Corporate Fin Mgt NDLM.PDF

Learning Unit- 4

Instructions to Faculty

Capital Management

First, explain the objectives of this Learning Unit.

Objectives:

At the end of this Learning Unit the participants will be able to:

1. Understand the nature of investment decisions.


2. Value the estimated future benefits that will occur to the firm over a series of years.


3. Understand the implications of long-term investments.


4. Apply the steps of investment evaluation criteria methodically.


5. Work out to accept or reject an investment proposal.


6. Use pay back period as a method of evaluating investment proposal.


7. Evaluate both the lending and borrowing type projects.


8. Build the relationship between profitability and risk.


9. Describe basic risk concepts.


10. Incorporate risk analysis in the capital budgeting proposals.


11. Apply different approaches to the calculation of cost of equity capital.


12. Adopt CAPM approach for computing the cost of equity.


13. List merits and demerits of the CAPM approach.


14. Calculate weighted average cost of capital.


15. Determine the cost of equity capital of the company.


16. Establish the relationship between leverage and the cost of capital.


17. Critically appraise the traditional approach and the Modigliani- Miller approach to the
    problems of capital structure.


18. Establish the relationship between capital structure and the value of firm.


19. Define capital structure, appropriate capital structure and flexible capital structure.


20. Employ yield measures like, current yield, yield to maturity, yield to call and realized
    yield to maturity.


21. Undertake stock valuation by using dividend discount model.


22. Understand the DEMAT systems and the working of depositary system in India.