The document presents an alternative model for profit distribution on deposits in Islamic banks. Currently, banks use a weightage system that can negatively impact some depositors if weights are changed. The proposed model uses an income sharing ratio that distributes profits directly to the bank and depositors, avoiding losses to depositors if one ratio is adjusted. It provides an example showing that the alternative model maintains equitable profit distribution when seeking to increase one depositor's share.
The document discusses several valuation models:
1. Discounted cash flow (DCF) model, which discounts future cash flows.
2. Tobin's Q model, which compares a firm's market value to replacement cost of assets.
3. Market multiples model, which uses multiples like price-to-earnings to value firms.
4. Valuation football field (FBF) provides an overview of valuations from different sources.
Common stock valuation methods include:
1. Discounting future dividends using the required return rate for the stock. This works best when dividends are constant or grow at a known rate.
2. Using the earnings per share and an industry benchmark PE ratio when dividends are not paid, as the PE ratio captures expected future earnings and dividend growth.
3. Special cases exist when dividends are constant forever or grow at a constant rate, allowing the stock value to be directly calculated using perpetuity or dividend growth models. However, these ideal cases are rare in practice.
The document discusses capital structure and the Modigliani-Miller approach. It provides definitions of capital structure and optimal capital structure. It then outlines the key assumptions of the Modigliani-Miller approach, including perfect capital markets, no taxes, 100% dividend payout, and constant business risk. The document explains the Modigliani-Miller propositions that the market value and cost of capital of a firm are independent of its capital structure. It provides an example to demonstrate how arbitrage would eliminate any differences in market values between levered and unlevered firms.
This document discusses the cost of capital and how to calculate it. It defines cost of capital as the rate of return a firm must earn on its investments to maintain its market value and attract funds. It then discusses how to calculate the costs of different sources of capital including long-term debt, preferred stock, common stock, and retained earnings. It explains how to calculate the weighted average cost of capital (WACC) and discusses weighting schemes. Finally, it discusses how to determine break points and calculate the weighted marginal cost of capital (WMCC), which can be used with the investment opportunities schedule to make financing decisions.
The document discusses several capital structure theories:
- The Modigliani-Miller model establishes that firm value is independent of capital structure under certain restrictive assumptions.
- The trade-off theory recognizes that while debt provides tax benefits, it also increases financial distress costs at higher leverage levels.
- Agency theory suggests that debt can help reduce equity agency costs by limiting free cash flow.
- Signaling theory posits that capital structure decisions signal private information to investors.
- Overall, the optimal capital structure balances these factors and depends on firm-specific characteristics.
The document discusses cost of capital and its importance for investment decision making. It defines cost of capital as the rate of return a company must pay to its investors for raising funds through different sources like debt and equity. It also discusses weighted average cost of capital (WACC) as the blended rate a firm pays for its capital, incorporating costs of different sources based on their market values. The document emphasizes that cost of capital should be used to evaluate potential investments and set the minimum return threshold. It also summarizes investment theory and how cost of capital analysis helps rational investment decision making per Miller and Modigliani's theory.
The main types of dividends are cash dividends which are payments made to shareholders in cash, bonus shares which increase the number of shares held, and special dividends which are additional non-recurring payments over regular dividends usually due to abnormal profits. Dividends can also be interim dividends paid during the year or annual dividends paid once a year. Regular cash dividends refer to the expected annual dividend payments a company aims to maintain.
The document discusses several valuation models:
1. Discounted cash flow (DCF) model, which discounts future cash flows.
2. Tobin's Q model, which compares a firm's market value to replacement cost of assets.
3. Market multiples model, which uses multiples like price-to-earnings to value firms.
4. Valuation football field (FBF) provides an overview of valuations from different sources.
Common stock valuation methods include:
1. Discounting future dividends using the required return rate for the stock. This works best when dividends are constant or grow at a known rate.
2. Using the earnings per share and an industry benchmark PE ratio when dividends are not paid, as the PE ratio captures expected future earnings and dividend growth.
3. Special cases exist when dividends are constant forever or grow at a constant rate, allowing the stock value to be directly calculated using perpetuity or dividend growth models. However, these ideal cases are rare in practice.
The document discusses capital structure and the Modigliani-Miller approach. It provides definitions of capital structure and optimal capital structure. It then outlines the key assumptions of the Modigliani-Miller approach, including perfect capital markets, no taxes, 100% dividend payout, and constant business risk. The document explains the Modigliani-Miller propositions that the market value and cost of capital of a firm are independent of its capital structure. It provides an example to demonstrate how arbitrage would eliminate any differences in market values between levered and unlevered firms.
This document discusses the cost of capital and how to calculate it. It defines cost of capital as the rate of return a firm must earn on its investments to maintain its market value and attract funds. It then discusses how to calculate the costs of different sources of capital including long-term debt, preferred stock, common stock, and retained earnings. It explains how to calculate the weighted average cost of capital (WACC) and discusses weighting schemes. Finally, it discusses how to determine break points and calculate the weighted marginal cost of capital (WMCC), which can be used with the investment opportunities schedule to make financing decisions.
The document discusses several capital structure theories:
- The Modigliani-Miller model establishes that firm value is independent of capital structure under certain restrictive assumptions.
- The trade-off theory recognizes that while debt provides tax benefits, it also increases financial distress costs at higher leverage levels.
- Agency theory suggests that debt can help reduce equity agency costs by limiting free cash flow.
- Signaling theory posits that capital structure decisions signal private information to investors.
- Overall, the optimal capital structure balances these factors and depends on firm-specific characteristics.
