Time And Resource Constraints

1. You own a portfolio that has $1300 invested in Stock A and $2100 invested in Stock B. If the expected returns on these stocks are 10% and 16%, respectively what is the expected return on the portfolio?

 

2. You own a portfolio that has $1300 invested in Stock A and $2100 invested in Stock B. If the expected returns on these stocks are 10% and 16%, respectively, what is the expected return on the portfolio?

 

 

 

4. You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14% and Stock Y with an expected return of 11%. If your goal is to create a portfolio with an expected return of 12.4%, how much money will you invest in Stock X? Stock Y?

 

 

 

5. Based on the following info, calculate the expected return

 

 

 

State of Economy             Probability of state of economy         Rate of Return if state occur

 

Recession .30 -.08
Boom .70 .19

 

 

 

 

 

8. Expected returns: A portfolio is invested 20% in Stock G, 35% in Stock J, and 45% in Stock K. The expected returns on these stocks are 9.2%, 12%, and 15.7%. What is the portfolios expected return? How do you interpret your answer?

 

 

 

12. You own a portfolio equally invested in a risk free asset and two stocks. If one of the stocks has a beta of 1.42 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

 

 

 

15. Using CAPM: A stock has an expected return of 10.9%, its beta is .85, and the risk-free rate is 4.6%. What must the expected return on the market be?

 

 

 

16. Using CAPM: A stock has an expected return of 12.5% and a beta of 1.15, and the expected return on the market is 11.5%. What must the risk-free rate be?

 

Budgeting With Real Options

A capital investment project that generates new opportunities is more valuable than one that doesn’t. A flexible project, one that does not commit management to a fixed operating strategy is more valuable than an inflexible one. When a project is flexible or generates new opportunities for the company, it is said to contain real options.

In this assignment, you are to discuss the budgeting implications of different option strategies and the cost-benefit issues associated with such decisions.

  • Why might recognizing a real option raise but not lower a project’s net present value (NPV) as found in a traditional analysis?
  • Why do we tend to underestimate NPV when we ignore the option to abandon?
  • What do you suggest as a cost-effective approach to capital budgeting analysis when a project contains real options.

Write a one-page memo in which you explain the answers to any two of the three questions.  Post your memo in the discussion forum and solicit feedback from your classmates.

A capital investment project that generates new opportunities is more valuable than one that doesn’t. A flexible project, one that does not commit management to a fixed operating strategy is more valuable than an inflexible one. When a project is flexible or generates new opportunities for the company, it is said to contain real options.

In this assignment, you are to discuss the budgeting implications of different option strategies and the cost-benefit issues associated with such decisions.

  • Why might recognizing a real option raise but not lower a project’s net present value (NPV) as found in a traditional analysis?
  • Why do we tend to underestimate NPV when we ignore the option to abandon?
  • What do you suggest as a cost-effective approach to capital budgeting analysis when a project contains real options.

Write a one-page memo in which you explain the answers to any two of the three questions.  Post your memo in the discussion forum and solicit feedback from your classmates.

The Cost Of Capital

Assume that you are a member of an aerospace company’s newly formed executive committee that has been given the role of reviewing requests for major capital expenditures.  The committee chairman has laid the groundwork for approving requests that managers of various organizational units have submitted by reminding the group that their charge is to approve the investment opportunities that will best meet the company’s financial objective of maximizing shareholder wealth.

One of the more outspoken individuals on the committee vigorously pushed the concept that the best way to maximize shareholder wealth would be to accept all of the projects that promise a return that is higher than the long-term interest rates on bonds or bank loans. This same committee member is also insistent that  the company  turn to borrowed funds as needed to augment existing funds so that all of the projects that are attractive to the committee,  and that promise a return that is higher than the borrowing rate,  can be accepted.

Other committee members expressed concern about that approach but the time scheduled for adjourning the meeting arrived before the disagreement was resolved. You have been assigned to examine the issue and, in the spirit of taking advantage of a teaching moment, circulate a report that will bring all committee members to a common understanding of the decision criteria that should be adopted by the committee.  The chairman asked that your report address the following questions that seemed to be present during the committee meeting.

