender:

1.     Name of the learner:

2.     Enrollment number:

3.     Regional Centre Code:

4.     Study Centre Code:

5.     Programme Code:

6.     Course Code(s) of attached assignments:

7.     Mobile number:

8.     Email ID:

How can I get first page of IGNOU assignment?

The first page must include the following information.

1.     Name.

2.     Roll number.

3.     Address.

4.     Assignment number.

5.     Name of the course.

6.     Study Centre.

7.     Programme.

Date of submission

You also directly download IGNOU Assignment Question Paper from –  Follow the advice and Guidelines by IGNOU University , For checking Guidelines you can see your question paper clearly, after seeing the question paper candidate still have any query related with IGNOU Solved Assignment , they can ask to their teacher if Students want any information they also can contact us. MCO 01 Solved Assignment 2022-23 We will provide all IGNOU Help – 8130208920

IGNOU Assignment Status 2022-23

MCO 01 Organisation Theory and Behaviour Solved Assignment 2022-23 :  Those students who had successfully submitted their Assignments to their allocated study centres can now check their Assignment Status. Alongside assignment status, they will also checkout their assignment marks & result. MCO 01 Solved Assignment 2022-23 All this is often available in a web mode. After submitting the assignment, you'll check you IGNOU Assignment Status only after 3-4 weeks. it'd take 40 days to declare.

Those students who had successfully submitted their Assignments to their allocated study centres can now check their Assignment Status. Along with assignment status, they can also checkout their assignment marks & result. All this is available in an online mode. After submitting the assignment, you can check you IGNOU Assignment Status only after 3-4 weeks. It might take 40 days to declare.

MCO 01 Solved Assignment 2022-23  Once the TEE assignments are submitted to the Centres, it's send to the evaluation department. After which the evaluation of IGNOU Assignment Solutions takes place.

PDF & Hand Written

WhatsApp : 8130208920

0 comments:

Note: Only a member of this blog may post a comment.

Popular Posts

• Why does Plato want the artists to be kept away from the ideal state? Discuss Why does Plato want the artists to be kept away from the ideal state? Discuss Ans . Plato, born around 427 BC in Athens, Greece, was an i...

• Comment on Mary Wollstonecraft’s contributions to the rights of women   Q. Comment on Mary Wollstonecraft’s contributions to the rights of women Introduction: Mary Wollstonecraft’s contributions to the ...

Watch Video Now !

Labels Cloud

• BA Assignment 2022-23 9
• Biography 11
• Book Summary 13
• Competitive Exams 9
• English Literature 743
• Govt Exams 5
• IGNOU Answers 1490
• IGNOU ASSIGNMENT 502
• ignou assignment 2022-23 288
• ignou guess paper 278
• NMIMS Assignment 14

MCO-07: Financial Management

Ignou solved assignment solution for 2022-23, if you are looking for mco-07 ignou solved assignment solution for the subject financial management, you have come to the right place. mco-07 solution on this page applies to 2022-23 session students studying in mcom courses of ignou., looking to download all solved assignment pdfs for your course together, mco-07 solved assignment solution by gyaniversity.

Assignment Code: MCO-07/TMA/2022-23

Course Code: MCO-07

Assignment Name: Financial Management

Year: 2022-2023

Verification Status: Verified by Professor

Maximum Marks: 100

Attempt all the questions:

a) “Investment, financing and dividend decisions are all interrelated” comment. (10 + 10)

Ans ) People say that money is what keeps a business going. "Money brings more money" and "money makes the horse go" are famous sayings that show how important money is to everyone. It's hard to tell the finance function from the production, marketing, and other functions, but it's easy to figure out what each function is.

Financing decisions, investment decisions, and dividend decisions are the decisions about how to get money, invest it in assets, and give the profits back to shareholders. So, it's clear that the finance functions of a business need to be planned, controlled, and carried out with skill.

Investment Decision

When a company decides where to invest, it spends capital, which can be used for any project. The financial management gives you a plan for making smart investments. It had to do with

Management of working capital

Capital budgeting decision

Management of mergers, reorganisation, and disinvestment

Buy or lease decisions

Securities analysis and portfolio management

When making an investment decision, most of the choices have to do with the mix of fixed and current assets.