The document discusses cost of capital and its importance for investment decision making. It defines cost of capital as the rate of return a company must pay to its investors for raising funds through different sources like debt and equity. It also discusses weighted average cost of capital (WACC) as the blended rate a firm pays for its capital, incorporating costs of different sources based on their market values. The document emphasizes that cost of capital should be used to evaluate potential investments and set the minimum return threshold. It also summarizes investment theory and how cost of capital analysis helps rational investment decision making per Miller and Modigliani's theory.
The main types of dividends are cash dividends which are payments made to shareholders in cash, bonus shares which increase the number of shares held, and special dividends which are additional non-recurring payments over regular dividends usually due to abnormal profits. Dividends can also be interim dividends paid during the year or annual dividends paid once a year. Regular cash dividends refer to the expected annual dividend payments a company aims to maintain.
The document discusses various capital structure theories:
1. The net income approach suggests that changing the capital structure will change the cost of capital and value of the firm. It assumes no taxes and constant costs.
2. The net operating income approach assumes the overall cost of capital remains unchanged for different leverage levels. It focuses on how debt affects the risk and required return on equity.
3. The MM approach argues that the value and cost of capital are independent of capital structure under certain assumptions. Increased risk from debt is offset by lower cost of debt.
4. The traditional approach suggests moderate use of debt can lower costs up to a point, but costs rise sharply at very high leverage levels.
The document discusses capital structure and the tradeoffs between debt and equity financing. It summarizes Modigliani and Miller's seminal work which established that in a perfect capital market without taxes, a firm's value is independent of its capital structure. Specifically, M&M Proposition 1 states that splitting cash flows between debt and equity holders does not change total firm value. Proposition 2 states that the expected return of equity increases with leverage in a way that exactly offsets the reduced risk of debt.
Dividend policy refers to a company's decision to pay dividends to shareholders from its earnings. Several factors influence a company's dividend policy, including the stability of its earnings, its ownership structure, capital needs, business cycles, government regulations, taxation policies, and legal requirements. There are several models that attempt to determine the optimal dividend policy, including Walter's model, Gordon's model, and the Modigliani-Miller model. These models make assumptions about financing, growth rates, and capital markets in analyzing how dividend policy impacts share prices.
This document provides an overview of cost of capital, including:
1. Definitions of capital, cost of capital, and the significance of calculating cost of capital for capital budgeting and other decisions.
2. Methods for calculating the cost of different sources of capital such as equity, preferred stock, debt.
3. Factors that affect the cost of capital for a firm.
4. The weighted average cost of capital (WACC) and how it is calculated based on a firm's target capital structure.
This document discusses the weighted average cost of capital (WACC) and its components. It addresses how to calculate WACC using the costs of debt, preferred stock, and common equity weighted by the target capital structure. It also discusses adjusting component costs for taxes and risk and determining the weights. Project risk can be standalone, corporate, or market risk and may require adjusting the composite WACC. Risk adjustments are made subjectively based on a project's estimated beta.
X Ltd. manufactures pens with a marginal cost of Rs. 3 per pen and fixed costs of Rs. 25,000 annually. It currently produces and sells 50,000 pens at Rs. 5 each. To achieve a target profit of Rs. 100,000, the company must determine how many additional pens it needs to produce and sell if it reduces the price of additional units by 20%.
The document discusses capital structure, which refers to the composition and proportions of various capital sources like loans, reserves, shares, and bonds that make up a company's total capital (capitalization). It also discusses the impacts of leverage and different capital structure alternatives on earnings per share. Over-capitalization occurs when a company's earnings are insufficient to provide a fair return on its investments, while under-capitalization means a company's capital is less than what is required.
The document discusses capitalization and capital structure. It addresses two issues: the magnitude of capital employed and the proportion of different forms of capital. It describes two approaches to determining optimal capitalization - cost theory and earnings theory. Earnings theory is generally preferable as it is aligned with a firm's earning capacity and estimates can be made reliably for ongoing concerns based on historical profits. Over-capitalization can harm a firm's performance, while under-capitalization has some advantages. Various measures are discussed to reorganize a firm's capital structure, such as changing share par value or issuing bonus shares.
A PRESENTATION ON VALUATION OF SECURITIESRavi kumar
This presentation discusses methods for valuing securities including discounted cash flow analysis, comparable company analysis, and capitalization of earnings. It defines equity value as the overall value of a business after subtracting outstanding debts, and defines enterprise value as a company's total value calculated as equity value minus cash plus debt, minority interest, and preferred stock. The importance and roles of valuation are also covered such as for business succession planning, IRS requirements, portfolio management, acquisitions analysis, corporate finance, and legal and tax purposes.
This document discusses methods for calculating the cost of capital, including the cost of debt, equity, and preference shares. It outlines the Capital Asset Pricing Model (CAPM) approach for estimating the cost of equity, as well as other methods like the dividend yield plus risk premium approach and the dividend discount model. It also discusses how to calculate the weighted average cost of capital (WACC) using target capital structure weights. Additionally, it notes some issues that companies face in estimating their cost of capital and common misconceptions about the concept.
The document discusses the cost of capital, which is the rate of return a firm requires to increase its market value. It has three components: return at zero risk, business risk premium, and financial risk premium. Cost of capital is classified as historical vs future, specific vs composite, average vs marginal, and explicit vs implicit. Specific costs include cost of debt, preference shares, equity shares, and retained earnings. Composite cost is the weighted average cost of different sources. Cost of capital is computed using book value weights or market value weights to determine the weighted average cost of capital (WACC).
