1 / 13

MN10311 Corporate Finance and Investment Appraisal

MN10311 Corporate Finance and Investment Appraisal. or Finance. The Course Tutor. Mr A N Birts, ACT Cert ICM, BSc, MBA WH 8.56 mnsanb@management.bath.ac.uk To obtain course outline, copies of overheads and seminar questions go to my personal website. Finance.

annbaker
Download Presentation

MN10311 Corporate Finance and Investment Appraisal

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. MN10311Corporate Finance and Investment Appraisal or Finance

  2. The Course Tutor • Mr A N Birts, ACT Cert ICM, BSc, MBA • WH 8.56 • mnsanb@management.bath.ac.uk • To obtain course outline, copies of overheads and seminar questions go to my personal website

  3. Finance • What is the objective of the organisation? - Make a profit? - Supply goods and or services? - Provide employment? - Growth? - Customer care? - Environmental care?

  4. Finance • All of these but for finance there is one objective and that is :- To Maximise Shareholder Wealth or Where no shareholders, an equivalent in terms of use of resources.

  5. Finance • Maximising Shareholders Wealth means Maximising Share Price. • Current Share Price Should Reflect All Future Cash Flows Discounted At The Appropriate Discount Rate

  6. Finance • Obstacles to maximising shareholders wealth. - Stakeholders * Directors * Managers * Workers * Customers * Suppliers What are their objectives?

  7. Finance • How may these be controlled? - Non Executive Directors? - AGM? - Published Accounts? - Audit? - The Market?

  8. Finance • Generalised Organisation Finance Director (the city!) Controller Accountant Treasurer Internal External Funding Management Reporting Risk Accounts, costing Bank relations

  9. Finance • Simple Model of Value Cash Flow Cost of Capital = Current Value (Required Return)

  10. Finance • Example Assume constant cash flow forever of 100,000 pa and required return of 10% (.10), then investor would be willing to pay today 100,000 = 1,000,000 .10

  11. Finance • We may add value by increasing cash flow e.g. 120,000 = 1,200,000 .10 How would we do this:- as a company? as financial managers?

  12. Finance • Or by reducing the required rate of return E.g. 100,000 = 1,250,000 .08 As financial managers how may we do this?

  13. Finance

More Related