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Failing to contribute the maximum amount to this retirement plan is simply giving up on free money; by doubling his current contribution of three percent, Chris would actually be tripling the amount added to the 401(k) each year due to the employer's matching policy. This account is also earning an estimated eight percent annually, not far behind the 9.5% the stock market is expected to earn, and the money in the 401(k) remain far more liquid with the ability to borrow up to 50% of the value at any given time, and at a rate lower than a mortgage and significantly lower than a secure personal loan (though funds must be repaid within five years). This strategy will build both short- and long-term growth to a much higher level without impacting the ability to have an emergency fund or purchase a home.
As the Nicholsons have short-term goals that are…
At 35 years, all equities will be purged from the portfolio to maximize safety (10% corporates, 70% Treasuries, 20% cash). This means that the fund will generate an average return of (0.48+2.31+.1) = 2.89%
Using Excel, it is determined that the value of the portfolio when John and Mary retire and Paul enters assisted living needs to be $5,775,134. With that level, the portfolio will have money until Paul turns 85, at which point the portfolio will no longer have value. The assumption here is that the payments for the assisted living around going to be held in cash, so there is a need for 20% of the portfolio to be cash, and much of the rest is Treasuries so that it is liquid. Maturities will need to be staggered so that there is a current portion reaching maturity each year, to avoid having to sell below par,…
9% for the past seven years (Index Mundi, 2009). An inflation rate of 2% per annum shall be assumed for our future cash flows model, the additional 0.1% reflecting a desire for conservativeness in our estimates.
Karl's pension pays him 80% of his current salary, which is not expected to increase in the final three years. The pension benefit is indexed to inflation. e will assume a 30% tax rate for both pre- and post-retirement income.
The couple is breaking even at present, with a surplus of €264 expected for 2010. This assumes minimal work for Beatrix, so anything she works above and beyond the €15,000 threshold will allow the couple to save more money for their retirement. ith no raises and no additional work from Beatrix, the couple will run a small deficit for their last two working years.
In retirement, the couple will not make enough money to…
Ibbitson, R.; Xiong, J.; Kreitler, R.; Kreitler, C. & Chen, P. (2007). National savings rates guidelines for individuals. Journal of Financial Planning. April 2007.
Index Mundi. (2009). Germany Inflation Rates. Index Mundi. Retrieved November 16, 2009 from http://www.indexmundi.com/germany/inflation_rate_%28consumer_prices%29.html
McClure, B. (2009). Modern portfolio theory: An overview. Investopedia. Retrieved November 16, 2009 from http://www.investopedia.com/articles/06/MPT.asp
No author. (2009). German government bonds. Bloomberg. Retrieved November 16, 2009 from http://www.bloomberg.com/markets/rates/germany.html
By lowering interest rates, the government lowers the threshold of expected return for capital investments, thus making more investments economically viable. However, such supply side initiatives are weighed by firms against the potential income. If the economic outlook - that is to say the expected demand - is poor, such that the expected return will still not exceed the cost, then the investment will not be undertaken.
In speaking with a local FedEx station manager, investment decisions are typically made at head office in Memphis. The decisions are based on expectations of future demand. Most capacity decisions at FedEx involve land and building acquisitions (new stations) or airplane leases. Thus, they are typically made on the basis of long-term demand projections. These relate to specific measures such as long-term economic growth of the region, population growth of the region and other long-term macroeconomic indicators.
