What does a firm’s overall cost of capital mean?

Cost of capital is the return necessary to make a capital budgeting process worthwhile. Further, it is the returns that a company gets after an investment. This is the money that evaluates any new project of a company for it determines the minimum profit expected by investors in the business. To satisfy investors, the return on capital employed must be above the company’s average debts, thus making investments worthwhile. That is, the expected output must be more than the invested capital; the returns are more than the capital (Armitage, 2005).Moreover, if a project costs the same as the company’s average business activities, then it is wise to use the average cost of capital of the company as the base. This ensures that the company’s security on the cost of capital is calculated. It is done by first calculating the cost of debt and equity. Afterwards, calculate the expected returns after doing business. This is done by dividing the dividend payment per share wit h the market price then adding the growth rate. One can thus issue dividends to investors.From a financial manager's perspective, discuss the capital budgeting process used to identify projects that add to the firm's value? How do capital budgeting decisions help to define a firm's strategic direction? The capital budgeting process is used to identify projects that add value to a firm. Afterwards, the managers have to calculate the cash required acquiring a new building or equipment without deriving any cash benefits from the disposal of the replaced commodity.Any additional working capital in relation to the new equipment is initially outlaid and the initial investment is included as a part only if changes occur at the beginning of the project. After this, the managers calculate the terminal cash flow after the sale of the assets, savings after the operations, as well as the net present value of the assets. This procedure helps them to calculate the feasibility of purchasing an equ ipment or building. Capital budgeting decisions help to define a firm’s strategic direction by deciding whether to invest in a specific asset or project.This process helps to determine whether to engage the firm in acquiring certain assets which were not formerly used by the firm. In addition, this undertaking can help to replace any outdated assets, thus maintaining their efficiency. How does a firm’s capital structure relate to your personal capital structure? In what ways are they similar? Provide examples of how you use debt and equity in your personal financial life that parallels the basic capital structure decisions made by a firm.Capital structure is the combination of equity, debt, and other finance sources used to fund other long-term finances. It is therefore related to personal capital structure since the 2 represent the money working in the business, thus showing money flow in the business. Both are similar for they are the working capital of a business. T hey indicate the amount of money invested in the business as well as the profit gained. They both indicate the amount of borrowed capital flowing in the business.Further, they indicate any other form of capital that are used to run a personal business, such as, a dealer servicing one’s business with goods then settling the dues later. Debt and equity in personal financial life parallels the basic capital structure decisions made by a firm since the amount of money invested at the launch of the business, together with the sum total of goods provided by a dealer to be paid later in form of equity, is indicated.The amount of money borrowed by an individual to help strengthen their capital is indicated as equity for it represents the total amount borrowed to run the business. Modigliani and Miller [MM] employed the concept of arbitrage to develop their theory. Explain the concept of arbitrage and the role of arbitrage in the MM model. Discuss the assumptions and the issues underl ying the MM model. http://www. rdboehme. com/MBA_CF/Chap_15. pdf The concept of arbitrage can be explained using the analogy two different markets with one selling at a lower price.Sellers will buy from the low-price market and sell in the market with high prices. The prices thus tend to rise in the low-priced market until the difference is bridged. The role of the MM model is to indicate the safety of investments, that is, if a firm runs two companies, then one might have high market value per share but be very risky regarding market price per share. Conversely, the other may be low market price. Investors will then sell the shares of the risky firms and purchase the other’s, thus standardizing the average cost of capital of the group.The assumptions of the MM model are that the capital market is perfect if only the investors know the market forces. Further, the model classifies firms in groups according to business risks. Investors are assumed to use the operating income to determine the market price. It is also assumed that there are no corporate income taxes. The issues underlying the MM model are that it is very hard to run a business without paying of taxes. Further, the market prices fluctuate, thus the knowledge about market prices is not conclusive. It is thus hard to gauge the market price. What does a firm’s overall cost of capital mean? Cost of capital is the return necessary to make a capital budgeting process worthwhile. Further, it is the returns that a company gets after an investment. This is the money that evaluates any new project of a company for it determines the minimum profit expected by investors in the business. To satisfy investors, the return on capital employed must be above the company’s average debts, thus making investments worthwhile. That is, the expected output must be more than the invested capital; the returns are more than the capital (Armitage, 2005).Moreover, if a project costs the same as the company’s average business activities, then it is wise to use the average cost of capital of the company as the base. This ensures that the company’s security on the cost of capital is calculated. It is done by first calculating the cost of debt and equity. Afterwards, calculate the expected returns after doing business. This is done by dividing the dividend payment per share wit h the market price then adding the growth rate. One can thus issue dividends to investors.From a financial manager's perspective, discuss the capital budgeting process used to identify projects that add to the firm's value? How do capital budgeting decisions help to define a firm's strategic direction? The capital budgeting process is used to identify projects that add value to a firm. Afterwards, the managers have to calculate the cash required acquiring a new building or equipment without deriving any cash benefits from the disposal of the replaced commodity.Any additional working capital in relation to the new equipment is initially outlaid and the initial investment is included as a part only if changes occur at the beginning of the project. After this, the managers calculate the terminal cash flow after the sale of the assets, savings after the operations, as well as the net present value of the assets. This procedure helps them to calculate the feasibility of purchasing an equ ipment or building. Capital budgeting decisions help to define a firm’s strategic direction by deciding whether to invest in a specific asset or project.This process helps to determine whether to engage the firm in acquiring certain assets which were not formerly used by the firm. In addition, this undertaking can help to replace any outdated assets, thus maintaining their efficiency. How does a firm’s capital structure relate to your personal capital structure? In what ways are they similar? Provide examples of how you use debt and equity in your personal financial life that parallels the basic capital structure decisions made by a firm.Capital structure is the combination of equity, debt, and other finance sources used to fund other long-term finances. It is therefore related to personal capital structure since the 2 represent the money working in the business, thus showing money flow in the business. Both are similar for they are the working capital of a business. T hey indicate the amount of money invested in the business as well as the profit gained. They both indicate the amount of borrowed capital flowing in the business.Further, they indicate any other form of capital that are used to run a personal business, such as, a dealer servicing one’s business with goods then settling the dues later. Debt and equity in personal financial life parallels the basic capital structure decisions made by a firm since the amount of money invested at the launch of the business, together with the sum total of goods provided by a dealer to be paid later in form of equity, is indicated.The amount of money borrowed by an individual to help strengthen their capital is indicated as equity for it represents the total amount borrowed to run the business. Modigliani and Miller [MM] employed the concept of arbitrage to develop their theory. Explain the concept of arbitrage and the role of arbitrage in the MM model. Discuss the assumptions and the issues underl ying the MM model. http://www. rdboehme. com/MBA_CF/Chap_15. pdf The concept of arbitrage can be explained using the analogy two different markets with one selling at a lower price.Sellers will buy from the low-price market and sell in the market with high prices. The prices thus tend to rise in the low-priced market until the difference is bridged. The role of the MM model is to indicate the safety of investments, that is, if a firm runs two companies, then one might have high market value per share but be very risky regarding market price per share. Conversely, the other may be low market price. Investors will then sell the shares of the risky firms and purchase the other’s, thus standardizing the average cost of capital of the group.The assumptions of the MM model are that the capital market is perfect if only the investors know the market forces. Further, the model classifies firms in groups according to business risks. Investors are assumed to use the operating income to determine the market price. It is also assumed that there are no corporate income taxes. The issues underlying the MM model are that it is very hard to run a business without paying of taxes. Further, the market prices fluctuate, thus the knowledge about market prices is not conclusive. It is thus hard to gauge the market price.

