Inflation will increase the nominal rate of interest and hence the discount or compounding rate. So, future value will be higher for a given present sum of money. Alternately present value of any future sum of money will be lower.
These are models to determine the amount of cash to be held. Kindly read the study material for the description of models. Cash cycle model finds out the cash cycle period and then calculates cash to be held on a proportionate basis based annual requirement of cash.
I think you are referring to the sources of capital. Financial decision means raising money whereas operational decision is deployment of money. Financing obviously depends on the evaluation of the possible sources of money and deployment is affected by the cost of the money.
There are various factors affecting dividend policy like availability of cash surplus, requirement of money for new projects, past trends etc. Kindly read the study material for detailed discussion.
Say, cash budgets are statements of cash receipts and expenditures. Practical if estimates are realistic and likely to be achieved. Useful depends on the purpose for which it is drawn. If the budget serves the purpose then useful. Flexibility is brought in by working out sensitivity of the budget to various changes in input information.
Capital rationing arises when more project are available than the amount of money in hand for investment. Projects under capital rationing are usually evaluated based on profitability index criterion.
What are the ways of reading a market, in the sense if you want to invest in any particular company, what am i to check other than its previous years balance sheets..
Welcome to eclass.
ReplyDeleteGood afternoon professor
ReplyDeleteWe are waiting for cimage to join in
good afternoon professor
ReplyDeletegood afternoon Chinmay please ask students to login and post their questions
ReplyDeletehow does inflation impact the time value of money?
ReplyDeleteSir please answer the queries
ReplyDeletehow annuities affect the time value of money?
ReplyDeleteKPP,
ReplyDeleteInflation will increase the nominal rate of interest and hence the discount or compounding rate. So, future value will be higher for a given present sum of money. Alternately present value of any future sum of money will be lower.
What process we can use to create financial report?
ReplyDeleteKPP,
ReplyDeleteAnnuities are cash flows. Time value of money will be affected by discount or compounding rate.
What is effective rate of interest?
ReplyDeleteKPP,
ReplyDeleteDo you mean balance sheet and p and l account or some other report?
KPP,
ReplyDeleteEffective rate of interest is the rate at which any sum of money grows to a future period. It should consider the compounding frequency.
What is the difference between Cash cycle model and Baemol model in cash management?
ReplyDeleteKPP,
ReplyDeleteThese are models to determine the amount of cash to be held. Kindly read the study material for the description of models. Cash cycle model finds out the cash cycle period and then calculates cash to be held on a proportionate basis based annual requirement of cash.
How does cost of capital influence the decision on capital structure?
ReplyDeleteKPP,
ReplyDeleteThe desired capital structure should have the minimum cost of capital if cost is the decisive factor.
Is there any relationship between working capital decision and capital budgeting decision.If there is ? explain.
ReplyDeleteWhat is capitalisation and how does capitalisation of a company affects the financial and operaitnal decision of a company?
ReplyDeleteKPP,
ReplyDeleteNo, they are two separate decisions. But the margin money required for working capital is obtained from capital sources of money.
what is the diffrence between intrest and dividend?
ReplyDeleteWhat type of risk does a well diversified portfolio cary?
ReplyDeleteis there any relationship between working capital decision and capital budgeting decision if there is ? explain...
ReplyDeleteWhy is it that a firm may not undeertake some project eventhough it create some value?
ReplyDeleteKPP,
ReplyDeleteI think you are referring to the sources of capital. Financial decision means raising money whereas operational decision is deployment of money. Financing obviously depends on the evaluation of the possible sources of money and deployment is affected by the cost of the money.
Whether the working capital of a company obtained from the bank became the core capital of the company?
ReplyDeleteMSH,
ReplyDeleteInterest is cost of debt and dividend is cost of equity.
You second question I have already answered.
KPP,
ReplyDeleteCan you elaborate such a project?
KPP,
ReplyDeleteIt is not core capital which is the risk capital obtained through equity.
what is the factor which affects the dividend policy?
ReplyDeleteK,
ReplyDeleteThere are various factors affecting dividend policy like availability of cash surplus, requirement of money for new projects, past trends etc. Kindly read the study material for detailed discussion.
How is cost of perpetual debt computed?
ReplyDeletewhat is mortage?
ReplyDeleteKPP,
ReplyDeleteThere is no perpetual debt in the world as on date. If there was any, it would be the annual long term bank rate plus premium for illiquidity.
KPP,
ReplyDeletemortgage term is used when any immovable asset is provided as security for any loan.
what is the dividend risk?
ReplyDeleteKPP,
ReplyDeleteuncertainty about whether dividend will be paid and or the amount of dividend.
which budget is more elastic and practical & useful?
ReplyDeletePlease ask your questions.
ReplyDeletewhat is capital rationing?
ReplyDeletePS,
ReplyDeleteSay, cash budgets are statements of cash receipts and expenditures. Practical if estimates are realistic and likely to be achieved. Useful depends on the purpose for which it is drawn. If the budget serves the purpose then useful. Flexibility is brought in by working out sensitivity of the budget to various changes in input information.
PS,
ReplyDeleteCapital rationing arises when more project are available than the amount of money in hand for investment. Projects under capital rationing are usually evaluated based on profitability index criterion.
please ask your questions
ReplyDeletewhat is corporate finance?
ReplyDeleteS,
ReplyDeleteThis branch of finance deals with raising and deployment of money in corporate organizations.
professor please answer
ReplyDeleteI have answered.
ReplyDeletewhat is the role of auditors in corporate governance?
ReplyDeleteR,
ReplyDeleteCorporate governance codes specify certain disclosures. Auditors should check that these are complied with.
Good night. Look forward to meeting you in the next eclass. All the best.
ReplyDeleteSinces its 5:00 pm we would close the sesion for the day and shall inform you about the next e-class.
ReplyDeleteGood night Professor & Cimage
May prosperity & success
ReplyDeleteBe the two side of the coin for you
this year & always
HAPPY NEW YEAR 2011
what is average present value?
ReplyDeletewhy marginal cost of capital is used for evaluating new investment projects rather than average cost of capital ?
ReplyDeletegood afternoon professor..r u there..
ReplyDeleteSir how do we calculate the Capital Employed of any organisation
ReplyDeleteWhat are the ways of reading a market, in the sense if you want to invest in any particular company, what am i to check other than its previous years balance sheets..
ReplyDeleteGood Afternoon....
ReplyDeletegood afternoon professor
ReplyDeleteplease explain time value of money