The document discusses cost of capital, including its meaning, significance, components, and calculation of average weighted cost of capital. It defines cost of capital as the minimum required rate of return for a project given its riskiness. The firm's overall cost of capital is the average required rate of return across all investment projects. It identifies the key components of cost of capital as cost of debt, preference shares, equity shares, and retained earnings. It also discusses the significance of cost of capital for investment decisions, capital structure design, performance evaluation, and dividend policy formulation. Finally, it provides the formula for calculating weighted average cost of capital and discusses using it to evaluate project net present value.
The document discusses various theories of capital structure, including the Net Income Approach, Net Operating Income Approach, Traditional Approach, and Modigliani-Miller Model. The Modigliani-Miller Model proposes that in a perfect market without taxes, the value of a firm and its cost of capital are independent of its capital structure. It consists of two propositions: 1) a firm's value depends only on its operating income and risk level, and 2) the cost of equity rises with leverage to offset the benefit of low-cost debt. Later models incorporate taxes, showing firm value increases with debt due to tax deductibility of interest payments.
The document discusses the Modigliani-Miller (MM) approach to capital structure. Some key points:
1) According to MM, the value of a firm and its overall cost of capital are independent of the firm's capital structure.
2) MM assumes that taxes and bankruptcy costs do not exist, and that debt and equity are perfect substitutes for one another.
3) Under MM, an increase in leverage will increase the cost of equity to offset the lower cost of debt, keeping the overall cost of capital constant.
4) The document provides an example to illustrate how two identical firms with different leverage would have the same overall value under MM.
The document discusses the cost of capital and how it is calculated. It can be summarized as:
1) The cost of capital is the weighted average rate that a firm is expected to pay to fund its assets and operations with different sources of capital such as debt, preferred stock, and common equity.
2) It is calculated by determining the market value proportion of each capital component, the market return expected by investors in each component, and adjusting for factors like taxes and flotation costs.
3) The weighted average cost of capital (WACC) represents the firm's hurdle rate and is used to evaluate whether potential projects can earn more than this required return.
This document discusses various aspects of capital budgeting and project financing, including:
1) Types of equity financing like retained earnings and issuing new stock or bonds.
2) Methods of debt financing such as bonds and term loans.
3) How to calculate the weighted average cost of capital (WACC) using the costs of equity and debt.
4) Examples are provided to demonstrate calculating the costs of different sources of financing like equity, debt, and the overall WACC.
The document discusses concepts related to calculating the cost of capital for a company. It covers determining the costs of different sources of capital like debt, preferred stock, common stock, and retained earnings. It also discusses calculating the weighted average cost of capital (WACC) by weighting the cost of each source of capital by its proportion in the target capital structure. The document provides examples of calculating costs of debt, preferred stock, and common equity using the dividend growth and CAPM models. It also includes a case study example of calculating the WACC for a company given its capital structure and costs of different sources of capital.
This document discusses interest (riba) in Islam. It provides several Quranic verses and hadith that prohibit riba. It then gives examples of the negative consequences of riba on societies through increased inflation, unemployment, and foreigners gaining control of national assets. The document suggests that the modern banking system originated from money lending with interest, allowing bankers to print more money than they held in reserves and gain wealth and power over time. It questions why Muslim societies accepted loans with interest that has led to problems. The conclusion asks what the future of riba is.
This document discusses Islam's prohibition on interest (riba) and introduces Islamic alternatives to interest-based financing. It begins by defining interest as any excess paid or received on the principal of a loan. The Quran explicitly bans riba in several verses. While capitalism allows money to generate unrestricted returns, Islam requires money to be invested and shared in business profits and losses. The document suggests interest misallocates capital and causes economic imbalances. It introduces musharaka, an Islamic financing model where investment returns are shared, as an alternative to interest.
The document discusses various capital structure theories:
1. The net income approach suggests that changing the capital structure will change the cost of capital and value of the firm. It assumes no taxes and constant costs.
2. The net operating income approach assumes the overall cost of capital remains unchanged for different leverage levels. It focuses on how debt affects the risk and required return on equity.
3. The MM approach argues that the value and cost of capital are independent of capital structure under certain assumptions. Increased risk from debt is offset by lower cost of debt.
4. The traditional approach suggests moderate use of debt can lower costs up to a point, but costs rise sharply at very high leverage levels.
The document discusses capital structure and the tradeoffs between debt and equity financing. It summarizes Modigliani and Miller's seminal work which established that in a perfect capital market without taxes, a firm's value is independent of its capital structure. Specifically, M&M Proposition 1 states that splitting cash flows between debt and equity holders does not change total firm value. Proposition 2 states that the expected return of equity increases with leverage in a way that exactly offsets the reduced risk of debt.
Dividend policy refers to a company's decision to pay dividends to shareholders from its earnings. Several factors influence a company's dividend policy, including the stability of its earnings, its ownership structure, capital needs, business cycles, government regulations, taxation policies, and legal requirements. There are several models that attempt to determine the optimal dividend policy, including Walter's model, Gordon's model, and the Modigliani-Miller model. These models make assumptions about financing, growth rates, and capital markets in analyzing how dividend policy impacts share prices.
This document provides an overview of cost of capital, including:
1. Definitions of capital, cost of capital, and the significance of calculating cost of capital for capital budgeting and other decisions.
2. Methods for calculating the cost of different sources of capital such as equity, preferred stock, debt.
3. Factors that affect the cost of capital for a firm.
4. The weighted average cost of capital (WACC) and how it is calculated based on a firm's target capital structure.
This document discusses the weighted average cost of capital (WACC) and its components. It addresses how to calculate WACC using the costs of debt, preferred stock, and common equity weighted by the target capital structure. It also discusses adjusting component costs for taxes and risk and determining the weights. Project risk can be standalone, corporate, or market risk and may require adjusting the composite WACC. Risk adjustments are made subjectively based on a project's estimated beta.
