Answer 1

INTRODUCTION
The financial position of a business can be seen by analysing the financial statement. One of the
very important documents that tell about the systematic fund flows and the income generated. One
of the main financial documents of the financial system is the Balance sheet. It not only tells about
the financial position of the business but also tells sources of funds and the application of the
funds. Funds are the most required financial aid to the corporate structure. Funds can be collected
through many instruments and this can reflect in the balance sheet of the company. In the case
study of Bharti Airtel we can see there is a large sum of funds collected and the impact that it has
done on the balance sheet.

CONCEPT AND APPLICATION

The collection of funds and the application of funds are the two main financial functions of any
business. Funds can be collected for the short or long-term goals of the company. Funds can be
collected for day-to-day operational activities or can be done for facing new projects. The collection
of funds can be done through multiple channels and multiple instruments. Successful
implementation of the funds is equally important to the collection of funds. These funds and their
utilisation can be seen in the balance sheet of the company.

SOURCES OF FUNDS IN BHARTI AIRTEL

Bharti Airtel is one of the leading telecom companies and has been working since 1995. Bharti
Airtel is a multinational company and it is operating in 18 countries Being a multinational company
and one of the top leading companies in India Bharti Airtel faces a lot of challenges both national
as well as international. o tackle the challenges Airtel required funds in order to operate, promote,
or face new projects. In the past years, Airtel has collected funds many times in order to upgrade
its working and face the computation. This can be seen in their balance sheet. Four of the big
funds collected by Bharti Airtel are as follow:-

1. 2017
Reliance Jio come to the Indian market in 2016 with the most affordable prices and premium
services. This creates a massive movement of customers from other telecom companies to Jio.
So in 2017, Bharti Airtel raised a massive amount of 4,600 crores rupees. The bargain was
made at 0.20 percent of the company. This round was necessary for the firm as it was
undergoing a crisis as dependence on Jio interfered with the telecom industry back with its very
inexpensive data plans, and various other businesses got hit. The financial investment was
made by TIAA, which is an investment company that brought back Airtel.
2. 2019
In 2018 the two big telecom company Vodafone and Idea joins their hands to form a
partnership name "VI". This changes the game strategies, so in 2019 Bharti Airtel raised
another 3 lakhs crore rupees from PIMCO. The company quit its 0.10 percent possession with
this deal, examining the organisation at 3 lakh crores. The company used these funds for
various sorts of assets, consisting of firm towers, and land purchases and the remainder of the
funds were used for advertising. Working with the most incredible song composer in the nation
Mr. A.R. Rehman to recommend their brand is rather expensive. But it ended up being
profitable. Bharti Airtel acquired a lot of consumers via advertising, making it the 2nd lead in the
sector after Reliance Jio

3. 2020
In 2020, Bharti Airtel raised its third round by raising rupees 3500 crores through commercial
papers. Commercial papers are short-term debts that were required by Bharti Airtel. This debt
is basically used for the refinancing of existing loans and to meet working capital needs.

4. 2021
In 2021, Google purchased Bharti Airtel and took over 6 percent of the company by investing
rupees 27,600 crores. The financial investment of Google in Bharti Airtel valued the company
at 460,000 crores, making it one of the biggest firms in the nation. Google's financial
investment in Bharti Airtel assisted the business in acquiring 5G rights sold by the government.
Bharti Airtel is one of the telecom companies with 5G rights and is ready to introduce its 5G
solutions in the nation with Reliance Jio.Google became one of the considerable stakeholders
in Bharti Airtel, with a stake of 6 percent in the company.

RANKING THE SOURCES

From this report, we can say that Bharti Airtel used its funds carefully. On the basis of the value
cost that is provided to the company by the sources of funds that can be ranked as, first, in the
year 2017, when the customers are shifting to Jio because of affordable services and premium
services. These fund help in reviving the company and allow them to lower the price to fight
competition. The second was in the year 2021 when Google come into the picture as a
technological giant Google can help Airtel in the future and this investment will be fruitful in future.
The third was in the year 2019 which help Airtel to be at even number 2nd due to good
advertisement even though Vodafone and Idea join hands and the last was in 2020 when short-
term loans are used to settle long-term loans.

