International Corporate Finance. NOTES TOPIC: corporate finance framework and environment. BOOK : Chapter 1. Finance Function ·) Corporate finance based to cash flow not profit. Concerned with raising Fund & providing return to investor. ) Concepts in CF are time value of money and the relationship between risk & return. Time value of money time value of money refers to nilai vans Itu berubon seriap waktu. 3 Faktor yo berpengaruh pdl time value of money : Time , Inflation , and ( Risk.) Risk bukan cuma hasil dibawah expectasi to diatas juga. Relationship between risk & return. company will takes on more risk only if higher return as the compensation . company that invest In "non current assets" and business operation - Return berupa PROFIT company that invest in ordinary shares (saham) - Return Dividend payment & Capital Gain (share price increases). company/ investor who buy corporate bunds - Return: Interest payment. Compounding & discounting menghiting Jmlh vang yg diinvest. compounding (penggabungan) al cara v/ menprediksi future value of sum of money invested. Future value (FV) = Co (1+1) - Co = sum deposited now (sumlah yo didepositoran) i : annual interest rate (%) n : number of year is invested (sumlah Tahun nvesfasi ) " The value of a future cash Flow in current times " Discounting ( diskon ) untuk memprediksi nilal arus kas masa depan ke saat ini ( present value). cash flow dr different point time cannot be compared directly because they have diferent time values. Discounting allow us to compare cash flow by comparing their present values. Present Value (PV) : FV FV : future value 1 : discount rate (%) (1 + 1 ) n n : number of year until the cash flow occurs . Discounting calculations can be found at "Present value Table" pembayaran reguler dr jumiah us letap padla wakth tertentu .) PV of an annuity ( a regular payment of a fixed amount of money over a fixed period ) tampa batas waktu ferientus. EXAMPLE ) PV of an Perpetuity ( payment of equal cash flow at regular intervals for an indefinite period of time ).
Example case FV & PV : Investor receiving 1000 now and of1200 in 1 year time, rate 10%. check the future value & present value of the investment ? answer - Future value (FV) : Co (1 + 1)" Present value : FV = = 1000 ( 1+ 10%)' (1+1)n = = 1000 ( 1,1)' £ 1200 = = 100 (1+10%)' Dalam hal ini Kondisi nilai uang £ 1000 (saat ini) menjadi £ 1200 £ 1200 = = 100. dim 1 tahun sangat menguntungkan. (1/1)' Karena based on perhitungan future value dr £1000 dim 1 tahun kedepan dgn annual rate 10% adalah £ 1.100 sedangkan investasi yo dihasian direncanatan £ 1200. Trial Question : Pick Highest Present value with discount rate 10% ? a. f 125 paid 2 years from Now. b. & 13 paid every year forever PV = FV = = 12