introduction to finance

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Introduction to Finance

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?

Firms to run its operations requires….

CAPITAL

What is the source of this capital?

•You put your own funds•You get it from outside D

E

Capital Structure

Now every source of capital has some cost associated with it?

•Equity Opportunity Cost•Debt Rate of Interest

Cost of Funds

What is the objective of the firm?

Maximization of the Economic Profits!!!!

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

Source of funds

Application of Funds

Own Equity

Inter Bank Lending

RBI

Deposits

Lending

Investments

Regulatory Compliance

How does a Bank work

Banking

Retail Banking

Private Banking

Commercial Banking

Divisions in all 3 Banking

Relationship Management Products

Risk Operations

Legal Treasury

Important Points

Customer Acquisition & Portfolio Management

Customization

Diversification of Risk

Customer Retention

Asset Management

Wealth Management

Retail & HNI Broking Insurance

Structured Products

Non Banking Financial

Companies

Other Financial Services

Investment Banking

Capital Raising

M&A

Product Structuring

Certifications

FRM – US, GARP

CFA – US & ICFAI

NCFM

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

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

THANK YOU

Team $treet :-

Apurva Agarwal

Bikash Kedia

Ritom Das

Rohit Bafna

Saurabh Bansal

Simant Goyal

Sonam Gupta