CONCLUSION
The requirement of the fund is an ongoing race for a business. proper utilisation of the funds is
equally important as the collection of the funds and the main concept that needed to be completed
is to locate the sources and find out the best source. Bharti Airtel faces many challenges in their
work but they raise the funds and then use the funds wisely. This can be seen in the past record of
the company. Sources of the Funds can be traced from the balance sheet of the company. Bharti
Airtel has used all its funds carefully and managed to come out of the worst situation.
 Answer 2

INTRODUCTION
Investment is considered to be the most effective part of saving. While saving is the leftover
earnings that were not utilised during a period of time investment on other hand is converting the
saving into more profit. Investments can be of various types. It can be short-term or it can be long-
term. There are many investment options that are available in the financial market and as a good
financial step, it is very important to evaluate all the steps and then make an investment. The
investment is judged on the basis of the rate of return. The better will be the rate of return, the
better will be the investment.

CONCEPT AND APPLICATION

A good investment can be highlighted by calculating, the period of return, the present value of
return, or by internal rate of return. These three standards are very commonly used for calculating
the profitability of an investment. In the case of M/s Priya Industries Ltd., we have two options for
investments. Both the investments are for 5 years but the principal amount and the per year return
are different. The investment amount and the year-end return can be seen as follow:-

YAER OPTION A OPTION B

0 -40,000 -50,000
1 5,000 8,500
2 12,000 15,000
3 10,000 12,000
4 12,500 12,300
5 10,500 10,500

EVALUATION OF OPTIONS
The given scenario has two available options for M/s Priya Industries. Both options require an
investment and then provide profitable returns for the next 5 years. The time period is the same for
the investment but the initial investment is different and the per-year return is also different. There
can be three methods that can be used to calculate the maximum profitability of these two options.
PAYBACK PERIOD
Just like other non-discounted method payback period methods is used to rate an investment
option. The payback method is computed by calculating the period under which the investment is
recovered. The faster the investment can be recovered better the investment will be. Suggestions
to M/s Priya Industries about the two options can be given by calculating the payback period of
both options using the following formula.

Unrecovered . amount . at . thestar t . of . a . period

Payback . Period = Years . before . f ull . recover y +
cash . f low . during . the . period

Option 1

Year before full recovery = 4th year

Undercover amount = 40,000 - (5,000+12,000+10,000+12,500)
= 40,000 - 39,500
= 500
Cash flow during 5th period = 10,500

As per formula,
= 4 + (500/10,500)
= 4 + 0.0476
= 4.0476 years

Option 2

Year before full recovery = 4th year

Undercover amount = 50,000 - (8,500+15,000+12,000+12,300)
= 50,000 - 47,800
= 2,200
Cash flow during 5th period = 10,500

As per formula,
= 4 + (2,200/10,500)
= 4 + 0.2095
= 4.2095 years

As per pay back period method option A is better than option B as the period of return on option A
is less as compare to option B.
N.V.P. METHOD
The NPV also known as the Net Present Value technique involves discounting net cash flows for a
project, and then subtracting net investment from the discounted net cash flows. This is one of the
discounted cash flow methods. The higher the value of the NPV better the project will be. In the
case of M/s. Priya Industries the profitability of the option can be calculated by the NVP method
using the following formula:-

CI1 CI2 CIt

N VP = [ + + . . . + ] − C0
(1 + k)1 (1 + k)2 (1 + k)t

Where,
CIt = Cash flow at time t
C0 = Initial investment
k = Cost of capital.

Option 1

C0 = 40,000
k = let cost of capital be 5%
Discounted net cash flow for 1st year when CI1 = 5,000
= 5,000 / (1+ 5%)
= 4,761.90
Discounted net cash flow for 2nd year when CI2 = 12,000
= 12,000 / (1+ 5%) (1+ 5%)
= 10,884.35
Discounted net cash flow for 3rd year when CI3 = 10,000
= 10,000 / (1+ 5%) (1+ 5%) (1+ 5%)
= 8,638.37
Discounted net cash flow for 4th year when CI4 = 12,500
= 12,500 / (1+ 5%) (1+ 5%) (1+ 5%) (1+ 5%)
= 10,283.78
Discounted net cash flow for 4th year when CI4 = 10,500
= 10,500 / (1+ 5%) (1+ 5%) (1+ 5%) (1+ 5%) (1+ 5%)
= 8,227.02