  1. Why would the suggested approach of using the cost of new debt as the hurdle rate probably not result in maximizing the shareholders wealth?
  2. What role does the cost of capital play in the committee’s work?
  3. How might a company’s WACC be affected by changes in the size of its capital budget?
  4. When and why would it be inappropriate to use the firm’s cost of capital as calculated on its existing capital structure to evaluate new investment opportunities?
  5. In what situations would it be appropriate to use the firm’s cost of capital as calculated on its existing capital structure to evaluate new investment opportunities?
  6. For the situations in which it would be inappropriate to use the firm’s cost of capital as calculated on its existing capital structure to evaluate new investment opportunities, what are the alternatives that might be used instead as the hurdle rate?

Prepare a 3-4 page report in which you answer the questions as requested by the committee chairman.  Apply APA standards for writing style to your report.

Discuss Global Economic And Political Issues

Primary Task Response: Within the Discussion Board area, write 400–600 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas.

The importance of trade continues to be a topic that is debated because the gains are not always quantifiable by those involved. An article by Ed Crooks published on January 6, 2011, “America: Riveting Prospects,” discusses why American companies are sometimes opposed to exporting.

Using your search engine type “America: Riveting Prospects” by Ed Crooks, published in the Financial Times on January 6, 2011. You will notice several options under this title, chose the link that is provided by the Financial Times. There is a free version of this article through the search engine. Avoid going directly to the article’s Web address because you will be prompted to subscribe to its membership. A subscription payment is not necessary to review this article.

  1. Summarize why the author claims that U.S. companies are still having issues with exporting.
  2. Discuss the five reasons that Crooks outlines in the article and finish your post by offering your opinion of whether The Economist’s viewpoint or with The Industrialist’s viewpoint is more agreeable.

Explain the roles of emotion and fairness in decision making

Explain the roles of emotion and fairness in decision making.

Apply the standard of APA style to all research and writing tasks.

Apply critical thinking skills to analyze business situations.

 

Post an executive summary of your Comprehensive Project in the body of a post in this discussion (please do not use attachments). An Executive Summary is a one-page document that outlines the purpose, process, findings, discussion, and findings of a report submitted to management. CEOs often read and assess an Executive Summary before deciding to read the entire report, so this must be high quality narrative that demonstrates the significance of the work undertaken, the objectivity of research and analysis underpinning the report, and the credibility of the resulting conclusions

Explain the roles of emotion and fairness in decision making.

Apply the standard of APA style to all research and writing tasks.

Apply critical thinking skills to analyze business situations.

 

Post an executive summary of your Comprehensive Project in the body of a post in this discussion (please do not use attachments). An Executive Summary is a one-page document that outlines the purpose, process, findings, discussion, and findings of a report submitted to management. CEOs often read and assess an Executive Summary before deciding to read the entire report, so this must be high quality narrative that demonstrates the significance of the work undertaken, the objectivity of research and analysis underpinning the report, and the credibility of the resulting conclusions

Discussion—Finance Organization and Long-Term Planning

 

Considering Genesis Energy’s aggressive growth plan, Sensible Essentials suggested that its client should broaden the scope of financing beyond short-term loans and consider long-term financing options. These options would greatly enhance the ability of the operations management team to fund the capital investments and growth in operating expenses. One option is selling more equity in the company. A public stock offering might be a possibility; however, a company as young and small as Genesis Energy might be hard to value.

Sensible Essentials believes that another private investor might require preferred stock dividends in order to mitigate some of the financial risk. Another option is a long-term bank loan.

Acting as the finance expert for Sensible Essentials, respond to the following:

•Determine the cost of debt and equity for Genesis Energy and its weighted average cost of capital. Go to www.yahoofinance.com and look under SEC filings. Use a US publicly traded company, such as Apple, Google, DuPont, etc.

•Identify the sources of long-term financing for Genesis Energy.

•Analyze the potential costs and benefits of each option.

•Explain how relative risk (from the investor’s perspective) impacts the cost of capital for Genesis Energy.

•Determine the cost of debt and equity for Genesis Energy and its weighted average cost of capital.