X Ltd. manufactures pens with a marginal cost of Rs. 3 per pen and fixed costs of Rs. 25,000 annually. It currently produces and sells 50,000 pens at Rs. 5 each. To achieve a target profit of Rs. 100,000, the company must determine how many additional pens it needs to produce and sell if it reduces the price of additional units by 20%.
The document discusses capital structure, which refers to the composition and proportions of various capital sources like loans, reserves, shares, and bonds that make up a company's total capital (capitalization). It also discusses the impacts of leverage and different capital structure alternatives on earnings per share. Over-capitalization occurs when a company's earnings are insufficient to provide a fair return on its investments, while under-capitalization means a company's capital is less than what is required.
The document discusses capitalization and capital structure. It addresses two issues: the magnitude of capital employed and the proportion of different forms of capital. It describes two approaches to determining optimal capitalization - cost theory and earnings theory. Earnings theory is generally preferable as it is aligned with a firm's earning capacity and estimates can be made reliably for ongoing concerns based on historical profits. Over-capitalization can harm a firm's performance, while under-capitalization has some advantages. Various measures are discussed to reorganize a firm's capital structure, such as changing share par value or issuing bonus shares.
A PRESENTATION ON VALUATION OF SECURITIESRavi kumar
This presentation discusses methods for valuing securities including discounted cash flow analysis, comparable company analysis, and capitalization of earnings. It defines equity value as the overall value of a business after subtracting outstanding debts, and defines enterprise value as a company's total value calculated as equity value minus cash plus debt, minority interest, and preferred stock. The importance and roles of valuation are also covered such as for business succession planning, IRS requirements, portfolio management, acquisitions analysis, corporate finance, and legal and tax purposes.
This document discusses methods for calculating the cost of capital, including the cost of debt, equity, and preference shares. It outlines the Capital Asset Pricing Model (CAPM) approach for estimating the cost of equity, as well as other methods like the dividend yield plus risk premium approach and the dividend discount model. It also discusses how to calculate the weighted average cost of capital (WACC) using target capital structure weights. Additionally, it notes some issues that companies face in estimating their cost of capital and common misconceptions about the concept.
The document discusses the cost of capital, which is the rate of return a firm requires to increase its market value. It has three components: return at zero risk, business risk premium, and financial risk premium. Cost of capital is classified as historical vs future, specific vs composite, average vs marginal, and explicit vs implicit. Specific costs include cost of debt, preference shares, equity shares, and retained earnings. Composite cost is the weighted average cost of different sources. Cost of capital is computed using book value weights or market value weights to determine the weighted average cost of capital (WACC).
The document discusses cost of capital, including its meaning, significance, components, and calculation of average weighted cost of capital. It defines cost of capital as the minimum required rate of return for a project given its riskiness. The firm's overall cost of capital is the average required rate of return across all investment projects. It identifies the key components of cost of capital as cost of debt, preference shares, equity shares, and retained earnings. It also discusses the significance of cost of capital for investment decisions, capital structure design, performance evaluation, and dividend policy formulation. Finally, it provides the formula for calculating weighted average cost of capital and discusses using it to evaluate project net present value.
The document discusses various theories of capital structure, including the Net Income Approach, Net Operating Income Approach, Traditional Approach, and Modigliani-Miller Model. The Modigliani-Miller Model proposes that in a perfect market without taxes, the value of a firm and its cost of capital are independent of its capital structure. It consists of two propositions: 1) a firm's value depends only on its operating income and risk level, and 2) the cost of equity rises with leverage to offset the benefit of low-cost debt. Later models incorporate taxes, showing firm value increases with debt due to tax deductibility of interest payments.
The document discusses the Modigliani-Miller (MM) approach to capital structure. Some key points:
1) According to MM, the value of a firm and its overall cost of capital are independent of the firm's capital structure.
2) MM assumes that taxes and bankruptcy costs do not exist, and that debt and equity are perfect substitutes for one another.
3) Under MM, an increase in leverage will increase the cost of equity to offset the lower cost of debt, keeping the overall cost of capital constant.
4) The document provides an example to illustrate how two identical firms with different leverage would have the same overall value under MM.
The document discusses the cost of capital and how it is calculated. It can be summarized as:
1) The cost of capital is the weighted average rate that a firm is expected to pay to fund its assets and operations with different sources of capital such as debt, preferred stock, and common equity.
2) It is calculated by determining the market value proportion of each capital component, the market return expected by investors in each component, and adjusting for factors like taxes and flotation costs.
3) The weighted average cost of capital (WACC) represents the firm's hurdle rate and is used to evaluate whether potential projects can earn more than this required return.
This document discusses various aspects of capital budgeting and project financing, including:
1) Types of equity financing like retained earnings and issuing new stock or bonds.
2) Methods of debt financing such as bonds and term loans.
3) How to calculate the weighted average cost of capital (WACC) using the costs of equity and debt.
4) Examples are provided to demonstrate calculating the costs of different sources of financing like equity, debt, and the overall WACC.
The document discusses concepts related to calculating the cost of capital for a company. It covers determining the costs of different sources of capital like debt, preferred stock, common stock, and retained earnings. It also discusses calculating the weighted average cost of capital (WACC) by weighting the cost of each source of capital by its proportion in the target capital structure. The document provides examples of calculating costs of debt, preferred stock, and common equity using the dividend growth and CAPM models. It also includes a case study example of calculating the WACC for a company given its capital structure and costs of different sources of capital.
