Purpose of Assignment
Students should understand the mechanics in calculating a company's weighted average cost of capital using the capital asset pricing model (CAPM) and its use in making financial investments.
Assignment Steps
Resources: Tutorial help on Excel
® and Word functions can be found on the Microsoft
®Office website. There are also additional tutorials via the web that offer support for office products.
Scenario: You work for an investment banking firm and have been asked by management of Vestor Corporation (not real), a software development company, to calculate its weighted average cost of capital, to use in evaluating a new company investment. The firm is considering a new investment in a warehousing facility, which it believes will generate an internal rate of return of 11.5%.
Due Week 6 and worth 100 points
Read Case Study 9 from
Multi-Sector Casebook in Health Administration, Leadership, and Management, and respond to the following:
- Summary of the major facts
Summarize the facts in narrative or outline form. Include the most important and pertinent incidents in the situation. (Do not simply restate the entire case.)
- Problem(s)
The facts of the case reveal one or more problems that require attention. Indicate at least three problems affecting GreenHealth and explain their importance.
- Alternative Solutions and Probable Outcomes
Analyze optional courses of action. This is one of the most important parts of the analysis. Remember that a decision not to act or to do nothing is always an alternative. However, doing nothing also has repercussions—sometime
you have learned how important performance management is for both employees and organizations. You have also explored how important a well-designed performance management program is to ensuring an organization’s success. Part of its success also relies on the ability of the manager to have the skills necessary to effectively work with employees as a mentor (a relationship built on trust, focused on the person and his or her individual growth and career) and a coach (a method of training, focused on an employee’s performance, giving advice, and monitoring progress). Based on a manager’s personal style, there are guidelines available to help with mentoring and coaching employees to successfully meet the short- and long-term objectives in their development plans. These skills will help managers to ensure they are effective in providing the guidance, support, advice, and training necessary so that employees have the confidence to achieve the desired competencies.
Pos
Imagine that you are a financial manager researching investments for your client. Use the Strayer Learning Resource Center to research the stock of any U.S. publicly traded company that you may consider as an investment opportunity for your client. Your investment should align with your client’s investment goals. (
Note: Please ensure that you are able to find enough information about this company in order to complete this assignment. You will create an appendix, in which you will insert related information.)
The assignment covers the following topics:
- Rationale for choosing the company in which to invest
- Ratio analysis
- Stock price analysis
- Recommendations
Write a 250-word minimum paper in APA format that discusses average returns, arithmetic vs. geometric averages, and risk premiums. Also, explain how the average investor could benefit by knowing these concepts to assume the least amount of risk.
Be sure to support your work with specific citations from the Learning Resources and any additional sources.
Learning Resources
Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2017). Essentials of corporate finance (9th ed.). New York, NY: McGraw-Hill Irwin.
Complete the following Questions and Problems from each chapter as indicated.
Show all work and analysis.
Prepare in Microsoft® Excel® or Word.
A firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project?
For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a required return of 11 percent, should the firm accept this project? What if the required return is 24 percent?
A proposed new investment has projected sales of $635,000. Variable costs are 44 percent of sales, and fixed costs are $193,000; depreciation is $54,000