NPV = (4,761.90+ 10,884.35+ 8,638.37+ 10,283.78+ 8,227.02) - 40,000

= 42,795.42 - 40,000
= 2,795.42
Option 2

C0 = 50,000
k = let cost of capital be 5%
Discounted net cash flow for 1st year when CI1 = 8,500
= 8,500 / (1+ 5%)
= 8,095.23
Discounted net cash flow for 2nd year when CI2 = 15,000
= 15,000 / (1+ 5%) (1+ 5%)
= 13,605.44
Discounted net cash flow for 3rd year when CI3 = 12,000
= 12,000 / (1+ 5%) (1+ 5%) (1+ 5%)
= 10.366.03
Discounted net cash flow for 4th year when CI4 = 12,300
= 12,300 / (1+ 5%) (1+ 5%) (1+ 5%) (1+ 5%)
= 10,119.24
Discounted net cash flow for 4th year when CI4 = 10,500
= 10,500 / (1+ 5%) (1+ 5%) (1+ 5%) (1+ 5%) (1+ 5%)
= 8,227.02

NPV = (8,095.23+ 13,605.44+ 10,366.03+ 10,119.24+ 8,227.02) - 50,000

= 50,412.96 - 50,000
= 412.96

As per NPV method option A is better than option B as the NPV value of option A is higher as
compare to option B.

I.R.R. METHOD
IRR is also called the internal rate of return that a given investment generates over its useful life. It
is measured as the return yielded by the investment. IRR is a popular, time-adjusted technique and
overcomes the disadvantages of which investment results in traditional techniques. In the case of
M/s. Priya Industries the profitability of the option can be calculated by the IRR method using the
following formula:-

CI1 CI2 CIt

C0 = + + . . . +
(1 + r)1 (1 + r)2 (1 + r)t

IRR = r ( the discount rate)

Option 1

C0 = 40,000
CI1 , CI2 , CI3 , CI4 , and CI5 = 5,000 , 12,000 , 10,000 , 12,500 and 10,500 respectively.

5,000 12,000 10,000 12,500 10,500

40,000 = + + + +
(1 + r)1 (1 + r)2 (1 + r)3 (1 + r)4 (1 + r)5

Solving the equation in excel IRR = 7%

Option 2

C0 = 50,000
CI1 , CI2 , CI3 , CI4 , and CI5 = 8,500 , 15,000 , 12,000 , 12,300 and 10,500 respectively.

8,500 15,000 12,000 12,300 10,500

50,000 = + + + +
(1 + r)1 (1 + r)2 (1 + r)3 (1 + r)4 (1 + r)5

Solving the equation in excel IRR = 5%

As per IRR method option A is better than option B as the IRR percentage of option A is higher as
compare to option B.

CONCLUSION
Evaluation is a very important step for selecting the best option for investment. In the case of M/s.
Priya Industries we can say the best option is option A as by every method whether by payback
period method, NPV method or by IRR method this is clearly stated that option A is much better
than Option B.
 Answer 3(a)

INTRODUCTION
Investment is the process when a certain amount of cash or money is converted into some other
kind of asset to gain additional profits. There are some factors that must be valued before going for
the investment. Rate of return, Principal investment, and the time for which the amount is invested
or maturity time. There are many methods that can be used for the valuation of an investment. One
of the very common and popular them is the compound interest or future value method.

CONCEPT AND APPLICATION

Compound interest is computed in keeping in mind that the interest is paid on the interest also. In
simple words, the interest of one year is added to the amount of the nest year for calculating the
interest of future years. In the case of Mr. Sunil who has two investment options a,) investment of
Rs. 3,00,000 for 5 years at 8% compounded quarterly and b,) investment of Rs. 20,000 every year
for 5 years at the rate of 10% compounded quarterly.

r n t
CI = P(1 + ) .
n

EVALUATION OF OPTIONS
Out of the two investment plans we can check the profitability by calculating the Future value by
the help of compounding interest.

Investment 1

Initial Investment = 3,00,000

Number of years = 5 years
Rate of Interest = 8% compounded quarterly
Compounded quarterly means 4 times in a year.

