Q2.

1.Conflict between the Management and Shareholders

The CEO and top executive are responsible for making the decisions about the high-level policy
and strategy. The shareholders on the other are individuals legally own the stock in a
corporation. The shareholders usually concede most of their control rights to managers.

While attempting to benefit shareholders, managers often encounter conflicts of interest. For example,
a manager might engage in self-dealing, entering into transactions that benefit themselves over
shareholders. Managers might also purchase other companies to expand individual power, or spend
money on wasteful pet projects, instead of working to maximize the value of corporation stock.
Venturing onto fraud, they may even manipulate financial figures to optimize bonuses and stock-price-
related benefits.

Advocates of governance typically encourage corporations to respect shareholder rights, and to help
shareholders learn how and where to exercise those rights. Disclosure and transparency are intertwined
with these goals.

. Profit maximization is basically a single-period or, at the most, a short-term goal. It is usually
interpreted to mean the maximization of profits within a given period of time. A firm may
maximize its short-term profits at the expense of its long-term profitability and still realize this
goal. In contrast, shareholder wealth maximization is a long-term goal shareholders are
interested in future as well as present profits. Wealth maximization is generally preferred
because it considers wealth for the long term, (2) risk or uncertainty. (3) the timing of returns,
and (4) the "shareholders' return. The following table provides a summary of the advantages
and disadvantages of these two often conflicting goals.

2.

Roles of the modern day CFO

Leadership – To be an effective business partner, today's CFO must have the necessary
leadership and communication skills. They must give advice and counsel as well as provide a
voice of reason.

Operations – They should possess a strong understanding of the company's business model and
industry and be able to use this knowledge to provide an independent perspective and to
constructively challenge the commercial and operations teams, ensuring that business decisions
are grounded in solid financial criteria.

Controls – In an increasingly global and volatile environment with additional regulatory

burdens, it often falls to the CFO to ensure adequate assessment and mitigation of risk as well as
compliance with applicable regulatory or other legal requirements.

Strategy-supporting strategy developing and helping enable its execution. The CFO also plays role in
prioritizing and ensure the strategy can be funded.
In this case the GM finance made the report to enhance the business in the long term process,
company already in the profitable position in the existing business but the CEO need the increase the
size of the business. The LED makes good profit to reduce the dealer’s incentive switch to high
investment business.

The expand the investment to improve the business is good idea but any business beginning level itself
go for bigger investment and market place is less it works in the negative manner,

The estimation level itself make the correct decision to calculate the market space ,how to reach the
people ,how to reduce the working capital to get the profit.

The volume of the business also plays major role the domestic markets to retain the position and make
the profits to shareholders. The LED lamp makes the unit margin is less but the volume increases it
leads to bigger profits. other hand the solar panels costlier than the LED lamps so complicated source
of energy its beginning stages .

To enhance the business level first strong in the LED enhance the market to get the additional finance
to enhance to solar panel business.

Wrong decision made the GM is streamline the existing business to go for new one.

3.

(a) .Too much management not enough leadership

The CEO made the decision to increase the business but fails in the leadership, not think about the
employee and shareholders money.

The person in the CEO position not know the financial management leads to fails go to bankrupt.

The bigger decisions are taken after gets into the stream line in the financial positions ,the LED is the
major market share if you enhance the existing business and starts the new investments to slow
increase to withstand in the business.

The CEO must know the product market value, investment and to manage the financial position to
adopt the new investments.

The leader must think about the peoples and goals in the life.

4.

According to case study mu decision go for the new business not such bad idea but before enter into
new business estimation is bigger part of the business and market space to reach the peoples.

The solar panels in the beginning stages only the large organization only implement the source but
makes costlier than the conventional source.

To improve the LED lamp business into bigger volume based on the profits to utilize finance to solar
panel in the small level it works maximum then go for the larger investment.
Q1. Evaluation of the Housing Loan of the Pharma company employees

Appartment cost--RS10000000

down payment--5%

loan amount 9500000

PNBHFL EMI CALCULATION

18 YEARS 9%Interest

rate of interest i 0.09

no of years n 18
Annual Installment or A of P.V

P.V PVIFA
9500000 8.7556

EMI- Rs.1085020

Loan Amortization Schedule

Outstanding
Year EMI Interest Principal Balance
0       9500000
1 1085020 855000 230020 9269980
2 1085020 834298.2 250721.8 9019258
3 1085020 811733.2 273286.8 8745971
4 1085020 787137.4 297882.6 8448089
5 1085020 760328 324692 8123397
6 1085020 731105.7 353914.3 7769483
7 1085020 699253.4 385766.6 7383716
8 1085020 664534.4 420485.6 6963230
9 1085020 626690.7 458329.3 6504901
10 1085020 585441.1 499578.9 6005322
11 1085020 540479 544541 5460781
12 1085020 491470.3 593549.7 4867232
13 1085020 438050.8 646969.2 4220262
14 1085020 379823.6 705196.4 3515066
15 1085020 316355.9 768664.1 2746402
16 1085020 247176.2 837843.8 1908558
17 1085020 171770.2 913249.8 995308
18 1085020 89577.76 995442.2 0
HDFC EMI CALCULATION

15 YEARS 8%Interest
i 0.08
n 15

Annual Installment or A of P.V

P.V PVIFA
9500000 8.5595

EMI- Rs.1109878

Loan Amortization Schedule

Outstanding
Year EMI Interest Principal Balance
0       9500000
1 1109878 760000 349877.9 9150122.087
2 1109878 732009.8 377868.1 8772253.94
3 1109878 701780.3 408097.6 8364156.342
4 1109878 669132.5 440745.4 7923410.936
5 1109878 633872.9 476005 7447405.897
6 1109878 595792.5 514085.4 6933320.456
7 1109878 554665.6 555212.3 6378108.179
8 1109878 510248.7 599629.3 5778478.919
9 1109878 462278.3 647599.6 5130879.32
10 1109878 410470.3 699407.6 4431471.752
11 1109878 354517.7 755360.2 3676111.578
12 1109878 294088.9 815789 2860322.591
13 1109878 228825.8 881052.1 1979270.485
14 1109878 158341.6 951536.3 1027734.21
15 1109878 82218.74 1027659 0

PNBHFL EMI CALCULATION

18 YEARS 9%Interest

i 0.09

n 18

Annuity due

9500000 8.7556 1.09

 9500000 9.8456

EMI Rs.964898

HDFC EMI CALCULATION

15 YEARS 8%Interest
i 0.08
n 15

Annuit of PV

9500000 8.5595 1.08

9500000 9.6395
EMI Rs.985528.3

Best method to repay is annuity method because the EMI is less in the Annuity due method but the
rate of interest amount higher than the annuity method.

PNBHFL
Total –employee repayment amount ---RS.8788662/-

Total – company- repayment amount -RS10741698/-

PNBHFL
Total –employee repayment amount ---RS.33296338/-

Total – company- repayment amount -RS.10741698/-