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CORPORATE Finance
Meaning © fo. management — reearys Panning ,Aganising
con Evolling fin activities ,
ia “anagement| ig activity woneerned wit,
planning 1 ¥aiSing 1 Controlling, and adroini stering fords
Tyres of finance +
- Business. fin
| directing and
pe{ 3 Financial
~ Gvthran & Dougal
) Divect + fin
) Indirect fin
and — c&lperate,
) Peblic , private
xcApAate fj : .
¥EpUATe lirance. Tt deals with financing , capital:
jnvestment — decisions ,
& Components of ce: Planning {Raising | Investing &
Stucture and
Menitaring
vesearch & dev,
Smooth conduct of bes,
Meeting contingencies ,
wplacement of -Assets .
& Tnpatance . Motivating .emp ,
Expansion g diversi fication
govt Agencies 3 diviclent-Int
¥ Evolution of Finance !
th
+ came into existence at 20° century
~ 3 phases 0) Traditional - upto tayo
‘ i’) Transitional - tage - 1950
iit) Modern
- Mid "950 till now
~ Gealls ef fin. Manage ment ;
2 ~ profit max and wealthy menimization
= eon
> wWeatth:max allo krewn as value-max (8)
Net present wath - max
Les
‘Scanne wih CamScanet se ehjectivet ef in Mer
te mae eopulay and odiegerte spply «| irc
To enane adequate retwins to Shorehoiaters «
De ensore eptitorm finds eatilyation
‘ veptorent
Te ensure safety en 0
< To plan a wund mpital roche «
The cemsparey survival
reper reebiligaton ef Finance
proper recidination
+ towen cart of capital
¥ sere ef Pin. Management +
Fivancat Analysis, planning and contra Fong
large
Investment decisign i=-shdbt term Tew: dle cision
+9 -derm rw. decision
* Phregement el mergers
teeganization @ dverstrent
fin. capitad Alonning decision,
> pte! Shuckaxe decision .
> distiibution bs dividends &
Wlained — eas
Bividend dbtisen % . Dividend fh shaw hatless
* Retained profits
+ Fnencial ckeision 3
metion ef Fin. Monagennent
Etinwtion ef capital requirements «
falrvmminabier of fapital cemposiliney «
= thrice * coerce ef funds.
= dev: decision
fin + decisien
+ Mlain pocper liquidity
+ fin contecls
+ Kispesal ef surptas
+ Mang incerne
anaginig eMpovate asset structume
Peciding abort reo mores gf firencing
entart 4 camy regptiation
Aralyting & appaical ef tins perdtimance
Ader) tep oniginent
Crdit management
cash parning git Supervision
Redd keeping & repAting
meviding ep management with tafe
4 TTime value ef Money
cls time flows the valve ef money ceelines
‘5 mohe than
=" The actual worth ef money today,
ae worth dhe do petential eaaning
opacity a] renee”: This ie called” Time
ferfermance ef money”
= Tk defined as seiatiorshp pio Pt today are!
Vid fotuve
jin fatore
‘Scanne wih CamScanet Tome wae gf Meoey *
Ss foasens for
= Re imestment gportuinities
= Rsk and uncentainity
+ Teflation
Trefevence fi consumption
= penta eaning emeity ef eey
Notations +
and amount ef cach oh
Notations
A cash fino eveering at end ef yout 4 is
aquivalent 4o cash flow cecows ak Seqyining,g
yan 2
> cath inflaw
eutflow
+ pesitiv cash lo
Negative sh tow
“FH PU «Present value
PG © Foture value om year heme
ee
cash
hin flas eceuving at end of year t
Bemvity (A) stream ef censtant peri
Bir flow in qiven Lene «
Interest te dscoort gate
Fos Expected geesth mle iy cath flows
ms Fo: 7S ewe Cash flow extn
Stream 5 8 aalled TH Aral,
4 Tecls Tene vale ep men
1. compounding (A) feotore value
HL runs a gwen quantity ef mney teri ie
worth —mtie than what ull be aeceived at
seme point of time in future
fer NEM GEICO I Invested today at tre
Feried © what will be the future vnlue ef
ANS investment at end ef synans i compan
interest wade is ay, Pat
© ecco} 2 3
}———+ 1
Bele ap Future value
3
oN, = toecef 1+ 6-08)
+ gece 61-957)
AP Tebwiques ef tompeunding t
To. feture wale ef Single ameurt
A. eempeunel interest vate: Anneal
Semi ~anreal
fuateny
Monthly
. tentinow sty
2+ Sieple interest vate 7
3+ Devbling pevied ; The ale ef 12
“te 69
ss Ro
cltectise whe EM wie |
4 Gerding So rate ay intenent 5 fat
‘Scanne wih CamScanet ey otrwiby
value
ay fiche
Wy fot gatue ef en ever cashflows «
ay fotere
irreal
ume gyit - fature salve intewst joctay
Amb
aeviow
4. Assuming the BERS crample prmb » lculate
fv wsing “able rrethed «
a
Fin Buys OY CFVIE Cue)
= rocco ( Fue (87,35)
ieee (1.2599)
iy
Tenelusion sum ef 1D60 invested today ef
Bf. pin with cAenualecomp -f ayes at end of
Byes tre omeurt becomes FA
rho tds RL font g
Time tine» 8 i 2 ;
—— b+
Reco fv
______-» &. n,saa
ferrets fa ayes
at
ay
Assuming that sun of Re: ieee. is imested today
|;
al
Aime Jored 0. thal wit be FY ef
fovectrvel at nd of 97 42s if you let your
| inveeterer encl of 2 yas if you let y
j interest’ Gncorne he reinvested 2 The. intext
| ate & ot pe sot
EMA © Pv Cte)? forma metbeet
| tooo (140-10) *
310)
Fy,"+ Wee (waree) 5 Table rethod
JA 20)
Aco gf Fs 1000 Ioweeted todayy ot
with armea) "compourcling 44 2 4>t,
yrs
+ fonval compaunding +
Aloe. .armount 15. Rot BID
calculated | every weonths
| 2) formula method levy» pve |
| [even ae.
