0
$500 if interest for five years at a 7% interest rate
Wiki User
∙ 13y ago
Add your answer:
Earn +20 pts
What is business finance?
Finance is the science of funds management, or the allocation of assets and liabilities over time under conditions of certainty and uncertainty. A key point in finance is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow. Finance aims to price assets based on their risk level, and expected rate of return. Finance can be broken into three different sub categories: Public finance, corporate finance and personal finance.
What is the most important criteria in capital budgeting?
net present value
What tax condition must hold in order for a financial lease transaction to generate positive net-present-value tax benefits for both the lessor and lessee?
"Leasing is only beneficial when the present value of the benefits of leasing exceeds the present value of the costs of leasing." - Corporate Financial Management, Third Edition, by Douglas R.Emery, John D.Finnerty, and John D.Stowe
Difference between present value and net present value?
Present value is the result of discounting future amounts to the present. For example, a cash amount of $10,000 received at the end of 5 years will have a present value of $6,210 if the future amount is discounted at 10% compounded annually.Net present value is the present value of the cash inflows minus the present value of the cash outflows. For example, let's assume that an investment of $5,000 today will result in one cash receipt of $10,000 at the end of 5 years. If the investor requires a 10% annual return compounded annually, the net present value of the investment is $1,210. This is the result of the present value of the cash inflow $6,210 (from above) minus the present value of the $5,000 cash outflow. (Since the $5,000 cash outflow occurred at the present time, its present value is $5,000.)
Why the calculation of present value is important in decision making?
When calculating any return on investment or the amount to be spent on a project, you have to do the calculation using the present value of any spending or income to be received, in order to calculate it without the effect of interest or any other event that might effect the inflow or outflow. Only by using the present value of the amounts do you have common ground to compare the options or to calculate the true value of the income.
Understanding Corporate Finance?
Corporate finance is a discipline that focuses on the monetary decisions businesses make as part of their normal operation. Although many aspects of corporate finance mirror the decisions individuals make, more complicated decision-making is required when calculating the value of products and projects, understanding profitability and producing necessary accounting reports for investors. Corporate finance also deals with tax issues. As businesses navigate the ever-changing tax loss, they are always interested in making sure they have the lowest tax liability possible. Other aspects of corporate finance deal with capital equipment, cash management, stock valuation and other important financial decisions.
What is corporate financial management?
Corporate financial management refers to the discipline and strategies used by companies to manage their financial resources and make informed decisions about investments, expenses, and financing. It involves a wide range of activities, including financial planning, budgeting, cash flow management, risk assessment, and capital structure management. The goal of corporate financial management is to maximize shareholder value and ensure the long-term financial stability and success of the company.
What has the author Glen Arnold written?
Glen Arnold has written: 'Corporate financial management' -- subject(s): Corporations, Management, Finance 'Essentials of corporate financial management' -- subject(s): Corporations, Management, Finance 'The financial times guide to value investing' -- subject(s): Investments, Stocks 'The great investors' -- subject(s): Investment analysis, Case studies, Capitalists and financiers, Investments 'Handbook of corporate finance' -- subject(s): Corporations, Industrial management, Finance, Handbooks, manuals
What is meant by wealth maximization in a corporate finance environment How are corporate securities contingent claims on the firm's value?
Wealth maximization has been accepted by the finance managers, because it overcomes the limitations of profit maximization. Wealth maximization means maximizing the net wealth of the company's share holders. Wealth maximization is possible only when the company pursues policies that would increase the market value of shares of the company.
Principles of cooperative finance with emphasis on where positive net present valuscome from?
Taking a look at market value you should first
What is the most important criteria in capital budgeting?
net present value
What is business finance?
Finance is the science of funds management, or the allocation of assets and liabilities over time under conditions of certainty and uncertainty. A key point in finance is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow. Finance aims to price assets based on their risk level, and expected rate of return. Finance can be broken into three different sub categories: Public finance, corporate finance and personal finance.
What are the primary objectives of corporate management in India?
The major objective of corporate finance by Indian corporate are are summarized as follows; Ø The two most important objectives of management decision making in corporate finance in India are; (a) maximization of earnings before interest and tax (EBIT) and earnings per share (EPS) (85 percent) and (b) maximization of the spread between return on assets (ROA) and weighted average cost of capital (WACC), that is, economic value added (EVA) (76 percent). Ø Large firms (on the basis of sales, assets and market capitalization), high growth firms and firms with high exports significantly focus on maximizing EVA than small, low growth and low exports firms respectively. Ø There is no significant difference in the EVA as a corporate finance objective followed by the firms in public and private sectors. Ø The spread between cash flow return on investment (CFROI) and the WACC, that is, cash value added (CVA) is the third most important objective (54 percent) of corporate finance management for large firms based on market capitalization. Ø Yet another important objective is the maximization of market capitalization. The MVA (market value added) objective is more likely to be followed by public sector units than by private sector firms. Ø The overwhelming majority of corporates (70 percent) consider maximizing percent return on investment in assets as the most important. Ø Another preferred goal is desired growth rate in EPS/maximizes aggregate earnings. Ø Wealth maximization/maximization of share prices is the least preferred goal of the sample corporates. Sanjay Swami
What tax condition must hold in order for a financial lease transaction to generate positive net-present-value tax benefits for both the lessor and lessee?
"Leasing is only beneficial when the present value of the benefits of leasing exceeds the present value of the costs of leasing." - Corporate Financial Management, Third Edition, by Douglas R.Emery, John D.Finnerty, and John D.Stowe
What are the best MBA finance project topics to choose now at this present crisis time?
Working capital management Capital structure Ratio analysis Financial modelling of a company for last 10 years, leading to a analysis of its ratios. Liquidity analysis.. Comparative valuation. Corporate lending Industry analysis and company analysis on a scenario basis, competitiveness, growth potential and credit analysis debtor management Research in risk management, banking, derivatives etc . International banking, foreign exchange, monetary economics, micro finance, rural finance The effects of financial constraints on corporate investment decisions and demand for liquidity Corporate finance Capital budgeting Virtual finance Financial planning and forecasting Structured finance Computational finance Optimization methods in finance Dependence on external finance: an inherent industry characteristic? Project finance as a tool for growth Creating value through financial management Cost reduction and control New financial approaches for the economic sustainability in manufacturing industry Activity-based costing and management Fundamental analysis to assess earnings quality Eqa earnings quality analysis Zero base budgeting International business International Finance Investment Banking Investment Management Venture capital
Why is capital so important in economics?
as finance used to acquire produced equipment; as all finance used to begin and carry on production, including the wage fund; and as the assessed value of the whole productive enterprise
What can be the Project topics on insurance related to finance?
· Working Capital management · Capital structure · RATIO ANALYSIS · Financial Modelling of a company for last 10 years, leading to a analysis of its ratios. · Liquidity Analysis. · Comparative Valuation. · Corporate lending · Industry analysis and company analysis on a scenario basis, competitiveness, growth potential and credit analysis · Debtor management · Research in Risk management, Banking, Derivatives etc · International Banking · Foreign Exchange · Monetary Economics · Micro Finance · Rural Finance · The Effects of Financial Constraints on Corporate Investment Decisions and Demand for Liquidity · Corporate finance · Capital budgeting · Virtual finance · Financial Planning and forecasting · Structured Finance · Computational finance · Optimization Methods in Finance · Dependence on external finance: an inherent industry characteristic? · Project Finance as a Tool for Growth · Creating Value through Financial Management · Cost Reduction and Control · New Financial Approaches for the Economic Sustainability in Manufacturing Industry · Activity-based costing and management · Fundamental Analysis to Assess Earnings Quality
