Scribd
Upload
44 views7 pages

Corporate Finance

This document summarizes the findings of a survey about corporate finance and capital budgeting practices in India. 77 companies responded to the survey. The most commonly used techniques for capital budgeting were NPV, IRR, MIRR and simulation analysis. Larger companies used more sophisticated techniques while older companies preferred simpler methods like payback period. Companies calculated multiple discount rates based on project risk and most used WACC, cost of debt or prevailing bank rates. Risk calculation is now more prominent, using techniques like standard deviation. Cost of capital was typically calculated using WACC or cost of debt, while cost of equity used CAPM or dividend yield methods.

Uploaded by

priyanka valechha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
44 views7 pages

Corporate Finance

This document summarizes the findings of a survey about corporate finance and capital budgeting practices in India. 77 companies responded to the survey. The most commonly used techniques for capital budgeting were NPV, IRR, MIRR and simulation analysis. Larger companies used more sophisticated techniques while older companies preferred simpler methods like payback period. Companies calculated multiple discount rates based on project risk and most used WACC, cost of debt or prevailing bank rates. Risk calculation is now more prominent, using techniques like standard deviation. Cost of capital was typically calculated using WACC or cost of debt, while cost of equity used CAPM or dividend yield methods.

Uploaded by

priyanka valechha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 7

Corporate Finance

Project
PRESENTED BY-
GROUP-2
NAMAN AGARWAL- 201911024
SHRUTI LELE - 201911041
PRIYANKA VALECHHA - 201911030
SANATAN CHAUDHARI - 201911036
VAIBHAV KUMAR - 201911047
SHRIYA BHAMBHANI - 201911109
Introduction

 Present evidence on Current Indian investment practices and to


determine how far these practices reflect the latest financial
theories
 Survey based on Questionnaire circulated to companies
 77 companies replied for the same
 Need for Capital Budgeting -
 Smaller companies in majorly expansion of current business
 Larger companies for entry into new business
Capital Budgeting Techniques

 Most preferred – NPV, IRR, MIRR and Simulation Analysis


 Sophisticated techniques such as NPV adjusted with real option
analysis, EVA etc are not preferred
 Larger the size of company, the more sophisticated techniques
are used
 Older companies prefer Payback period, Younger companies tend
to use sophisticated techniques
 Now companies prefer to use multiple Capital Budgeting
Techniques
Discounting Rates & Risk

 Most preferred discount rates-


 WACC
 Cost of Debt
 Prevailing Bank Rate
 Companies calculate multiple discount rates based on different
projects and their prevailing risks
 Calculation of risks is now prominent. Standard deviation and Co-
efficient of Variation are commonly used for calculation
 Unexpected Inflation risk, Interest rate risk & Foreign Exchange
Risk considered as most important
Cost of Capital & Cost of
Equity
 Methods used for calculation(COC)-
WACC

Cost of Debt

 Methods used for calculation(COE)-


CAPM – Generally used by larger firms
Dividend Yield Method – Generally used by smaller firms
In general sense, both of the methods are used equally
Maintaining
Availability of raw existing product
material, labour, lines and keeping
location, technology up with
and power competition
NON
FINANCIAL
CONSIDERATIO
Government NS
legislations, Linkage with
Environmental corporate strategy,
constraints Demand-Market
analysis
THANK YOU

You might also like