mero ef times interest “compounds
Po es oo
|47 “Table methods pw,» Py (001 (hn m))
| eee :
‘Scanne wih CamScanet B) semi = Annval *
apeunding *
cow
Gusstely Fe
nem
Mg > Pv Cte Btn)
3 reonths
galewlated eve" soit -Ainrual tak | tv, veo fg ney
~ forla is same ns ye) | | . aes
met CF te fe ween,
oe Morty corrpouncting * 2) quater
cntewtated every rronth fg e too (14 88
= ferrela is same but m= 19 (rents) Fee (1-059?
# Continess Compounding ¢ F¥s = tye SAY
~ calculated every day —& tnverted daily a) Monthly :
aia = Set
py feor"]] Fs = too 14 08
where ¢ . exporential value = 2+31/828183
=) formula method: | Py¥y
= 100 C 1-006) °°
rN,
. | S = lyse
3. tn investor deposits Fico 47 back accel fH) aaa
Sys at ef mate af interest - Find amaunt if |e) entinoug
interest | 5 cermpeurcted ! 2) Annually b) Semi Arnal ~ oc
Den A)Menthly 4) centinang « | fy, 2 100 Cerna "}
Pa) terval rico Fru]
Fin PY (ies)?
ee GD 4 / : ye a
Fs = 0 (14. 8)% : .
71 Cruaesy
Fis = 1693,
ee ee
‘Scanne wih CamScanet re
|g. te ievester “
ta nys ot oF rete d
; ach be in bid ace
he a ended
te interest 18 corte yd) Monthy) se; |
3 dena seers DEON vem
yl
2) Annes
rye vend”
formula Method 5
Fy = heeveer (1467)
Fy = 1,26) 2489,
8) se = Arwen
uy «Py (1 my
F Method !
Fy, = tcoicoo ( veoeey™
+ iweseoisee
Aye eye y
2) Renterty
Forlettod sy Py (re Bem)
Faye 0016 (r400s
© Neo ece (o22 910)*
Bae eaaiew yp
Fig 2 126) aa 55 y
a vee Pee neereo Jn honk ola
interest Pee fing
a) Monthly an
ee
2 apejero 4 (v23008)
+ MANA B 2 2 OUT Mp
g) continous s .
fun © ov [tey?”]
Fy, Nesyeen faa
= yeoveon y p27 NWAT
ya 34-91
Mm -
eRe
ye SINPE IN
| “Sptevest payment i ret aeinvested (8 epaning
interest .
ono inertet on caleatahion.
cieple interest $160 {8 2 years at 10/ tes
vate
Vn \usn]
oa
> formula method
Hot ve Given lero = PV
Th gone ev © (eee & Ics) «|
| { yor PY = Ceo P)jeo) + 160 L
si tee0 “160 4160. + OO
By PYd'e 100 Cos aver)
L Py
120
‘Scanne wih CamScanet iwested at 7,
bling period
nate, Wha uy
Rule ef themb" 1 Guede calealole
alway use cre rember ant red decid
G thomb ules: Te ule of a2
oe 6m
noes ho ot uO
. The CM sule
Fy. Ineo (i+ Gyoon) ‘ 1
ey jy Tee Mle 72 LTE welts elt tn tommon interest
a toyere (24) gitvations and easy divisible
Fig = BNO D \r vole qa ae ante sate seuld
loree invested in hank at to terest tate) by inten as given
Lage
&/ Gienple Interest
rumher rot decinal
ye WE CLE TL aks chen’ interest sates
a yoceo th inverted at | Oe ewer (ot Sen) «TE works fa only
chal ES Bh tyy COHNUCLS Compeending»
agter years ameord i Ry
eo. te nvestrent
toy pa. Simple Tomake 5
The tule 64
. , : +0636 yh :
hoe Given, py = Neerere oe vate
we tof + oo + gy Te ae 30
nes —=
| Rule 9 = 70
F¥ee uence (14 €r0%9) Vo | Date
Wy, EM tule! inbedvesd by Gerart & Me Hale
PMs Meco, ivy
tonal JL works 4 Higher rate ef intrest
fondlusion: ip py .