College education Essay Example | Topics and Well Written Essays - 500 words

College education - Essay Example There is justification to have the taxes used for the benefit of the state dwellers and it should not be seen as a burden. I believe that if the students have the means to pay for tuition, then they should pay for it and it is their responsibility. If in the event the students do not have the means to pay for tuition, it is the responsibility of the state to pay for the tuition fees of those in need so that they are able to pursue a higher education degree. The difference of in and out-of-state tuition is appropriate because the out-of-state students, in general, will be living in the state while they go to school. Meanwhile students that live in Texas and are residents, in general, will stay to continue living in the state. Upon graduation, the students that stay will become taxpayers with full time jobs, if they have not already become taxpayers. Generally speaking, the majority of the students receive some kind of financial assistance (loans, grants, and scholarships) to pursue a higher education degree. Since this is the case, this would mean that if students do not receive financial assistance, they would not be able to continue their higher education degree. In most cases, these students are first generation college students. Everyone should be entitled to a college education. If public education is available for all students, then why leave them without a college education because they are not able to pay? If financial support is available (meals at school, transportation, books, tuition) for students from kindergarten up till high school graduation, we should continue to help them so that they may fulfill their goal and objectives in obtaining a higher education degree. Let us live in a state where we are able to continue helping those in need. Let those that have more, continue to help those in need. Let us continue a state where education is free of charge since the beginning till the