Financing Decisions

The second most important job of a financial manager is to make decisions about financing. To meet the firm's investment needs, one must decide when, where, and how to get funds. The most important thing is to figure out the right mix of equity and debt, which will lead to the best capital structure. When the market value of each share is at its highest, the firm's capital structure is said to be at its best. Once the financial manager has figured out the best mix of debt and equity, he or she must find the best way to raise the right amount of money. This can come from both internal and external sources. "Financial leverage" refers to the use of these sources in different ways. For this decision, you need to do different kinds of analysis, such as a leverage analysis or an EBIT-EPS analysis.

Dividend Decision

The decision about the dividend is the third big financial decision. The financial manager has to decide if the company should give away all of its profits, keep them all, give away some and keep the rest. The dividend pay-out ratio measures how much of a company's profit is given out as dividends. The retention ratio measures how much of a company's profits are kept for itself. Like the debt policy, a good retention ratio maximises the market value of a company's shares. The decision to keep earnings depends on the opportunities to reinvest and the chance to make more money. Dividends can be paid out in cash or extra shares.

b) What is time value of money? Discuss its relevance in financial decision making.

Ans ) Time Value of Money, also called present discounted value, is the idea that money you have now is worth more than the same amount of money you will have in the future because it can grow. The phrase is similar to the idea that "time is money," but it refers to the money itself instead of the person's time. Money is worth more the sooner you get it, as long as it can earn interest, which it can.

The time value of money is one of the things that is taken into account when figuring out how much it costs to spend money instead of saving or investing it. As a result, this is one of the reasons why people pay or get interest: whether it's on a bank deposit or a loan, interest compensates the depositor or lender for not being able to use their money. Investors are only willing to put off spending their money now if they think they will get a good net return on their investment in the future. This means that the value of their investment will go up enough in the future to make up for the fact that they would rather spend their money now and for inflation, if there is any. See required rate of return.

We all know that if we put money in a savings account, it will earn interest. Because of this, we would rather get money now than the same amount in the future. When making financial decisions, it is very important to know how money changes over time and how much risk there is. One rupee is worth more today than it is tomorrow. Having Rs. 75,000 now is a much better choice than having Rs. 1,00,000 in five years, because the present is more certain. You could make money on Rs. 75,000 that you put into the market. On the other hand, because of inflation, Rs. 1,00,000 would be worth less after five years. The ideas behind the time value of money will explain these choices, which we all have to make every day. Most financial decisions, like buying assets or getting money, change the cash flow of a business at different times. For example, if a fixed asset is bought, cash will have to be spent right away, but it will also bring in cash flows when the owner has to pay cash for interest and pay back the principal in the future. So, knowing the value of money over time is very important, and a good understanding of it makes up 90% of good financial sense.

If the timing and risk of cash flows aren't taken into account, the company may make decisions that don't help the owner as much as it could. A rupee is worth more today than it is tomorrow. Most people would rather get money right now than have to wait for one or more times to get the same amount. Time preference for money means that a person would rather get a certain amount of money now than the same amount in the future. The person's time preference for none could be due to three things 

Preference for consumption

Investment opportunities

Most of the time, an interest rate shows how much money is worth over time. Even if there were no risk, this rate would still be good. So, you might call it the risk-free rate. In the real world, an investor will always face some risk. So, he would need a rate of return from the investment, called a "risk premium," to make up for both the time and the risk. So, the rate of return needed will be,

Required rate of return = Risk free rate + Risk premium

You can also call the required rate of return the opportunity cost of capital of similar risk. No matter what a person likes or how they feel, the interest rates take time and the value of money into account.

2) Discuss the different approaches for valuation of equity shares. (20)

Ans ) Ordinary shares, also called equity shares, are harder to put a value on. There are two things that cause the problem. First of all, the rate of dividends on equity shares is not known and paying equity dividends is up to the company. So, it is harder to predict the amount and timing of the cash flows that equity shareholders expect. When it comes to debentures and preference shares, the interest rate and dividend are both known for sure. So, it is easy to make predictions about the cash flows that go with them. Second, earnings and dividends from equity shares tend to go up over time, while interest on bonds and preference dividends tend to go down. Variable dividends on equity shares make it hard to figure out how much each share is worth. So, there are two ways to figure out the value of stock based on dividends and profits.