•Calculate the required rate of return for Genesis Energy using the capital asset pricing model (CAPM). What is the required return for Genesis Energy shareholders?

Write your initial response in 300–500 words. Citation (APA Style) and use at least 1 source

 

Assignment Part II: Discussion—Managing Finance

 

The Genesis Energy operations management team was excited to understand the various options for securing financing to fund the rapid growth plans. The team was surprised by the cost associated with using funds supplied by others after accounting for risk of investments in its small but profitable company. Sensible Essentials explained how the cost of external financing can be calculated.

Explain with examples how the cost of capital is determined.

•Calculate the differences in cost and risk. Explain why the costs and risks of external financing are important for the organization to understand.

•Explain why rapid growth plans are important to a small company. Would there be a more efficient way to fund a growing company? Why or why not? Justify your answer.

Write your initial response in 300–500 words. Citation (APA Style) and use at least 1 source

Which of the following is the first step in developing a set of strategies designed to best meet the needs of customers?

Question 1
In which of the following stages is it determined what the project will entail, when it will be scheduled, whom it will benefit, and what the budget will be?
A. Conceptualizing
B. Defining
C. Planning
D. Executing
E. Delivering
Question 2
Which of the following is the first step in developing a set of strategies designed to best meet the needs of customers?
A. Market Research
B. Define the Integrated Project Management System
C. Environmental Analysis
D. Project Selection
E. All of the above are correct
Question 3
Which of the following activities is not considered a project?
A. Developing a new software program
B. Designing a space station
C. Preparing the site for the Olympic Games
D. Production of automobile tires
E. Developing a new advertising program
Question 4
Project management is ideally suited for a business environment requiring all of the following except
A. Accountability
B. Flexibility
C. Innovation
D. Speed
E. Repeatability
Question 5
Which of these is not part of the “technical dimension” of project management?
A. WBS
B. Budgets
C. Problem solving
D. Schedules
E. Status reports
Question 6
In which of the following stages is a major portion of the physical and mental project work performed?
A. Conceptualizing
B. Defining
C. Planning
D. Executing
E. Delivering
Question 7
Which of the following would not be classified as an organizational threat?
A. Slowing of the economy
B. A maturing life cycle
C. Poor product quality
D. Government regulations
E. All of these are organizational threats
Question 8
Which of the following is not one of the classifications for assessing a project portfolio?
A. Sacred cow
B. Bread-and-butter
C. Pearls
D. Oysters
E. White elephants
Question 9
Which of the follow is not one of the commonly heard comments of project managers?
A. Where did this project come from?
B. Why are we doing this project?
C. How can all these projects be first priority?
D. Why is this project so strongly linked to the strategic plan?
E. Where are we going to get the resources to do this project?
Question 10
Which of the following terms is often used to denote a project that a powerful, high-ranking official is advocating?
A. Sacred cow
B. Pet project
C. Political necessity
D. Special undertaking
E. Strategic ploy
Question 11
Projects are usually classified into all but one of the following categories. Which one is not one of the typical classifications?
A. Compliance and emergency
B. Operational
C. Strategic
D. Political necessity
E. All of these are typical classifications
Question 12
The assessment of the external and internal environments is called _______ analysis.
A. SWOT analysis
B. Competitive
C. Industry
D. Market
E. Strategic
Question 13
Which of the following cultural characteristics relates to the degree to which work activities are organized around groups rather than individuals?
A. Member identity
B. Team emphasis
C. Managerial focus
D. Unit integration
E. Control

Case Analysis Summary: Google

  1. Read the Google Case Study located in the Case Study section of the text.
  2. Write a summary of the case study. In your paper explain how Google analyzed their value chain for the purpose of determining where they were able to create value when using their resources, capabiltites and core competencies.

Your summary should be a minimum of 2-3 pages in length and must be in your own words. Use APA style. Include 3-5 references. Only one reference may be from the internet (not Wikipedia). The other references must be found in the Grantham University Online Library. Include a title page with your submission. Only the body of the paper will count towards the page requirement. Please see rubric below.

