Return to Previous Page

Ajay Sharma’s Financial Planning Dilemmas

CASELET, FINANCIAL MANAGEMENT
ET Cases, 2 pages

Case Preview

Ajay Sharma’s Financial Planning Dilemmas

 

Ajay Sharma (Ajay) and Ankita Sharma (Ankita) had been a happily married for 10 years now. Theirs was a love marriage which happened few years after they graduated from IIT Mumbai in Computer Science Engineering. Being one of the top-5 students in his batch, Ajay was placed with one of the top-3 Indian IT companies on the first day of placements. The package and profile was what he had dreamt of. After having worked through various functions and levels for about 13 years successfully, Ajay aged 35 opted to become an entrepreneur by setting up a software firm along with his group of friends. Soon after her graduation, Ankita was also respectably placed. After gaining few years of corporate experience, she took a break from her professional life when blessed with a baby boy, Rohit. Though Rohit turned five now, Ankita continued to be homemaker as Ajay and she herself decided that she should mentor and monitor Rohit...........................

Teaching Note Preview

Ajay Sharma’s Financial Planning Dilemmas

 

Synopsis

Time Value of Money (TMV) is a fundamental concept of Financial Management that must be well comprehended by all the business administration students. A rupee in the hand today, with all the other conditions being the same, is worth more than a rupee to be received in the future. This underlines the power of compounding. This caselet applies the concepts of TMV in the backdrop of Ajay Sharma’s dilemmas. This caselet can also be very effective in understanding and implementing the concepts of TMV by individuals as well as business entities while finalizing their financing decisions.

Prerequisite Conceptual Understanding

The students/participants should be encouraged to read the chapter on TMV for an effective classroom analysis:

  • • Prasanna Chandra, " Chapter 8 - Time Value of Money,Fundamentals of Financial Management, 5th Edition, Tata McGraw-Hill Education Pvt. Ltd., 2010

 

Expected Learning Outcomes

At the end of this caselet, the participants are expected to have working knowledge of the following:

  • • Mechanics of Compounding and Discounting
  • • Application of Present Value and Future Value concepts in financial planning decisions

 

Positioning and Setting

This caselet can be used for highlighting the importance of TMV in any of the following modules/courses.

  • • Financial Management course
  • • Corporate Finance course
  • • Valuation of Securities

 

Assignment Questions

  • I. What’s the significance of Time Value of Money (TMV)? How does it make a difference to financial/investment decisions?
  • II. How does the power of compounding help investors? How does it help dedicated investors to earn higher returns?
  • III. In which option should Ajay invest the proceeds of insurance policy to maximize his returns?
  • IV. How much will be the tuition and living expenses per year when Rohit goes for higher studies? Once Rohit starts college what will be his total expenses in each of his four years? How much money will have to be deposited by Ajay per month to allow Rohit to complete his education from a top-notch institution?
  • V. ...................

$3.66
Rs 0
Product code: FIN-2-0004, FIN-2-0004A

Abstract


The caselet depicts the dilemmas of the protagonist Ajay Sharma (Ajay) who was not well-versed with financial terminology and calculations. A currency today holds more value than would be the value of the same currency in future. The concept of compounding plays a very crucial role while finalising investment/financing decisions. When Ajay was in the process of financial planning for his family, he faced few dilemmas in taking the right decisions. This caselet can be used to introduce the concept of Time Value of Money (TMV), including the mechanics of compounding and discounting presented through the dilemmas faced by Ajay. This caselet enables a holistic understanding of the underpinnings of TMV.



Pedagogical Objectives

  • To introduce the participants/students to the importance of TMV in financial planning (both at a personal level as well as company level) decisions
  • To illustrate the mechanics of TMV compounding and discounting in cash flows (annuities, semi-annual, quarterly, monthly, etc.)
  • To develop a practical approach to resolving financial planning dilemmas using the underlying principles and economic logic of TMV

Positioning and Setting

This caselet can be used for highlighting the importance of TMV in any of the following modules/courses:

  • Financial Management course
  • Corporate Finance course
  • Valuation of Securities



This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
$3.66
Rs 0

Related products




Request for an Inspection Copy

(Strictly for Review Purpose, Not to be Used for Classroom Discussion/Trainings)