t Reem ty invested in bank | (mae than S/+)
wt rede of Simple inte
4 inkerect » after eye vue a male 9
er pen Sy | Jen fe = ule 69
‘Scanne wih CamScanet awe the Tem
rounting ny
ee
7
Y lerhniqees *
ate # 3 ot ph
! rtevest sole of 725 8% 30 G6
su periods 0 7 VN ata 8 PM af income shears whieh Devices
feat) ¢ years REO I beginning ep gear one 4 B 7660 in
Bhp fer le . | jeatening wap year two and ¥ eee in begins
gh tres eye © deve the ep deer 3s Hh disccunt. sate is tay. 2s
Fender le 3?
ptele BR MO 2 Baa ymay
ot .
> oii. Se tates 5893.95 (0 double
the amnint :
6 yfray cath fons Heep yrs pte ov,
as tile ot = 0:99 4, 2 Chesinnirg) f fated Gr) mae er
tater vate) (“re eae
cease sas 7 > Bl Years sted Oa
. 127 0) vibe Coco ee
DP eonclugion y TE takes GT ys to double a leco, D years: ( oo > leon
: . cnt 2 eo
the erreentt 2 ace ayy Sang erasiiser
ye eM mle + 3 reco. aymys (P5270 C seen vo99)
eryaa
meee Toial ey
> tenelasion TE 42k BUR Yay” dy cube
the ammount,
‘Scanne wih CamScanet interedt ¢
in dace of Rowling
Teeiedt "=
fading rete te
*
intovest
|
a ater
pry git “a doubt tay |
ante of Fetes sate
firaneiad om pays
feel given neat
* —-
Petting pesca |
with an,
rvestert
eqectve
4
combines
wat 8
iwatited
applicable a
double the
Th cae gf 7 fer
ameunt at
jnekitale fas + cerce
there
invested
Me T the ig
wears
financial
te, public,
tne
End
to
cateutate
a
ster
‘lou ble
at te
interested
“ institute pay
amount insti tate
B years
ath
depot institute
fri:
en
es
vy
= lt
ert.
conclusion + effective sete gl
ee
“
eer. oss
% oF
®
Le
pot se
LOT es menas f .
alle mgthed ef Peuhling pried
piternalively PP coh te font eet ty teoking
al FYIF fables. an EvT# yin intevert
polo fo wate of interest. Hind cut the
facto value lee to A Crouhie) Te year
which A factor salut te cece fe g deat uP
# TR pear to Ryalue ab PP values”
2
ind OP 2 é
a
gi A een wt PIF table, intemal vate
py TH wh tctomn Acarch f4 factor value
Mtoe fo Ree can find RATIR Te Clete
lea weg yenas rel T §0 the OP is b yas,
DP + bys y
fate
we finciing reeth
‘Scanne wih CamScanet ©
gues mp Beceem
ne 7 toyne CF in tH, WZ Ud hes lero enpteyeos’ to rel, +
wot» ee ett le Moto hich oT TO MEO PaPYAOS In see ,
viet runs ee o 1) grat fe empornd Qer h empleyers.
fiven Mas tere . * Vas fu tyre?
ee oe (en Se
ee wes AT a ;
(rag) > ecco $1000 qe omy tg
tas 10 q r.coeq om aH )
no (0) . * te . :
. . Byyn Ud mesently $85 tooo eerleyses orl
ng sna Ce eer ected gon my mF
Te vasea et gens eet many emp Tn,
ge essa ave in 5 years time 2
By eo CHO Pet
@
so.
ge R87. TE bn ‘be Founded: off te
nef, = teeof-te oni) ®
terclusion: The tempeend qrecth rate in ww seo Even) ,
Jewmuts thy reer lo 3elr TS me c= $610, erpleae? 7
TE weane revenues grwen fer 2 teeo teh toncludlon ; XYZ tld have 260 arepleyee afte
piece ex wim 2a} erqererd growth wt) 5 apy, when sompound gewstn vcle fe s07h
‘Scanne wih CamScanet y fy fe coh feos ot
formate Hetted
= pnneity & wo -
a. Retenes sole 4 Cy UH depadt @ mer arrwally ate
Ltn tensity * pen end af each $0Oy thank fF YS omit
tath flew ee tens |e deposits 0m a cpuurnd By ef 107,
cay nerve pm EY ingoronte pin! yy can + that wit he value ef this tories
wench iewoe ry et tnd of Bode (yd deposits Com arrattyy at end of 1s?