This document discusses interest (riba) in Islam. It provides several Quranic verses and hadith that prohibit riba. It then gives examples of the negative consequences of riba on societies through increased inflation, unemployment, and foreigners gaining control of national assets. The document suggests that the modern banking system originated from money lending with interest, allowing bankers to print more money than they held in reserves and gain wealth and power over time. It questions why Muslim societies accepted loans with interest that has led to problems. The conclusion asks what the future of riba is.
This document discusses Islam's prohibition on interest (riba) and introduces Islamic alternatives to interest-based financing. It begins by defining interest as any excess paid or received on the principal of a loan. The Quran explicitly bans riba in several verses. While capitalism allows money to generate unrestricted returns, Islam requires money to be invested and shared in business profits and losses. The document suggests interest misallocates capital and causes economic imbalances. It introduces musharaka, an Islamic financing model where investment returns are shared, as an alternative to interest.
This document discusses selfies and provides information on their history, types, popularity, and impact. It notes that the selfie was named word of the year in 2013 by Oxford Dictionary. Some key points covered include that the first selfie was taken in 1905, over 1 million selfies are taken daily, and selfies make up 30% of photos taken by those aged 18-24. The document also lists different types of selfies and cautions that some selfies can be dangerous if the photographer is not paying attention to their surroundings.
Causes of-poverty-presentation-on-poverty-poverty-in-pakistan by salim sahilazanahmadlangah
Poverty is a widespread global issue, with over 3 billion people living on less than $2 per day. Absolute poverty refers to a lack of access to basic needs, while relative poverty means having a low income compared to others in one's society. Poverty traps people in a cycle of poor health, lack of education, and lost opportunities that is then passed on to future generations. Some of the major causes of poverty include lack of economic growth, political instability, natural disasters, and lack of access to education, healthcare, and other resources. Addressing poverty requires tackling its complex social and economic roots.
The document discusses the history and psychology of selfies. It traces the origins of self-portraits back to the 15th century and discusses how technology has enabled the rise of the selfie culture. Taking selfies can boost self-esteem and confidence but may also be linked to narcissism, obsession, and body dysmorphic disorder in some cases. The psychology of selfies is complex as they can have both benefits and drawbacks for mental health and social perception.
#selfie: Our Society's Obsession With the Selfie1hdc
Selfies have become obsessively popular in society, driven by loneliness, desperation for attention, and the ability to curate and edit one's image for social media. While selfies allow people to present an idealized version of themselves and get validation from online connections, this focus on superficial interactions and curated self-images online can be psychologically unhealthy compared to real-life interactions that are not as controlled. The obsession with selfies is fueled by social media apps that facilitate instant photo sharing and editing, activating people's desire to curate the perfect selfie to share.
Savings account is focused on individuals and puts a limit to the amount of money the depositor can withdraw from the same. Except specified institutions a saving account cannot be opened in the name of a government department. The procedure for opening a saving account is similar to the procedure followed for opening any other type of bank account. In times of calamities however RBI has permitted banks to allow an individual to open a saving account either against electricity bill or any other document of identity or through an introduction from another account holder. When it comes to depositing money in a saving account, a holder cannot deposit third party cheques into the saving account. There is no transaction tax to be paid in case of a saving account. Interest paid to saving account (3.5%) is calculated by taking into account the lowest balance on the 10th and end of the month. An additional 1% interest is payable to retired employees or spouse of a retired employee if the latter is deceased. The operation of saving account is stopped if the customer dies or becomes insane or insolvent. If the customer cannot be traced then the bank will place the balance in an unclaimed deposit account.
This document discusses poverty, including its various definitions, types, and measurements. It defines poverty as a lack of basic human needs like food, shelter, and clothing. There are two main types of poverty - absolute and relative. Poverty is commonly measured using indicators like the headcount ratio, poverty gap index, and squared poverty gap index. The document also outlines some characteristics and impacts of poverty like effects on health, hunger, education, housing, and violence. It provides statistics on global poverty and discusses strategies for reducing poverty.
Principles and Practices in Continuous Deployment at EtsyMike Brittain
This document discusses principles and practices of continuous deployment at Etsy. It describes how Etsy moved from deploying code changes every 2-3 weeks with stressful release processes, to deploying over 30 times per day. The key principles that enabled this are innovating continuously, resolving scaling issues quickly, minimizing recovery time from failures, and prioritizing employee well-being over stressful releases. Automated testing, deployment to staging environments, dark launches, and extensive monitoring allow for frequent, low-risk deployments to production.
The chairman of an aerospace manufacturing company is concerned about the accumulation of cash on the company's balance sheet. The company has grown through acquisitions rather than R&D, and now faces competitive pressures and lower government spending. It has a history of project overruns and unaccountable managers. The chairman suggests using cash reserves to improve facilities, pay, environmental performance, and board compensation, though he admits business opportunities may not return to previous levels. He seeks advice on how to best deploy the accumulated cash.
The document discusses various concepts related to financial management including cost of capital. It defines controller and treasurer roles, and explains that in the Indian context, the controller typically takes on treasury responsibilities as well. It then provides examples of calculating present value of cash flows, rates of interest for loan repayment installments, weighted average cost of capital, and analyzing leverage and risk positions for different companies.
Here are the answers to your homework problems:
1. A stock dividend distributes additional shares to existing shareholders, increasing the number of shares they own but not changing the total value of their holdings. A stock split increases the total number of shares by distributing them in a set ratio but does not change anyone's ownership percentage.
2. Dividend payout ratio = Dividends declared / Net income = $500,000 / $2,500,000 = 20%
3. It's important because different types of stockholders have different preferences regarding dividends vs capital gains. Understanding these preferences helps the firm determine a dividend policy that satisfies different groups of stockholders.
