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1. NTA UGC
NET
COMMERCE
Financial
Management
Classes By- Sakshi Saxena

2. • Concept
• Financial Goal-Profit Maximization & Wealth
Maximization
• Introduction to Capital Budgeting decisions
Financial Management
Classes By- Sakshi Saxena

3. • Financial management is that managerial activity which
is concerned with planning and controlling of firm’s
financial resources.
• It has no unique body of knowledge.
• The three most important activities of a business firm
are-
Production
Marketing
Finance
Classes By- Sakshi Saxena

4. Meaning- Capital Budgeting Decisions may be defined as
the firm decisions to invest its current funds most
efficiently in long term assets in anticipation of an expected
flow over the series of years.
Importance of Capital Budgeting Decisions
They influence the firm’s growth in the long term.
They affect the risk of the firm.
They involve large amount of funds.
They are irreversible and reversible at sustainable cost.
They are among the most different decisions to make.
Classes By- Sakshi Saxena

5. Classes By- Sakshi Saxena
 It influences the growth of the firm.
It effect the risk of the firm.
It involves the commitment of large amount for
long period.
They are most difficult decision to make.
They are irreversible.

6. There are basically three types of investment decisions.
They are as follows :
oMutually Exclusive Investment
oIndependent Investment
o Contingent Investment
Mutually Exclusive Investments :
They serve the same purpose and compete with each
other.
Independent Investment Decisions
They serve different purposes and do not compete with
each other.
Contingent Investment Decisions
They are dependent projects the choice of one investment
necessitates undertaking one or other investments.
Classes By- Sakshi Saxena

7. *Discounted Cash Flows
* Non discounted Cash Flows
Evaluation Criteria
Discounted Cash Flows Non Discounted Cash Flows
1. NET PRESENT VALUE 1. PAYBACK PERIOD
2. INTERNAL RATE OF 2. DISCOUNTED PAYBACK
RETURN
3. PROFITABILITY INDEX 3. ACCOUNTING RATE OF RETURN
Classes By- Sakshi Saxena