Business Finance

2022
Session 2
 Social Business
Social business is an OXYMORON
Bitter sweet, Clearly Confused, Deafening Silence, Only Option, Open
Secret, Original Copy
The budget was unlimited, but I exceeded it. - Donald Trump

Prof. Yunus: Trying to maximize social benefit by using commercial

model e.g. Grameen, BRAC
NGOs, Non-Profits, TSOs
Stakeholders VS
Shareholders
 Agency
• Relationship between owners & managers
• Corporate Governance
• Operational Management
• Who has a higher stake?
• Conflict of interest
 What Can You Do With a Major in Finance?
You can choose to make a career from a vast array of fields such as:
Banking Non Banking Corporations Accounting Brokerage and
Financial Institutions Security Companies
Corporate and Leasing Corporate Planning Budgeting & Planning Equity Research
Commercial Banking
Consumer and Retail Insurance Financial Operations Taxation Money & Capital
Banking Markets
Investment Banking Mutual Funds Project Management Auditing
Treasury Funds Management Accounting
Islamic Banking Financial Services
Digital Banking Management
Consultancy
 Interest
Business world is a transactional world (means give & take)

Deposit: You are giving the bank a right to use your money. As you are
giving something, in return you should receive something

Loan: You are getting a right to use bank’s money. As you are receiving
something, in return you must pay something

Payment for the right to use money is called Interest

 Simple Interest Formula
Interest = (Amount deposited/received) × Rate × Time

Principal
 Compound Interest
Simple interest + Interest on Interest

Value = Principal × (1 + Rate )nt

n

Value = Principal + interest

T = time

n = number of times compounded in t

 Annuity
An annuity is an investment in which the investor makes a sequence of
periodic, equal payments

• Ordinary annuities: An ordinary annuity makes payments at the end

of each period. For example, bonds pay interest at the end of every
year.
• Annuities due: With an annuity due, by contrast, payments are made
at the beginning of each period. For example, Rent, which landlords
typically require at the beginning of each month.
 Annuity

• Recurring payments, such as the rent on an apartment or interest on

a bond, are sometimes referred to as "annuities."
• In ordinary annuities, payments are made at the end of each period.
With annuities due, they're made at the beginning of the period.
• The future value of an annuity is the total value of payments at a
specific point in time.
• The present value is how much money would be required now to
produce those future payments.
 Formula – Ordinary Annuity
If you plan to invest a certain amount each month or year, annuity will tell you
how much you'll have accumulated as of a future date.

FV _Ordinary Annuity​= C × (1+i)n − 1​
i
where:
C=cash flow per period
i=interest rate
n=number of payments​