4. No, it would not be
The document discusses capital structure and its components. It defines capitalization as the total amount of securities issued by a company, including equity share capital, preference share capital, long-term loans, retained earnings, and capital surplus. Capital structure refers to the proportion of different types of securities that make up the total capitalization. Financial structure includes all financial resources, both short-term and long-term, including current liabilities. The document then discusses various theories of capital structure, including the net income approach, net operating income approach, and traditional approach. It provides examples to illustrate how these approaches analyze the impact of leverage on firm value and cost of capital.
The document provides an overview of CUNA Corporate Committee Presentation by Lee C. Butke, President/CEO of Corporate One FCU. The agenda includes background on Corporate One, its future balance sheet, efficiency ratio, capital plan, future business model, and requests for CUNA and task force. Key points are Corporate One services over 750 credit unions, has a diverse $5.5B balance sheet, and maintains a strong efficiency ratio with coverage of expenses by fee income through multiple business lines. The presentation requests help improving regulations and determining liquidity options for credit unions.
The document discusses capital structure and various theories related to it. It defines capital structure as the combination of capital from different sources of financing. It then discusses factors that affect capital structure decisions like control, risk, cost, size and nature of business. It explains optimal capital structure as the perfect mix of debt and equity that maximizes firm value while minimizing cost of capital. It also discusses various methods of analyzing optimal capital structure including EBIT-EPS analysis and indifference point analysis. Finally, it summarizes different theories around capital structure like net income, net operating income, traditional and Modigliani-Miller approaches.
This document provides a guide to questions that will be on a FIN 370 final exam, including questions about financial statements, ratios, time value of money, stocks, bonds, capital budgeting, and other finance topics. It lists multiple choice questions about items like the statement of cash flows, primary markets, current and quick ratios, weighted average cost of capital, bond yields, compound interest, and the balance sheet. It also provides a link to purchase the full tutorial with answers to the exam questions.
Which financial statement reports the amounts of cash that the firm generated and distributed during a particular time period?
Statement of cash flows
Which of these provide a forum in which demanders of funds raise funds by issuing new financial instruments, such as stocks and bonds?
Primary markets
We call the process of earning interest on both the original deposit and on the earlier interest payments:
compounding.
The document is a practice exam for FIN 370 with multiple choice questions covering various topics in corporate finance including financial statements, capital markets, ratios, time value of money, capital budgeting, cost of capital, and risk/return analysis. It tests understanding of key concepts like the statement of cash flows, primary markets, current/quick/cash ratios, net present value, yields, compounding, balance sheets, weighted average cost of capital, the efficient frontier, and bond pricing.
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Send your semester & Specialization name to our mail id :
“ help.mbaassignments@gmail.com ”
or
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The document provides guidance on financial planning for retirement. It discusses estimating longevity and inflation, investing for retirement, asset allocation strategies, withdrawal rates, and taxation considerations. The key points are: estimating longevity is essential for planning; a balanced portfolio with 40-65% in equities can maximize returns while minimizing risk; withdrawal rates of 5-7% of the initial portfolio value are typically sustainable; and diversifying investments across asset classes and rebalancing periodically reduces risk.
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The document appears to be a practice exam for a finance course. It contains multiple choice questions testing concepts such as financial statements, ratios, time value of money, capital budgeting, cost of capital, risk and return. The questions cover topics like the statement of cash flows, primary vs secondary markets, financial ratios, net present value, weighted average cost of capital, the risk-return relationship, and bond pricing.
The document contains questions and multiple choice answers that appear to be from a finance exam covering various topics like financial statements, ratios, time value of money, capital budgeting, cost of capital, and corporate finance. It asks the reader to identify statements of cash flows, primary markets, current ratios, weighted average cost of capital, net present value, compound interest, balance sheets, and income statements. It also contains questions about capital structure, risk and return, financial planning, and dividend valuation.
SOC-436 Topic 2 Power in America Worksheet Scoring Guide.docxwhitneyleman54422
This document provides guidelines and a rubric for a final project in a finance course. The project involves conducting a financial analysis of Home Depot Inc. based on provided case study data. Students will analyze topics related to time value of money, stock valuation, bond valuation, and capital budgeting. The project is divided into four milestones to be submitted at various points in the course. Students must address critical elements for each topic, including calculating present and future values, dividend yields, and capital budgeting metrics. They will also discuss how macroeconomic variables may impact the company's financial decisions and strategic objectives. The analysis will demonstrate mastery of learning outcomes involving financial portfolio management, maximizing shareholder value, capital financing and budgeting
This document provides an overview of market-based cash balance plans, including:
- A brief history of interest credit options for cash balance plans under different regulations and notices.
- Examples of how cash balance accounts accumulate pay credits and interest credits over time.
- Seven key issues that can arise for market-based cash balance plans, such as investment risk, nondiscrimination testing, lump sum restrictions, and administrative challenges. Suggested approaches are provided to help address these issues.
- Contact information for the actuarial consulting firm that authored the document.
This document provides an overview of market-based cash balance plans, including:
- A brief history of interest credit options for cash balance plans under different regulations and notices.
- Examples of how cash balance accounts accumulate pay credits and interest credits over time.
- Seven key issues that can arise for market-based cash balance plans, such as investment risk, nondiscrimination testing, lump sum restrictions, and administrative challenges. Suggested approaches are provided to help address these issues.
- Contact information for the actuarial consulting firm that authored the document.
The document discusses various aspects of capital structure including:
1) Capital structure refers to the combination of debt and equity used to finance a company's operations and growth. The capital structure decision considers factors like control, risk, and cost.