Dividend capitalisation Approach.

Earnings capitalisation Approach

Dividend Capitalisation Approach

The expected cash flows from an equity share are the dividends the owner expects to get while he holds on to the share and the price he expects to get when he sells the share. When the owner sells the share, the price he gets will include his original investment and a capital gain (or minus capital loss). The final conclusion is that, for most shareholders, the only expected cash flows are future dividends. This means that the value of an ordinary share is calculated by capitalising the expected stream of future dividends at the opportunity cost of capital. The opportunity cost of capital is the return an investor could get from a market investment with the same level of risk. A share's value is the present value of the dividends it will get in the future. The timing of cash flows is a problem with the dividend valuation model. We will look at this in two situations:

Single period valuation

Multiple period valuations.

This will be further examined assuming

Dividends do not grow in future i.e., zero growth. They are constant.

Dividends grow at a constant rate in future.

Dividends grow at a varying rate in future.

Single Period Valuation

In a single period of one year the price of equity will be calculated as given below:

P0 = D1 / (1+r) + P1 /(1+r)

= D1 + P1 / (1 + r)

P0 =current price of equity shares.

D1  = dividend expected at year-end.

P1 = price of the equity share expected at year-end.

r = rate of return required

Multiple Period Valuations

The value of an equity can be put in a formula as follows:

P0  = D1 / (1 + r )1 + D2 / (1 + r )2 + D3/ (1 + r )3 + ……………. + / (1 + r )t

As equity shares have no maturity time period. They are likely to bring a nonstop dividend for endless period.

Earnings Capitalisation Approach

The dividend capitalization models we've talked about so far are the most basic way to value a share. But in two situations, the expected earnings can be used to figure out how much the share is worth. When a company pays out 100% of its profits as dividends, it doesn't keep any of its own money.

When a company's return on equity (ROE) is the same as its opportunity cost of capital at the rate of return needed, this is called a "breakeven point" (r). Under this method, the expected price is estimated in three steps:

Estimate future earnings per share,

Estimate growth rate, and

Find normal price earnings ratio.

For one year holding period with D1 as expected dividends in the next year, the expected return can be found as follows:

Expected Return D1 + (I - P) / P

where, P = Actual pay-out ratio.

P1 = Expected pay-out ratio

The most important part of this method is figuring out the normal price earnings ratio. Earnings per share and the pay-out ratio are used to figure out the dividend.

Hence, Dt = Pt Et

Or  Pt = Dt / Et

Pt = Pay-out ratio

Et = earnings per share in time “t”.

Dt = dividend in time “t”

Forecasting earning per share and pay-out ratio, then will mean forecasting dividends. It can be expressed as:

If earnings grow at a rate ‘g’ in future period, then

Et = Et – 1 ( 1+ft) P.

The normal price is calculated as:

Vi / E0 = P (1+ gt) / (r-gt)

Vi= Intrinsic value or the price

E0 = Actual level of earnings.

This shows that the expected pay-out ratio will be higher if the normal earnings ratio is higher. The price earnings ratio goes up as the expected rates go up.

Other Approaches

Other ways to figure out how much a share of stock is worth are based on its book value or its liquidation value per share value earnings. Not many people use these methods.

When we say, "book value per share," we mean the company's net worth, which is the paid equity share capital surpluses divided by the number of outstanding equity shares.

For example, if a company has Rs. 50,000 in paid-up capital and Rs. 30,000 in reserves, it has a net worth of Rs. If there are 200,000 equity shares, then the book value of each share is Rs. 8,000,000 divided by 200,000, which is Rs. 4. This method is an objective way to measure value, but it also has a very big problem. It is based on historical balance sheet numbers that are found by following accounting rules. Estimates from accountants are not reliable, so this method is used.

Liquidation Value

The following formula is used to find the liquidation value per share.

Amount realised on liquidation from sale of assets – Amount to paid to all creditors and preferences shares / Number of equities shares outstanding

3)  A company is considering the following investment projects. (20)

Projects Initial Investment (₹) Cash Flow (₹) A 10,00,000 12,00,000 8,00,000 Nil B 10,00,000 8,00,000 10,00,000 12,00,000 C 10,00,000 3,00,000 5,00,000 5,00,000 D 10,00,000 10,00,000 6,00,000 3,00,000

Find out payback period, and net present value and rank the projects according to them. Assume discount rate 10% and 20%.