Scoring Cyber Competitions Essay Example | Topics and Well Written Essays - 250 words - 130

Scoring Cyber Competitions - Essay Example Since it is an online activity, there needs to be an automated scoring machine which can be manipulated to generate and maintain scores to the competing teams. In fact, some competitions might require the use of certain services such as web, email, and database each of which plays an integral role in determining the success of the competition (Cashell, et al., 2004). Each of these machines should always be made available and actively maintained throughout the competition. Besides, I would like to recommend that competitors should be equipped with both offensive and defensive skills. Offensive skills can be crucial in launching an attack and allowing access to the vulnerabilities. On the other hand, defensive skills can be of much value especially when eliminating the vulnerabilities and building one’s own network before defending it (Loguidice & Barton, 2014). Lastly, the cyber competition should involve the use of rewards. The machine chosen should be in proper condition to help in awarding and deducting points from the competitors depending on the level of their performance. Points should be added if the competitor complies with all the rules and manages to carry out a successful defense, attack, and injections in line with the competition. Otherwise, points might be lost if they fail to do so or intentionally interrupt the scoring system.

Does the Problem of Evil Provide a Defeater for the Existence of God Essay

Does the Problem of Evil Provide a Defeater for the Existence of God - Essay Example One of the major functions of religious belief has been to give human beings a structure and a set of codes to help them minimize their exposure to this evil, by concentrating on God and keeping themselves pure and well away from temptations and sins. This paper traces some of the main arguments that have been used throughout history to explain the problem of evil and concludes that it can never be fully explained due to the difference between human and divine ability to understand things. In the simplest terms there is a basic contradiction in the fact that both God and evil exist. We can accept that it is not possible to know where God came from, since he is eternal, having existed always, existing now, and going on to exist for ever into the future. But what about evil? It seems unlikely that a God who is absolutely good would actually create evil. Similarly, if he came across evil arising out of what he created, then it seems logical that a God who is good would eliminate evil from the world, or would prevent it from occurring in the first place. How can a good God stand by and watch terrible injustices, suffering of innocents, or indeed be the cause of these evils? This is a big moral and logical problem which has been tacked from several different angles. From an atheist perspective the answer is quite straightforward: the absence of intervention to stop evil from happening proves that there is no such thing as an absolutely powerful and absolutely good God, as defined in the Judaeo Christian tradition. One solution to the apparent contradiction between the existence of evil and the existence of God, is to argue that God and evil are two separate and different things, and that evil is in some mysterious way the â€Å"opposite† of God. This line of reasoning preserves the absolute goodness of God, and means he is not contaminated by the bad things that happen in the world. From this position it can be argued that that evil is a necessary thing because without it, we would not be able to understand the goodness of God. An analogy from the physical world would be the relationship between light and darkness. It is possible to conceive of absolute light, and absolute darkness, but in these two extreme situations we would be blind, and not able to appreciate anything in the middle of them properly. This is quite a promising line of argument, because it places the problem in the limited, physical nature of man, rather than the realm of logic or ideas. The physical world, unlike the world of pure ideas, is not an absolute situation, and it exists between the extremes of good and evil, in such a way that they set up a contrast, allowing us to operate in the grey area in the middle, an by implication make choices to orient ourselves towards the one or the other extreme. In the history of Christianity this kind of thinking was put forward as a suggestion but quickly condemned, and it is since known as the â€Å"Manichean heresy.† The problem with this line of argument is that it waters down the essential nature of the divine being, in order to explain away the problem of evil. This solution also implies either that evil was co-existent with God from the beginning, so that good and evil define the nature of G od, or that God in some way relinquished some of his omnipotence when he created the earth, and allowed evil to take on existence