2) Several capital structure theories are described including the net income approach, traditional approach, and Modigliani-Miller approach. The net income approach suggests maximizing debt to minimize costs while the traditional approach finds an optimal debt level.
3) Worked examples demonstrate calculating a firm's value, cost of equity, and weighted average cost of capital under different capital structure assumptions.
by- g 6 envensebles
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Prepared by Students of University of Rajshahi
Dip Murmu & Md. Abadullah Miah
Neamur Rabbi & Md. Azad Khan
Anik Costa & Tanvir Hasan Plabon
Tarikul Islam Tarif
Md. Jakir Hossain Khan & Dilruba Jahan
Shanjida Afrin & Md. Rajib
1. Markfield Institute of Higher Education Presented By Bashir Uj Jaman Alternative Model For Profit Distribution on Deposit You can reach Bashir at bashir07@live.co.uk
2. How does depositor get benefit from Conventional Banks ? ---By fixed Interest Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit
3. Markfield Institute of Higher Education Presented by Bashir Uj Jaman What is wrong with predetermined Interest? How does it effect Economy? Alternative Model for Profit Distribution on Deposit
4. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit Riba Bank Of Kuffar Deposit taking on X% interest Investment with (X+Y)% interest Fixed rate of x% interest to depositors forces to charge fixed rate of (x+y)% interest to customer, hence if no chance of investment with expected interest, Money will not be invested. Sometimes customers are forced to pay more than ROI Impact of predetermined interest
5. What is the solution for Islamic banks? Instead of predetermined interest, islamic bank sets pre determined profit ratio. eg; 80%:20%. So actual profit will be determined after getting outcome from investment Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit
6. Practice of design of deposit account around the world based on Qard a Hasana/ Wadia- Iran, Client can’t demand profit. Current account Mudaraba – Savings account Murabaha (Bai al ina & Tawarruk) – Malaysia, fixed deposit account.term deposit Wakala - by treasury department to raise fund for special purpose. Bank receives agency fee. Long term deposit account. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit
7. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit Comparison - conventional vs Islamic Approach Flexible, Ethical, realistic investment Profit increases if ROI increase Restricted, Unethical higher interest rate investment Profit is fixed Last to first variable approach Profit/Loss sharing Predetermined first to last fixed approach No loss sharing Islamic Bank Conventional/Riba Bank
8. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Logic behind profit distribution Alternative Model for Profit Distribution on Deposit Conventional -Time is money. The higher the duration the higher the percentage. Islamic -Not only duration but the higher the risk, the higher the profit
9. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Sharia requirement for declaring profit distribution method. Do you know the percentage of your profit in your account with Islamic Bank? Alternative Model for Profit Distribution on Deposit
10. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Currently, bank keeps it profit first and then distribute remaining profit to mudaraba depositors based on weightage system . So It is called two tier Profit Distribution. Alternative system is a Income sharing ratio (ISR) based system treating different mudaraba depostors individually.It is a single tier profit distribution which distributes profit to bank and depositors at a time. Example will make it clear Alternative Model for Profit Distribution on Deposit
11. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative model for profit distribution on deposit Table A: Profit Distribution Based on Current Weightage system. 1.8 300 Total Investment) .7 100 Term Deposit C 25:75 300* 20% (on .6 100 Savings B .5 100 Curret A 7 6 5 4 3 2 1 Collective Income Distribution Ratio between Bank: Client Income from Bank’s Investment Investmet Amount(Tk.) Weightage Deposit Amount (Tk.) Type Of Mudaraba Deposit Depositors Name
12. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative model for profit distribution on deposit Table Al: Determination of amount of Investment Income and collective distribution thereof Tk.45 Tk.15 Tk.300 x 2O% = Tk.60 10= Col. 8 X 75% 9= Col. 8 X 25%; 8= Col. 5 x Col. 6 Client Bank Total Share of Investment Income as per Col. 7 Income Investment Tier 1:
13. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative model for profit distribution on deposit Table A2: Distribution of Clients’ portion of Income of Tk.45 (Column 10) to individual type of depositors according to Weightage at column 4 above Tk.45.00 1.8 Total Tk.45x.7~1.80 = Tk.17.50 .7 C Tk.45x.6-* 1.80 = Tk.15.00 .6 B Tk.45x.5-* 1.80 = Tk.12.50 .5 A Profit Distribution Weightage Depositors Name Tier 2:
14. Problem with Existing System Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative model for profit distribution on deposit In the first step of the Weightage formula (in the name of Collective PSR or Profit Sharing Ratio, Col. 7), the Bank sets aside its own share from the Investment Income. Factors that affect/distort the distribution pattern, changing due amount of profit to individual types of depositors under Weightage System are: i) Change of Weightage of any one (or more) type of the Mudaraba deposit mix (Current, Savings & Terms Deposit etc.). ii) Change in the Proportion of individual deposit type, among the total Deposit mix. iii) Inclusion of any new deposit product.
