Corporate Fin Mgt NDLM.PDF

Discounted Cash Flow technique and

Internal Rate of Return

1. Objectives :

1.1. At the end of this Learning Unit, the participants will be able to :-

• Calculate the present value of money receivable in future


• Use SPPWF and USPWF tables to calculate the PV of cost of returns


• Calculate the most economical decision


• Calculate the net present value (NPV)


• Calculate the Internal rate of return (IRR)

2. Sub-Units of Learning Unit- 2


3. Meaning and objective of DCFT


4. Present value of formulae with examples


5. Using of Discount factors with examples


6. Using of SPPWF table with examples


7. Using USPWF table with examples


8. Calculation of Internal rate of return


9. Instructions to Faculty :

3.1. Make a presentation in the sequence listed below, using visual aids Nos. 13 -

19:

∆ Explain the time value of money and meaning of discount factor, the

advantages of using DCFT and to which situations DCFT can be

applied

∆ Give simple examples, for example returns accruing on National Savings

Certificates, Fixed Deposits etc.,

∆ Explain with examples the method of calculating future value of money by

using Compound Interest

∆ Explain how present value (PV) can be calculated by reversing the

Compound Interest Formulae

∆ Explain how discount factor can be used.