Finance principles Essay Example | Topics and Well Written Essays - 1750 words

Finance principles - Essay Example The company held a meeting to discuss the launch of its new product and the top management discussed in detail about the cash flow analysis and projections of the liquid detergent. The Chief Financial Officer, Mr. Mc Donald presented a report in a meeting which included the cash flow projections for the new project. He was planning to purchase specialized equipment and production facilities from Donnalley limited. Mr. Gasper, the production manager, inquired the CFO that why wasn’t he purchasing the equipment from Danforth limited. Being the financial analyst, I will analyze the purchase of equipment and facilities from Donnalley as well as Danforth limited if the company was planning to go with the project. If the company will buy specialized equipment from Donnalley limited, then it is expected to have increased net cash flows for the project. For the first four years, company will be able to get increased cash flows of $580000. While for the next three years, company is hopeful to receive higher cash flows of $650000. However, the company will get net cash flows of $550000 for the remaining four years of the project. There will be reducing depreciation on the specialized equipments of the company which are shown in table 1. The Radiant limited will experience loss in sales revenue from the existing product lines during the term of the project. The EBIT and NOPAT are calculated for each year in the table 1. Following are the formulae for the calculations of EBIT, NOPAT and free cash flows. In the fifth year, there was a need to purchase additional production facilities to meet up the growing demand of the detergents. The company will invest $5000000 to continue operations and production of detergents. The terminal cash flows are also calculated to come up with the free cash flows of the last year of the project. Let us suppose that the company can also purchase the plant, equipment and facilities from Danforth limited for launching a new

NAFTA and Mexican Trucking Assignment Example | Topics and Well Written Essays - 250 words

NAFTA and Mexican Trucking - Assignment Example These objectives are actually not fair, since, after a reported pilot study that allowed an initial 100 Mexican trucks to cross the U.S. borders within the stipulated safety standards, the results actually indicated that the Mexican drivers exhibited greater and higher conformity to safety regulations and standards, as compared to the counterparts in the U.S. Â  3. Does it make economic sense for the United States to bear the costs of punitive tariffs as allowed for under NAFTA, as opposed to letting Mexican trucks enter the United States? In evaluating the scenario, it could actually be more beneficial for the U.S. to bear the costs of tariffs rather than completely allow unrestricted entry of Mexican trucks to enter the U.S. If this is allowed, it could be perceived that a barrage of cheaper goods could create an oversupply in the American market which would destabilize the demand and supply of various products, and likewise affect costs and pricing structures. Imposition of the tariffs would at least ensure that American manufacturers and producers would still look for the local markets are a more sensible option to market their goods and to be consumed by the American citizens at significantly lower costs.

How useful is the Concept of Self Esteem For Supporting Students With Essay

How useful is the Concept of Self Esteem For Supporting Students With Special education Needs - Essay Example This assignment will firstly, begin by my stating my approach to learning about this topic before I joined the course, followed by what I learned about this topic during the course. These two section will be generally based upon personal self-reflection. The next section is academic, as I survey the literature surrounding the topic of self-esteem with regards to special needs students. This is followed by my observations about personal development, and how this impacts self-esteem. The last section is the conclusion, in which all these concepts are drawn together What do Albert Einstein, Alexander Graham Bell, Walt Disney, Whoopi Goldberg and Tom Cruise have in common? Of course, they are all famous people. However, only a few people know that they all suffered from dyslexia, a disability associated with difficulty in reading and spelling words. Albert Einstein was known to suffer from dyslexia mainly because of his bad memory and his constant failure to memorize the simplest of things. Alexander Graham Bell had poor grades. Walt Disney suffered from reading difficulties. Whoopi Goldberg had a lot of difficulty in school and Tom Cruise suffered from abuse as a child, and was also a victim of bullying in school, both of which were partially because he suffered from dyslexia. (Disabled World, 2008). However, they all overcame their disabilities to play a major role in the area of knowledge and entertainment. They refused to let their disabilities define them. They are all examples of individuals who overcame disabilities, partially because of their reliance upon their own self-esteem. When we have a positive self-esteem, we are capable of doing more things and can serve as an inspiration to others. Though there is a feeling sadness and being down, it is just but normal, yet, we must not allow it to define ourselves. We should learn to maximize our level of confidence, because if we feel good