(This post explains what are NPV, IRR, DCF, Time value of money, Hurdle rate or opportunity cost of capital, accounting rate of return, pay- back period etc.) The price of groceries or any other items purchased by you today will not be same next year. The purchasing ability of a Rupee today is different (normally…
Benefit to cost ratio is used to calculate the NPV in a proportion or ratio format. Here, the present value of future cash flows is calculated on proportion method, though, the method of calculation is similar to NPV method. Benefit to cost= Present value of investment/ present value (PV) of future inflows. If the ratio…
The Financae Minister Mr.Arun Jaitley, said that Cabinet approves 2.11 lakh crore recapitalization package to public sector banks. Of 2.11 crore, Rs 1.35 lakh crore will come from recap bonds, while the rest will come from the market and budgetary support.Finance minister informed that the entire Rs 2.11 lakh crore of capitalisation will be spread…
The Ministry of Rural Development, Government of India is operating a scheme namely ‘Interest Subvention Scheme under Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM)’. The funding for the scheme will be met out of Central Allocation under DAY- NRLM. This scheme is limited to Women Self Help Groups in rural areas only and…
The Ministry of Micro, Small and Medium Enterprises is operating a scheme namely “Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation of Micro and Small Enterprises. If you are a MSE (Micro & Small Enterprise) manufacturer and if you want to modernize your equipment/plant/machineries, you may get capital subsidy of up to Rs.15 lakh…
A company determines the selling price of its products after calculating of the fixed cost, variable cost involved in productions and sales of the items produced by it. There are three other important workings in the process viz. profit volume ratio, breakeven point and margin of safety. Let us study how the companies examine all…
Sinking fund is also known as depreciation fund. Sinking Fund is a fund into which a company sets aside its revenue over a period of time, in order to fund a future capital expense or used to replace the asset at the end of its useful life or for gradual repayment of company’s long-term debt.…
Annuity is a fixed sum of money paid to the investor or insurer to a series of annual sums for specific length of time or the rest of their life. In the case of reverse mortgage loan provided to senior citizen against security of their home is another example where loan amount is used to…
EMI is acronym to an equated monthly installment (EMI). It is a fixed amount payable by a borrower to a lender at each calendar month at a stated date. Under this system the principal and interest thereon is repaid through equal monthly interest over the fixed tenure of the loan. EMI is fixed based on…
When a lender grants loan to a borrower, he charges fee (interest) on money lent. The interest payable by the borrower may be simple interest or compound interest. Simple interest means interest charged at flat rate only on the principal amount. In the other words the interest will not be charged on the interest debited…