Learning Unit - 4
Capital Management
Objectives :-
At the end of this learning unit the participants will be able to:
- Understand the nature of investment decision.
- Value the estimated future benefits that will accrue to the firm over a series of
years. - Understand the implications of long-term investments.
- Apply the steps of investment evaluation criteria methodically.
- Work out, to accept or reject a investment proposal.
- Use pay back period as a method of evaluating investment proposal.
- Evaluate both the lending and borrowing type projects.
- Build the relationship between profitability and risk.
- Describe basic risk concepts.
- Incorporate risk analysis in the capital budgeting proposals.
- Do the calculation of cost of equity capitals.
- Adopt CAPM approach for computing the cost of equity.
- List the merits and demerits of the CAPM approach.
- Calculate weighted average cost of capital.
- Determine the cost of equity capital of the company.
- Establish relationship between leverage and in the cost of capital.
- Critically appraise the traditional approach and the Modigliani-Miller
approach to the problems of capital structure. - Establish relationship between capital structure and the value of firm.
- Define capital structure, appropriate capital structure and flexible capital
structure. - Employ yield measures like current yield, yield to maturity, yield to call and
realized yield to maturity. - Stock valuation by using dividend discount model.
- Understand the DEMAT systems and the working of depository system in
India.