Fegioning eH : ‘ ger berg termes , t
oa
aor 52 “4
ge reveen (repaid t t9606 (1408) + rescore D
feng a(t h aed
tyre [ra ey te00e
[ra atid 4 AG ”
—_ . TyGuy 4 IBIBO 4 12EO + NEES + (cere
cnitat for wa
= EE " we 61054 ,
Fe Peat
Phy 978 fern )] gad eat Hamulay -
Ee ale s
“ evans tercoo [CLE en =
RA, = “fe er
— + tore (° ores! |
“Tale method © | oF rs
— = , = Gt .
iva, A (eaten) osly
te Ah TBble method © gua, + taco (e108
tenet dion
+ 610tty
a} FE tele i depasiteed armuatty
oft vated ef vy
be
the
fh sys
around
at
will éo51
‘Scanne wih CamScanet Ty paren ceraatiy stort,
, 5 eu depasid B revege anntiaty in Feginnis
yt rank fh Sys Re ny pasa evege ually prin
R 4 en yen *S ompourd overt ef ee) in honk yrs and yor
seer Te ne el tle Gepesits “comm! a) tamper interest ate ef 4
sate ep RAPS . toh Pa -tchat valuc ef series depmsit at
aim 9 I ? ee Nee
. ow ws . / /
” Fyha # [ “| 6B yay + soceo [1 4049''] C44 00)
one ‘
seco es © eceo [hevat : ] a)
: oo rh,
. eco [8] a reco (6506) eens eit
eee
- , FYA, F GUSG y .
5 anisey . | ue .
F Fvmys weece( row + eecolire dD + ot
et ee v4
seose C44 oni tween (t+ 00) “4 tecadives)
fe da cathgiews tm Besintilg of_yeen
erty formula metind = wees (1 Bios) 4 teeee (1 LEU!) 4 toca (1:93)
Tyeoe (13s) reece C11) '
F telos + tueur 4 133tee + te
7 dbbdeal Prala woos
vaca an [tet ; frye cause »
Wage * [et] tio :
7
‘Scanne wih CamScanet f woeon Annually in beginning
In bank fF yrs and
a
deposits rep ak tnt Pa tohal 0 be
your
Ina par ccna ea) + MLE (03)
va, ation) + “ ° ns wy value ef teries at end ef FY
gate) 4 8 C8 ON s
See Fats gully « sence 14160) 4 16000 (14 EI OD 4
Poaiering year
ters) format 9 Se) jeoco [14 Fa venta Hee C14 AHN) Ft
3) os (ise) i ewecoo (14 6-4 #04) ;
' oe
© rscco'y Ineeo + Weeo tf ec0 ¥ Heo
eseeo
4 topeo annualty ‘at! end 4
©
3. ay you Aepastt
oy aw, on bank ye and your
ef each : 4 Ffutive value fi vb-even Cash flow
deposits cern STE Of lof Pras that with = = = =
tees depasits ab end ef Syn = eneven cath fetes ast itp + cash flows
Moi sare cath floor every?
- in tach ear
SI bya roeco (14 (6D ¥ gr) + worco (14 (5 =2)¥0") , .
. ” , Fy FA cash flows at end af Heer
ween a (deer) ceco( G4) Yer + reeeo(id)
rete (62) + t€¢00 (0:4) 4 e008 (0+ foneuta meted
Jorg formula
= cf, (14oavn) + ef (10 oy -
C4 (14 De) 4 hal 14 (ne) 79)
(
teceo (0.1) cee
‘Scanne wih CamScanet pea
so ak end ay First 7
ge
a. My x, depmits 2
: v4
dt '
yeay 8 tooo , at end of 2 year ta
vas
Z io, at end Of 3 yout Breow ,
‘ . |
at end al ey” yee R asocwy , at end
. vo
ef VP year in his Savings amount .
tay ”
The Try is Sh Pa SibRad iso fy atcend yf
Pay
Table method »
a — ™
No-of yrs EvIF
Yeay ‘|; cath flo ont) Gi (ae, ren
(Year Ene)
GOO 12S
# see 4 haiss = Gonis
a 1000 3 wisag Je nsqeg
4 100 R piers |e pess-45
y 2000 ‘
ly, posoo fe aioo
. are ° 1.000 ° asoo
FX sor
‘Scanne wih CamScanet
