introduction to finance
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Introduction to Finance
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How many of you want to start a business of your own?
Do you think basic knowledge of finance can help you in sound
decision making?
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Firms to run its operations requires….
CAPITAL
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What is the source of this capital?
•You put your own funds•You get it from outside D
E
Capital Structure
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Now every source of capital has some cost associated with it?
•Equity Opportunity Cost•Debt Rate of Interest
Cost of Funds
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What is the objective of the firm?
Maximization of the Economic Profits!!!!
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Where does a financial manager fit into the picture?
Ensuring profitability by:Allocation of funds into profitable projectsEmploying various sources of raising funds to reduce the overall cost of funds
Equity Preferential Equity
FCCB ECBBank Loans
Reserves
NPVIRR
PI
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Source of funds
Application of Funds
Own Equity
Inter Bank Lending
RBI
Deposits
Lending
Investments
Regulatory Compliance
How does a Bank work
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Banking
Retail Banking
Private Banking
Commercial Banking
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Divisions in all 3 Banking
Relationship Management Products
Risk Operations
Legal Treasury
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Important Points
Customer Acquisition & Portfolio Management
Customization
Diversification of Risk
Customer Retention
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Asset Management
Wealth Management
Retail & HNI Broking Insurance
Structured Products
Non Banking Financial
Companies
Other Financial Services
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Investment Banking
Capital Raising
M&A
Product Structuring
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Certifications
FRM – US, GARP
CFA – US & ICFAI
NCFM
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Net Present Value - NPV• The difference between the present value of cash
inflows and the present value of cash outflows
Internal Rate Of Return• The IRR of a project is the discount rate that will give it
a net present value (NPV) of zero.
Flavor of Corporate Finance
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Using the project cash flows presented in the table below, compute the NPV, IRR, PI, Payback Period of each project cash flows &State according to you which project should be accepted. Assume cost of capital is 10%.
Year(t) Project A Project B
0 -2,000 -2000
1 1000 200
2 800 600
3 600 800
4 200 1200
Flavor of Corporate Finance
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THANK YOU
Team $treet :-
Apurva Agarwal
Bikash Kedia
Ritom Das
Rohit Bafna
Saurabh Bansal
Simant Goyal
Sonam Gupta