Corporate Finance

  30-01-2026 In todays class, the concepts of capital budgeting were explored through the New Heritage Doll Company case study. Instead of approaching the topic purely through theoretical formulas, the class focused on how firms actually make investment decisions when they have limited financial resources and multiple competing projects. We applied techniques such as Payback Period, Profitability Index, and Internal Rate of Return to evaluate which project would create the most value under financial constraints. The case helped me appreciate the practical complexity behind financial decisions. While methods like the Payback Period provide insights into liquidity and risk recovery, they fail to capture long-term value creation. On the other hand, Profitability Index becomes particularly useful in capital rationing situations, as it helps rank projects based on value generated per unit of investment. The session reinforced the idea that no single metric can fully capture the qualit...

  27-01-2026 In todays session, we were introduced to the foundational objective of corporate finance, particularly the goals of a firm and the concept of shareholder value maximization. The discussion moved beyond the traditional idea of profit maximization and highlighted how modern organizations prioritize sustainable value creation through strategic financial decision-making. We also studied the key capital budgeting techniques used to evaluate long-term investment decisions, including Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, and Profitability Index. From my perspective, this session fundamentally changed the way I look at financial decision-making. I understood that corporate finance is essentially about allocating scarce resources in a way that maximizes long-term value rather than short-term profits. Among the techniques discussed, NPV appeared to be the most theoretically sound because it incorporates the time value of money and directly mea...