JAIIB-Accounting & Finance for Bankers MODULE-A BUSINESS MATHEMATICS Calculation of Simple Interest Calculation YTM Capital Budgeting Techniques Depreciation Methods

BUSINESS MATHEMATICS Importance of Interest Calculation in a Bank Types of Interest – Simple / Flat Interest - Compound Interest Importance of Rule 72 Annuities & its importance

BUSINESS MATHEMATICS Annuities are essentially series of fixed payments required from you or paid to you at you at a specified frequency over the course of a fixed period of time FV of Annuities PV of Annuities

BUSINESS MATHEMATICS Chapter – 2 – Calculation of YTM Sources of Finance - Debt – Bonds / Debentures - Capital - Loans Bonds – Face Value, Coupon Rate, Maturity / Period, Redemption Value, Market Value

BUSINESS MATHEMATICS Theorems for Bond Value When the required Rate of Return is equal to the coupon rate, the value of the Bond is equal to its par value. When the required rate of return (Kd) is greater than the coupon rate, the value of the bond is less than its par value. When the required rate of return is less than the coupon rate, the value of the bond is greater than its par value etc.,

BUSINESS MATHEMATICS 3. Capital Budgeting Techniques Decision Making – to acquire or not to acquire the capital goods. Present Value = P = M / (1+r)n - Pay Back Period - IRR - NPV - PI - Sensitivity Analysis

BUSINESS MATHEMATICS 4. Depreciation – Different Methods a. Straight Line Method b. Declining / Diminishing Balance Method c. Accelerated Depreciation. d. Sum of year’s Digit method AS-6 deals with Depreciation Accounting