JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD

Course Objective

To develop an understanding of the role of financial strategy, in the investing,

financing and resource allocation decisions within an organization.

Learning Outcomes

Students will be able to understand a) Investment Decisions in Risk and

uncertainty b) Strategic investment decisions c) Investment Appraisal Techniques d) Financing Decisions *****

UNIT - I: Investment decisions under conditions of Risk and uncertainty: Concepts of risk and

uncertainty. Risk Analysis in Investment Decisions. Risk adjusted rate of return, certainty equivalents, Probability distribution of cash flows, decision trees, sensitivity analysis and Monte Carlo Approach to Simulation. Investment Decisions under capital constraints: Capital Rationing vs. Portfolio. Portfolio Risk and diversified projects.

UNIT - II: Types of Investments and disinvestments

Project abandonment decisions, Evidence of

IRR. Multiple IRR, Modified IRR, Pure, simple and mixed investments. Lorie Savage Paradox. Adjusted NPV and impact of inflation on capital budgeting decisions.

UNIT - III: Critical analysis of appraisal techniques

Discounted pay back, post pay back, surplus

life and surplus pay back, Bail-out pay back, Return on Investment, Equivalent Annual Cost, Terminal Value, single period constraints, multi-period capital constraint and an unresolved problem, NPV mean variance analysis, Hertz Simulation and Hillier approaches. Significance of information and data bank in project selections.

UNIT - IV: Strategic Analysis of selected investment decisions

Lease Financing, Operating Risk,

borrowing vs. procuring. Hire purchase and Installment decisions. Lease Risk Management, Leasing as a Financing Decision, Advantages of Leasing, and Leasing Decision in practice.

UNIT - V: Financing Decisions

Mergers and Acquisitions - need, Strategy, Diversification and

Mergers and Acquisitions, Theories of Mergers, Types of Mergers, Cost of Mergers, Government guidelines for Takeover, Problems on Mergers & Acquisitions and cases

Suggested Readings:

• Ravi M Kishore “Strategic Financial Management, Taxman 2012.
• Prasanna Chandra: Financial Management, 8/e, TMH, 2012
• Prasanna Chandra: Projects: Planning, Analysis, Financing Implementation and Review, 6/e, TMH, 2012
• I.M. Pandey: Financial Management, Vikas 2012.
• Brigham & Ehrhardt: Financial Management, Text and Cases, Cengage, 2012.
• MY Khan and PK Jain: Financial Management: Text, Problems & Cases, TMH, 2012.
• A.N. Sridhar, Strategic Financial Management, Shroff Publishers, 3e, 2018.