CBS - Revision

Front

Describe future value?

Back

Is the value of a current asset at a future date based on an assumed rate of growth

How much money will be worth in the future after earning interest or investment returns.

Front

Define present value.

Back

the current value of the future sum of money, at a specified rate of return.

how much a future amount is worth right now, after discounting (removing) interest.

Front

Edward has RM 10,000 in a savings account that earns a simple interest at 7% per annum.

Calculate the interest Edward earns in 5 years.

Determine the accumulated savings at the end of year 5.

Back

Interest = P × r × t

Interest = 10,000 × 0.07 × 5 = RM 3,500

Accumulated saving = P + i

10,000+3,500=RM 13,500

Front

Rachel deposits RM15,000 in a bank today that pays 8%.

What will the money be worth in 3 years if interest rate is compounded semi-annually?

Back

A = P(1 + r/n)^nt

A = 15,000(1+8%/2)^2(3)

A = 15,000 x 1.2653

= RM 18,975.50

Front

A company sets aside RM50,000 as a staff welfare fund earning 4.8% simple interest.

How long will it take for the fund to grow to RM70,000?

Back

Simple Interest = P x R x T

A = P + (P x R x T)

A = P(1+rt)

70,000 = 50,000(1 + 0.048t)

= 8.333 years

Front

Hakim wants RM35,000 in the future. He invests money today at 8% simple interest for 7 years, and he earns RM13,440 in interest.

Calculate the amount he originally invested.

Back

Simple Interest = P x R x T

13,440 = P x 0.08 x 7

P = RM 24,000

Front

Kamal invests RM22,000 at 7% compounded quarterly.

What will his investment be worth in 6.5 years?

Back

A = P(1 + r/n)^nt

A = 22,000(1 + 0.07/4)^4(6.5)

A = 22,000 x 1.56998

A = 34,539.56

Front

If you were starting a small café tomorrow, what financial decisions would you need to make?

Back

Financial Decision

- Where will the money come from?

• Personal savings

• Bank loans

• Investors/partners

• Government grants or SME financing

Front

What are the elements of financial management? (decision)

Back

Investment decision

Financial Decision

Dividend decision

Front

Define the objectives of financial management

Back

• -To ensure regular and adequate supply of funds to the concern

-To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholder

• -To ensure optimum funds utilization. Once the fund are procured, they should be utilized in maximum possible way at least cost

  -To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved

  - To plan a sound capital structure that be balance between debt and equity capital.