 

Grading Criteria Assignments Maximum Points
Meets or exceeds established assignment criteria 40
Demonstrates an understanding of lesson concepts 20
Clearly presents well-reasoned ideas and concepts 30
Uses proper mechanics, punctuation, sentence structure, spelling, and APA style 10
Total 100

 

Discuss Financial Management

Discuss Financial Management

Locate a publicly traded U.S. company of your choice. Then, calculate the following ratios for the company for 2012 and 2013:

Liquidity Ratios

o    Current ratio [current assets / current liabilities]

o    Quick ratio [(current assets – inventory) / current liabilities]

·         Asset Turnover Ratios

o    Collection period [accounts receivable / average daily sales]

o    Inventory turnover [cost of goods sold / ending inventory]

o    Fixed asset turnover [sales / net fixed assets]

·         Financial Leverage Ratios

o    Debt-to-asset ratio [total liabilities / total assets]

o    Debt-to-equity ratio [total liabilities / total stockholders’ equity]

o    Times-interest-earned (TIE) ratio [EBIT / interest]

·         Profitability Ratios

o    Net profit margin [net income / sales]

o    Return on assets (ROA) [net income / total assets]

o    Return on equity (ROE) [net income / total stockholders’ equity]

·         Market-Based Ratios

o    Price-to-earnings (P/E) ratio [stock price / earnings per share]

o    Price-to-book (P/B) ratio [market value of common stock / total stockholders’ equity]

Discuss Financial Management

Locate a publicly traded U.S. company of your choice. Then, calculate the following ratios for the company for 2012 and 2013:

Liquidity Ratios

o    Current ratio [current assets / current liabilities]

o    Quick ratio [(current assets – inventory) / current liabilities]

·         Asset Turnover Ratios

o    Collection period [accounts receivable / average daily sales]

o    Inventory turnover [cost of goods sold / ending inventory]

o    Fixed asset turnover [sales / net fixed assets]

·         Financial Leverage Ratios

o    Debt-to-asset ratio [total liabilities / total assets]

o    Debt-to-equity ratio [total liabilities / total stockholders’ equity]

o    Times-interest-earned (TIE) ratio [EBIT / interest]

·         Profitability Ratios

o    Net profit margin [net income / sales]

o    Return on assets (ROA) [net income / total assets]

o    Return on equity (ROE) [net income / total stockholders’ equity]

·         Market-Based Ratios

o    Price-to-earnings (P/E) ratio [stock price / earnings per share]

o    Price-to-book (P/B) ratio [market value of common stock / total stockholders’ equity]

SLP Assignment Expectations

  • 5 year projection using Free Cash flow or constant growth model
  • Choose a real company to analyze their current performance and projections
  • Please show some of the work and calculations debt ratio, efficiency ratio, etc
  • APA format

The Process:

Since this is your first consulting job for this client, you want to do it right. After all, this could lead to additional analysis opportunities for you down the road.  After benchmarking with other financial consultants, and viewing some of their work, you feel you need to provide the following information to your client:

  1. Brief history and description of the company – background, primary product/service offerings, customers, business sector(s), etc.
  2. Financial analysis of XYZ Company – based on data provided from the last four financial reports (Annual Reports and 10Ks).  (note: you must choose a publicly-traded corporation in order to be able to access this data)
  3. Report on the strengths and weaknesses of any financial trends of XYZ Corporation
  4. XYZ Company’s competitors – who are they, size, background, etc.
  5. XYZ Company’s industry – what are trends in this industry?
  6. Based on your research, where do you think XYZ Company is going to be in three to five years?  To help answer this question you need to know the company as well as the industry.  Make sure you provide and support the assumptions used to project the company’s future.
  7. Recommendations – what are you advising your client to do?
  8. Bibliography – You know your client is going to want to verify the information provided in your report, therefore you will provide references in a bibliography.

 

The paper needs to be between eight and ten pages in length; it must be typed and double-spaced. Please include a bibliography of the reference used in the paper. The bibliography should follow the APA reference style. The APA style refers to references in the text by author and year; i.e (Jones, 1995) or (Smith, 1996; Rizzo,1994). If you need more details, please refer to the style manual provided by the National University.

 

You will of course document any sources you are directly quoting, and will make sure that this is your own work!!!!!!!!