4) a) What is operating leverage and financial leverage? What is their significance? (10 + 10)

Ans ) Operating leverage happens when a company has fixed operating costs and a steady stream of income. There are three types of costs that a business has to pay to run.:

Fixed costs are those that don't change with the number of sales, are based on time, and are usually contractual. They have to be paid no matter how much money is coming in.

Variable costs are those that change directly with the number of sales, and semi-variable or semi-fixed costs are those that are partly fixed and partly variable. They stay the same over a certain range of sales volume and go up when sales volume goes up. Since the last group of costs can be broken down into fixed and variable parts, a firm's costs can be broken down into (a) fixed and (b) variable.

Operating leverage is a company's ability to use fixed operating costs to magnify the effects of changes in sales on its earnings before interest and taxes. Operating leverage happens when a business has fixed costs that must be paid no matter how much it sells. We use fixed-cost assets in the hopes that sales will bring in more than enough money to cover both fixed and variable costs. In other words, when you have fixed costs, a change in volume causes a bigger change in profits than the change in volume. The term for this is operating leverage.

The presence of fixed financial costs in the firm's income stream leads to financial leverage. These fixed costs don't change based on the operating profits or earnings before interest and taxes (EBIT). They must be paid no matter how much EBIT is available to pay them. After paying them, the operating profits (EBIT) go to the ordinary shareholders. Financial leverage looks at how changes in EBIT affect the amount of money that equity holders can earn. It is the ability of a company to use fixed financial costs to make changes in EBIT have a bigger effect on earnings per share. In other words, financial leverage is using funds that were bought for a fixed price in order to increase the return to shareholders.

When figuring out how much money to spend on capital, operating leverage is a key factor. It shows how a change in sales affects operating income or EBIT. A firm's risk goes up when it has a lot of operating leverage. The effect of a further rise in risk will play a role in deciding whether or not to use debt in the capital structure. Leverage helps finance managers come up with the best capital structure and plan for making money. If you have a lot of debt, you have a lot of fixed costs and a lot of financial risk. When a company uses financial leverage, the shareholders will benefit from higher Earnings Per Share (EPS) and Return on Equity (ROE) only if the return on investment (assets) is higher than the cost of interest.

b) Firm “A” has an annual sale of  Rs. 80,00,000 and variable cost is Rs. 50,00,000. Fixed cost is Rs 5,00,000 per year. Company has 11% debentures of Rs 30,00,000. Find out operating leverage and financial leverage of the firm.

 Sales Rs.                                                                            80,00,000

Variable Costs Rs.                                                                50,00,000

Fixed Costs Rs.                                                                    5,00,000

Debt Rs.                                                                             30,00,000

Financial Costs @ 11%, Rs.                                                    3,30,000

Contribution= Sales- Variable costs                                       30,00,000

EBIT= Contribution -fixed costs                                             25,00,000

EBT= EBIT- Interest                                                              21,70,000

Operating Leverage                                                            

Contribution / EBIT                                                              120

Financial Leverage                                                              

EBIT/EBT                                                                             1.15

5) a) Discuss M & M preposition I of capital structure. (10 + 10)

Modigliani and Miller

The traditional view is not shared by Modigliani and Miller. They say that a firm's market value and the cost of capital stay the same even if its capital structure changes in a perfect capital market with no taxes or transaction costs. The firm's value is based on how much it makes and how risky its assets are, not on how the assets were paid for. The best way to explain the MM hypotheses is to look at their two propositions.

Proposition I

It's important to keep in mind that the MM Propositions only work in the MM world, which is a perfect, ideal place. MM assumed, either explicitly or not, that:

Capital markets are frictionless.

Firms can lend at the risk-free rate (riskless debt)

Individuals can also borrow and lend at the risk-free rate

There are no costs to bankruptcy

Firms only issue two types of claims: risk-free debt and (risky) equity

All firms are assumed to be in the same risk class

There are no taxes

All cash flow streams are perpetuities (i.e., no growth)

Corporate insiders and outsiders have the same information (i.e., no signalling opportunities)

Managers always maximise shareholders' wealth and do not expropriate in anyway other stakeholders of the company (i.e., no agency costs)

Contracts are complete and can always be enforced.