As per the formula,

Amount at the end of first year
Amount at the end of second year
Amount at the end of third year
= 3,00,000 (1 + 8%)^4
= 3,00,000 (1.02) (1.02) (1.02) (1.02)
= 3,24,729.65
= 3,24,729.65 (1 + 8%)^4
= 3,24,729.65 (1.02) (1.02) (1.02) (1.02)
= 3,51,497.81
= 3,51,497.81 (1 + 8%)^4
= 3,51,497.81 (1.02) (1.02) (1.02) (1.02)
= 3,80,472.54
Amount at the end of forth year
Amount at the end of final year
= 3,80,472.54 (1 + 8%)^4
= 3,80,472.54 (1.02) (1.02) (1.02) (1.02)
= 4,11,834.71
= 4,11,834.71 (1 + 8%)^4
= 4,11,834.71 (1.02) (1.02) (1.02) (1.02)
= 4,45,784.22

Investment 1 has a return rate of 0.48%

Investment 2

Initial Investment = 20,000

Number of years = 5 years
Rate of Interest = 8% compounded quarterly
Compounded quarterly means 4 times in a year.
And 20,000 are invested every year so 20,000 are added at the end of every year.

As per the formula,

Amount at the end of first year
Amount at the end of second year
Amount at the end of third year
Amount at the end of forth year
Amount at the end of final year
= 20,000 (1 + 10%)^4
= 20,000 (1.025) (1.025) (1.025) (1.025)
= 22,076.26
= (20,000 + 22,076.26) (1 + 10%)^4
= (42,076.26) (1.025) (1.025) (1.025) (1.025)
= 46,444.32
= (20,000 + 46,444.32) (1 + 10%)^4
= (66,444.32) (1.025) (1.025) (1.025) (1.025)
= 73,342.09
= (20,000 + 73,342.09) (1 + 10%)^4
= 93,342,09 (1.025) (1.025) (1.025) (1.025)
= 1,03,032.20
= (20,000 + 1,03,032.20) (1 + 10%)^4
= 1,23,032,20 (1.025) (1.025) (1.025) (1.025)
= 1,35,804.53

Investment 2 has a return rate of 0.36%

CONCLUSION
There are various kinds of assets in which an individual can invest, including shares, mutual funds,
property, cash, currency, bonds, fixed deposits, etc. We can say that Investment first is far more
better as compare to the second investment.
 Answer 3(b)

INTRODUCTION
Companies require funds to deal with their day-to-day working capital or for performing the new
project. These funds can be raised from debts, bonds, and debenture. Debts can be raised from
financial institutions but bonds and debenture are raised by public offering. Investment in
debenture is a secure form of investment. Debentures can be offered at par, premium, or at
discount. On maturity debentures payoff a profitable amount. This amount can be calculated by
calculating the current yield.

CONCEPT AND APPLICATION

The current yield is the return received by an investor on the maturity of a bond. The current yield
determines the annual percentage return on the bonds/ debentures held by the investor. In other
words, the current yield determines the percentage of the actual rupee interest payment to the
market price of the bond. In the end, the result is converted to a percentage by multiplying by
100.In the given two conditions current yield can be calculated by the following formula:-

Annu al . Interest . Paid

Cur rent . Yield = .100
Mark et . Pr ice . of . Debt

EVALUATION OF OPTIONS
In the given case scenario Ms. Sanjana has a debenture of Per Value Rs. 100 at the rate of 6
percent and the current yield is to be calculated for two conditions first, when the market price is
98.20, and second when the market price is 102.00. This can be calculated as follow:-

Condition 1

Annual Interest paid = 6% per year

Market Price = 98.20

As per formula,

6%
Cur rent . Yield = .100
98.20

Current yield = 0.0610 or 6.10%

Condition 2

Annual Interest paid = 6% per year

Market Price = 102.00

As per formula,

6%
Cur rent . Yield = .100
102

Current yield = 0.0588 or 5.88%

CURRENT YIELD AND MARKET PRICE RELATION

The relation between the current yield and the market price is dependent on each other. In the
given case we can see that the market rate in the first condition is less than the marketplace cost in
the second. The market rate in the first condition is 98.20, and its current yield is 6.10%, on the
other hand, the market cost in the second condition is 102, and its current yield is 5.88%. That
clearly shows that the greater the market rate lower the current yield and the lower the market rate
greater the rate of the current yield.

CONCLUSION
Investment can be done with any financial instrument. The main purpose of investment is to earn
profitable returns from saving. The debenture is one of the secure forms of investment but the
return is not that high. The valuation of any debenture option must be required to rate the
debenture before investing in it. The current yield is calculated to get a rate of return keeping the
market value of the debentures in the account. There is a relation between the market value and
the current yield and the current yield is inversely proportional to the market rate.