15. ISR (Income Sharing Ratio) based Module for distribution of profit to Mudaraba Depositors : 300 Total % Deposit 87.50% 12.50% Investment) 100.00 100 Term C (on 300* % 20% 100.00 75.00% 25.00% 100 Savings B 100.00 62.50% 37.50% 100 Current A 8 7 6 5 4 3 2 1 Total Client’s Share Bank’s Share Income from Bank’s Investment Investment Amount (Tk.) Income Sharing Ratio (ISR) Deposit Amount (Tk.) Type of Mudaraba Deposit Depositor/ Client
16. Markfield Institute of Higher Education Presented by Bashir Uj Jaman ISR based Single tier profit distribution would be as under: Table X: Client wise Profit Distribution 45.00 15.00 Total C 17.50 2.50 17.50% 2.50% B 15.00 5.00 15.00% 5.00% A 12.50 7.50 12.50% 7.50% 13= Col. 1 12= Col. 3 X Col. 10 11=Col. 3 X Col. 9 10= Col. 8 X Col. 5 9=Col. 8 X Col. 4 Client/ Depositor Profit to client (Tk.) by Bank (Tk.) Client’s Profit Rate Rate of Profit (on deposit) Retained by the Bank Profit Retained Income Sharing Ratio (ISR)
17. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit Comment: Inputs or given data/ information are same both for Table A & Table X. The former distributes profit on Weightage basis and the later on ISR basis. Both the systems’ ultimate profit distribution amount is identical. So apparently no significance of using a new Module is felt upto this level Comparison: To see the significance of the methods let us think to change a single data under both the methods. Say, we just want to pay C a bit higher profit than he earns this year. Other data would remain unchanged. Under Weightage system we shall change a data in Table A (that is Weightage against C at Col. 4 would now be .9 instead of .7). Similarly under ISR based system C’s ISR shall be 5 : 95 instead of 12.50 : 87.50 for Bank & C respectively (Col. 4 & 5 of Table X). Effect of change is now summarized in the Comparison Table:
18. Comparison Table: Result of Weightage based Vs. ISR based Profit Distribution Modules 60.00 60.00 60.00 Total Distributable* Investment Income 13.50 15.00 - 15.00 - Profit Retained by Bank 46.50 - - 45.00 2.0 45.00 - - 1.8 Total of Clients’ Profit 19.00 95.00% 05.00% 20.25 .9 17.50 87.50% 12.50% .7 C 15.00 75.00% 25.00% 13.50 .6 15.00 75.00% 25.00% .6 B 12.50 62.50% 37.50% 11.25 .5 12.50 62.50% 37.50% .5 A 10 9 8 7 6 5 4 3 2 1 (Tk.) Client Bank (Tk.) System (Tk.) Client Bank Client’s Profit ISR Client’s Profit Weightage Client’s Profit under both ISR Weightage Client/ Depositor Result under Revised ISR Result under Revised Weightage Result of Weightage & ISR (From Table A-A2 & X-X1)
19. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit Analysis: Analysis of this Comparison Table clearly reveals that subsequent decision to pay ‘C’ a bit higher profit than he was earning earlier under Weightage system causes A & B to lose although Weightage of A & B is not altered. In weightage syestem, additional profit of Tk.2.75 (Tk.20.25-Tk.17.50) paid to ‘C’ is actually deducted from A & B at the rate of Tk. 1.25 and Tk.1.50 respectively. Bank’s portion of profit remains the same as Tk.15. But under ISR System additional Tk.1.50 paid to C is sacrificed by the Bank. Neither profit of A nor that of B is cut down. Rather additional Tk.1.50 paid to ‘C’ cuts the Bank’s portion of Profit by the corresponding amount. So it becomes obvious that under Weightage base any subsequent agreement with any depositor affect profit of the existing depositors; whereas under ISR base, consequence of the subsequent agreement is taken care of at the Bank’s cost without causing any loss to the existing depositors.
20. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit When an Islamic Bank goes for a new deposit product say for example, Haj Deposit or different Mudaraba bonds, the Bank assigns higher Weightage to attract new clients. Surprisingly some of such products are offered Weightage much higher than 1; such as 1.2, 1.35 etc, Causing the existing or pioneer deposit holders lose their due rate i.e. they are deceived irrationally.
21. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit It should have been the Bank (not other depositors) who to sacrifice for the higher profit offered by the Bank. It is ethically wrong to cut the rates of the existing clients down (Weightage remaining the same) without any consent (consultation even) from those whose interest is hampered. A software designed according to this Module would enable to arrive at the actual rate of attained profit each month for different Mudaraba deposits and the same may be displayed electronically on the 1st day of the following month
22. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit Conclusion: Islamic banking is based on ethical standard. In some cases ignorance may be ignored; But whenever wrong or discrepancy is detected, that should be stopped or rectified immediately. In Islam none is advised, even to make charity from others’ purse. Any reward to anybody should be from one’s own pocket or at least the original donor should be informed. Islamic banking is an emerging market. it is yet being evolved. So any better thing from anybody may be adopted without hesitation for the greater interest of the ideology.
23. Markfield Institute of Higher Education Presented by Bashir Uj Jaman Alternative Model for Profit Distribution on Deposit References: An alternative module to distribute profit on deposits under Islamic banking by Afzalul Haq The Writer is the First Vice President and Head of Islamic Banking of Bank Asia Ltd. He can be reached at email [email_address] . Article Available at : http://csbib.org/publications/an-alternative-module-to-distribute-profit-on-deposits-under-islamic-banking-afzalul-haq#more-48 http://www.islamicbankingway.com/2010/11/21-investment-fixed-deposit-account.html Central sharia Board of Islamic Bank Bangladesh http://csbib.org/ Islamic Finance in a Nutshell by Brian Kettell http:// books.google.co.uk/books?id = CgjsYcxNLuUC&pg =PA130&dq= types+of+deposit+account+in+islamic+banks+non+specialist&hl = en&ei =pIj8TI23Jsv1sgbO06GUBA&sa= X&oi = book_result&ct = result&resnum =1&ved=0CC4Q6AEwAA#v= onepage&q&f =false
24. Markfield Institute of Higher Education Presented by Bashir Uj Jaman May Almighty help us to get benefit from this presentation. Zazak Allahu khairan for listening Any Question ? Alternative Model for Profit Distribution on Deposit