MM Proposition I say that the value of a firm with debt is equal to the value of a firm without debt plus the present value of an infinite stream of tax benefits from interest on debt. The required rate of return to lenders is used to discount the future, infinite stream of tax breaks from interest on debt. The present value of an infinite stream of operating cash flows is the value of a company that has no debt. In an all-equity company, the future operating cash flows are discounted at the required rate of return to shareholders.

VL = Vu + Tc *  rd * D / rd

Vo = EMT /ro

VL = Value of levered firm

VU = Value of unlevered firm

Tc= Corporate income tax rate

rd = required rate of return to lenders

D = Amount of debt in capital structure

EBIT = Earnings before interest and taxes

ro = required rate of return to equity shareholders of an all-equity firm

The graphic presentation of MM proposals I is as under:

Relationship between Debt and Firm Value

The obvious explanation for MM Proposition I is that companies can deduct interest on loan funds as a tax-deductible expense, but they can't deduct dividend payments. This means that financial leverage lowers tax payments and raises the value of a company. MIA uses a net operating income approach because the value of a company is equal to its net operating income multiplied by its capitalization. Both the firm's net operating cost and its opportunity cost of capital are thought to stay the same no matter how much financial leverage it has. For a leveraged company, the expected net operating income is the sum of the income of shareholders and the income of debtholders. Interest is what debt holders get paid and expected net operating income minus interest is what shareholders get paid, which is called net income. The value of the levered firm is the sum of the value of its equity and the value of its debt. The expected rate of return for a leveraged company is the ratio of its expected operating income to the total value of all its securities. This is the average expected rate of return on investments that all of the firm's security holders would want the firm to make.

b) What is credit policy? Explain its variables.

Ans ) "Credit Policy" refers to the factors that affect the amount of trade credit, i.e., the amount of money invested in receivables. The amount of risk a company is willing to take in its sales activities is set by its credit policy. If the credit policy is flexible and easy going, receivables will be higher than if the policy was strict. The goal of credit policy, also known as receivables management, is to include the following types of people.

Increase sales and profit through a better understanding and skillful handling of all credit functions.

Match risk and reward through customer and financial analysis.

Monitor, protect and manage the company's investment in accounts receivables.

Communicate the condition, cost, and trend of the company's investment in receivables to management.

Convert accounts receivable to cash in a timely manner.

Increase cooperation between sales and credit.

Maintain and increase goodwill in customer relations.

Coordinate credit activities with all departments.

Train and supervise credit department personnel.

Educate other departments about credit and the credit function.

Control operating costs and expenses.

Reduce collections and debt.

The important variables of credit policy are:

Credit Standard

Credit standards are the criteria that a company uses to decide which customers to give credit to. The company may have strict credit standards, which means it may sell mostly for cash and give credit to only the most trustworthy and financially stable customers. With these standards, there will be no bad debt losses and the cost of managing credit will go down. But the company might not be able to sell more. The company may lose more money on lost sales than it saves on costs. On the other hand, if there are fewer restrictions on credit, the company may make more money. But the company will have to keep a bigger number of receivables. The costs of managing credit and losing money on bad debt will also go up. So, choosing the best credit standards requires making a trade-off between incremental return and incremental cost. You can also expect that changing credit standards will change the number of sales. As standards are relaxed. Sales are expected to go up, but they are expected to go down if things get tighter.

Credit Period

The amount of time that a customer has to pay back a loan is called the credit period. Most of the time, it is written as a net date. For example, if a company's credit terms are "net 35," customers are expected to pay their debts within 35 days. The industry standards may determine how long a company has to pay back debts. But depending on what it wants to do, the company can make the credit period longer. On the other hand, the company may shorten its credit period if too many customers stop paying and bad-debt losses start to mount.

A company lengthens its credit period to increase its operating profit by selling more. But there will only be a net increase in operating profit if the cost of extending the credit period is less than the operating profit increase. When sales go up and credit terms get longer, investments in receivables go up. This rise is caused by two things: (a) more sales mean more receivables, and (b) existing customers will take longer to pay back their credit obligations (i.e., the average collection period will go up), which makes the amount of receivables go up.

