Applied Corpomate inance 05-Oct-

pe of Firms
Sole popie ter One owner, unlimited liq bi lity, no self- continu
-

Pont ners hip Multple owners, unlimited liability, selk- continuar bil
Some exttnt
LLP Multiple Owners, limifed iability
Pvivat
Public td. Public shartholdinq, move liquidity, martet dis cove
shat Bonds (debt) fixed rtumn
shae
tbeks (equity)- sh aved risk

anajr^ suppoje to be age nts of shartho[ders.

hey tak decision s which ar best fr shareholders.
Aency poblems menuy, shirk, growth, risk
ways to ove Come Voia ble pay, EsoPs, board
sothat managr starts to wovk as shareholdrrs)
t: Tata Sens Cyruy Miitry (Read)
kingiher } Vijay Mallya
Mavket Valuu Balance Sheat inelu des, empleyees, apprttiaftel aset et.
brand vales, prejent value ok
To make invest ment deu'sio 9rowth
n opportunities (PV G)
and Fuv ther
inancing
decision basec on
that
 Applied oYp. inan c (Sesien 2 07- Oct-2
Morket Participanty
Inves ors
peu lator Buy /Sell based on qut. feelings, provi dey liquidity in market
-

Avbitrayo Operates in shovt-term, den't take any rsks,

ensurt pride convers ion to tvue values5.
Time Va lw
Fuure value = FV C (1+)
Present valu PV =
Discounting facoY 1 (14) DE

Perpet uit
C
Annuity TC TC14) ny (1-3r).. eg pensyon tynde

9-9ething 160/y) (co nstant cash flog o ve time)

perpetui t
Growing anhut Constant quwth cash fles over time)

pin annuity 1 - ] . A
C14
APR Annua . Rate, EAR Effective annua rae

EAR is calculatd by compounding the rate guarterly

4. i £Rr AP R = lo m

Per quavter a t = 2-
EAR= APR

EAR (1.0 2y o.3 8

 1Ynurrind) (1+ (1+ ntlubion
lo-Oct-
Applied (orporae Fingnce

300 SoO

ov D countd Prespnt
DO 300
DPV_ -+2 . 2 1-13
+
1.1S Valut

Let3co in vest ment at prejnt, ie at 0.

Sabtratt tt 300 om DPV, : 3oo is out Hlouw at present

bimt. bime
NPV Net Present Value
DPV-300
C mpo und ed
at intermittent perod m
C For m-00 PV= Ce - FV. e"t
PV= m
(1+) FV= PV. e " t

iss bends
Bonds:- Any public liit e compary goV. ergs Can un

Coupenrahe interejt poymtnt amounT

Face value Prio ciple ameun txpeetd o qtt

Present va/u Pja of bond

Bend yield r a t In Ind)a all bn dj compound semi-qnual

30-1y bond USA

lo-19 notnot ey
<lyr bills
 dddddtttRRhEEL
pital At any peint we an only conti
Hows 2 f thyt 3.

Fotx Montt ay
pelioy
word rates, s pot rates, yleld curves

3240
 17-Ocf
Operaions Manaqement

Y T t S A a deli tive model

Tvtrd yoliit Seasonalby Rondomngs

epeatatve spike
demonc paten io demond

YT CS x* Multiplicakve model

tKampl Te
Y(sale)- CMA SXE
SR CMA
Yondichdy -
Sady
Prtdiotl descason dx Sadg

Applitd Cporak finantt- 20-Oct-zr

Stock va luahiong

Measume to be yd TTM Tailing |2 Months data)

Ple P Saly)
tum
DIV, +P, - P aflrT DIV+P-P,
P
Div,P P, 91V, +P
P.
Y
+Y
DaVi
14Y
(1+) (14
 DV

2Stat- Dividened digcount mocdl

.
(l+

Q Presenk pmject praduu coyt flo of2 in yto)

valuts a
1s, vhatis PV?
137 in Y2 $717 in 3. 1f cojt of capital is
PV 432 137 +797
+
1-Is

9.2) Compu nd .P. =12°

s
invejt lo00 hat is ovth alter yy.
$loso X
-012S 1821.0
e

Lhak is PV of $SM to be tcejed in 8yn.

5Mxe

cpVof (ont cashflovs, a mounhng b fo ov/yT, stavtiny immtdiatly

continu ing fr I5 yy.
-0-12x Is
O-)2
inflom aft operating coy
-5reyent val fachy (osts $o0.00. expechd oest el capital is 157.,
o17,0oco/yy f 10 y. If oppovtunity
what i NPV fa thoy
110,00
0.1 -1419P