Financial Calculation and Role of Finance

TASK 4

Contents
INTRODUCTION...........................................................................................................................3
TASK 4............................................................................................................................................3
Financial calculation...............................................................................................................3
Role of finance.......................................................................................................................4
CONCLUSION................................................................................................................................5
REEFRENCES................................................................................................................................6

INTRODUCTION
In modern business world, there is a need of proper managing and controlling of financial
resources and assets which that ease in reaching the set targets in specific time frame. The
systematic process of handling and making proper and effective use of financial resources is
known as financial management (Roberts, 2015.
In order to understand the importance of FM, the calculations are made on assumption basis
and role of finance are discussed.
TASK 4
Financial calculation
In business scenario, various financial calculations are performed by the manager in order
to determine the overall financial strength and status of company during a year. Different form of
financial statement and record are prepared which help in easy analysis overall company
performance that further ease the process of making financial decision (McFarland, 2015). For
example the calculation of NPV (This can be defined as a technique for measuring the actual
value of any given project) is computed underneath:
Initial investment = 150000
YEAR Discount Factor Cash Flow Computation
1 0.971 55230 53628.33
2 0.943 70045 66052.43
3 0.915 88375 80863.12
4 0.888 79870 70924.56
5 0.863 57555 49669.96
Decommissioned 0.863 45000 38835
TOTAL 359973.4
NPV 359973.4-150000=209973.4
The above table shows the calculation net present value of a proposal in which initial
investment is about 150000. The PV factor is 10% and the total cash flow after five year from
this investment is 359973.4. Thus, the total NPV after 5 year will be 209973.4 which states that