Cash Discount

A cash discount is a payment discount given to customers to get them to pay off their credit obligations in a shorter amount of time than the normal credit period. Most of the time, it is shown as a percentage of sales. Cash discount terms tell you how much of a discount you can get and for how long. If the customer doesn't take advantage of the offer, he has to pay within the normal amount of time. Cash discount is a way for a business to boost sales and get paid faster from customers. So, the number of unpaid bills and the costs that come with them may go down. The discounts that customers take are what pay for it.

Collection Efforts

To get customers to pay what they owe, the company should have a clear collection policy and set of steps to follow. When a customer's normal credit period is up and he hasn't paid, the company should send him a polite letter reminding him that the bill is due. If the customer doesn't answer, the company may send letters with increasingly harsh language. If the debt is still not paid, letters may be followed by a phone call, a telegram, or a personal visit from a representative of the company. If the customer still doesn't pay, the company may file a lawsuit against them. Before going to court, the company has to find out how much money the customer has. If it is weak, going to court against him will only speed up his bankruptcy. The customer will not give the company anything. In this situation, it's better to be patient and wait, or to settle the account for less money.

100% Verified solved assignments from ₹ 40  written in our own words so that you get the best marks!

Don't have time to write your assignment neatly? Get it written by experts and get free home delivery

Get Guidebooks and Help books to pass your exams easily. Get home delivery or download instantly!

Download IGNOU's official study material combined into a single PDF file absolutely free!

Download latest Assignment Question Papers for free in PDF format at the click of a button!

Download Previous year Question Papers for reference and Exam Preparation for free!

Download Premium PDF

Assignment Question Papers

Which Year / Session to Write?

Get Handwritten Assignments

• Exam Preparation
• University Entrance Exams

Sorry, there was a problem.

Download the free Kindle app and start reading Kindle books instantly on your smartphone, tablet or computer – no Kindle device required .

Read instantly on your browser with Kindle for Web.

Using your mobile phone camera, scan the code below and download the Kindle app.

Image Unavailable

• To view this video download Flash Player

IGNOU MCO 21 Solved Assignment 2022-23 Managerial Economics IGNOU Solved Assignment MCOM IGNOU Master of Commerce (2022-2023) MCO21 Unknown Binding – 1 January 2022

Save extra with 2 offers, 10 days replacement.

Replacement Instructions

Purchase options and add-ons

• Edition First Edition
• Publisher CHAKRADHAR PUBLICATION
• Publication date 1 January 2022
• Language English
• Print length 30 pages
• See all details

Product details

• ASIN ‏ : ‎ B0B1LDNRBK
• Publisher ‏ : ‎ CHAKRADHAR PUBLICATION; First Edition (1 January 2022)
• Language ‏ : ‎ English
• Unknown Binding ‏ : ‎ 30 pages
• Reading age ‏ : ‎ 18 years and up
• Country of Origin ‏ : ‎ India
• Packer ‏ : ‎ Shri Chakradhar Publication Pvt. Ltd., Phone: 9958947060, Website: shrichakradhar.com, Email: [email protected]
• Generic Name ‏ : ‎ IGNOU Solved Assignment
• #8,506 in IGNOU Entrance Exam

Customer reviews

• 5 star 4 star 3 star 2 star 1 star 5 star 0% 0% 0% 0% 100% 0%
• 5 star 4 star 3 star 2 star 1 star 4 star 0% 0% 0% 0% 100% 0%
• 5 star 4 star 3 star 2 star 1 star 3 star 0% 0% 0% 0% 100% 0%
• 5 star 4 star 3 star 2 star 1 star 2 star 0% 0% 0% 0% 100% 0%
• 5 star 4 star 3 star 2 star 1 star 1 star 0% 0% 0% 0% 100% 100%

No customer reviews

• Press Releases
• Amazon Science
• Sell on Amazon
• Sell under Amazon Accelerator
• Protect and Build Your Brand
• Amazon Global Selling
• Supply to Amazon
• Become an Affiliate
• Fulfilment by Amazon
• Advertise Your Products
• Amazon Pay on Merchants
• Your Account
• Returns Centre
• Recalls and Product Safety Alerts
• 100% Purchase Protection
• Amazon App Download

• Conditions of Use & Sale
• Privacy Notice
• Interest-Based Ads