The timing of decisions, however, can…
Piana, Valentino. (2001). Investment. Economics Web Institute. Retrieved March 26, 2009 at http://www.economicswebinstitute.org/glossary/invest.htm
MacDonald, Nadia Tempini. (1999). Macroeconomics and Business. Cengage Learning. Retrieved March 26, 2009 at http://books.google.com/books?id=MU3StwEAyz0C&pg=PA101&lpg=PA101&dq=investment+expenditure+determinants&source=bl&ots=RI6pmrsWgd&sig=KsuV03Ql501fcNRoQj6eR_EGJgM&hl=en&ei=G7rLSb7ZItuJtgfOze30CQ&sa=X&oi=book_result&resnum=7&ct=result
Cunningham, Ralph. (2008). FedEx Boss Presses for Business Tax Changes. International Tax Review. Retrieved March 26, 2009 at http://www.internationaltaxreview.com/?Page=9&PUBID=210&ISS=25204&SID=715638
INVESTMENT POJECT (OVEVIEW): As part, analyze performance potential industry BEVEAGE INVESTMENT POJECT (DETAILS): Assignment: You analyze beverage industry companies coca cola,(KO) monster (MNST) . Assess industry performance years assess expected future performance, , years.
The modern day business environment is continually challenged by emergent threats from both within and outside its immediate environment. In other words, the micro and macro environments of economic agents raise both opportunities and threats, to which the companies have to adapt in an effort to perverse their competitiveness. Some of the more relevant examples of contemporaneous challenges include the changing needs and behaviors of the customers, the changing laws and legislations, the rapid pace of technologic development or the still ongoing economic crisis.
In such a complex environment, the investors are faced with difficulties in selecting the best options to place their capitals. They must therefore complete thorough analyses of the companies targeted,…
Deichert, M.; Ellenbecker, M.; Klehr, E.; Pesarchick, L.; Ziegler, K.; Industry analysis: soft drinks. College of Saint Benedict. Saint John's University. 2006. http://www.csbsju.edu/documents/libraries/zeigler_paper.pdf accessed on November 19, 2012
Google Finance Website. 2012. http://www.google.com/finance accessed on November 19, 2012
P/E ratio. Investopedia. (2012). http://www.investopedia.com/terms/p/price-earningsratio.asp#axzz2CfE0zFaM accessed on November 19, 2012
2011 Annual Report of the Coca Cola Company. Website of the Coca Cola Company. http://www.coca-colacompany.com/annual-review/2011/pdf/TCCC_2011_Annual_Review.pdf accessed on November 19, 2012
Identify three ways that the H metrics can be used to justify the purchase on an HIS.
In the contemporary business environment, many organizations have identified that an effective Human esources (H) management enhances organizational effeciencies. To enhnace the functions of H department, firms have realized that the integration of Human esources Information System (HIS) provides primary infrastrutures by which H department performs effectively. Despite the benefits that an organization could accrue from the integration of HIS investment, effective cost-benefit analysis (CBA) is critical to make an investment decision. Without a comprehensive CBA on HIS investment, the HIS project may be disatratrous and a firm may not enjoy the benefits from such investment. One of the effective methods that a firm could employ for the justification of HIS investment is the use of human resources metrics. The H metrics reveal the number of factors human resources contribute to…
Kavanagh, M., & Thite, M. (2009). Human resource information systems: Basics, applications and future directions. Thousand Oaks, CA: SAGE Publication, Inc.
Calson, K.D. & Kavanagh, M.J. Cost Justifying HRIS Investment: Chapter 6
Marks & Spencer Group
Morrison (Wm) Supermarkets
andgold esources Ltd.
eckitt Benckiser Group
SA Insurance Group
Smith & Nephew
Evans, J & Archer, S (1968) Diversification and the Reduction of Dispersion: an Empirical Analysis. The Journal of Finance . 23 (5): 761-767.
Chandra, P. (2008).Investment Analysis (3rd Edition).Tata McGraw-Hill Education. UK.
Investopedia (2012). Beta. Investopedia. ULC.
Mase, B. (2007), the Impact of Changes in the FTSE 100 Index. Financial Review, 42(3): 461 -- 484.
Harley-Davidson Retail Sales and Deliveries
Source: Seeking Alpha (2007)
Over the past four years, account receivable growth has outpaced sales and the result is there is more inventory on dealer's lot than at any time in the history of HOG. The analysis states: "If the additional dealer inventory build was taken out of Harley's EPS from the previous two years and shipments evenly distributed throughout the quarters then Harley would have reported $3.41 last year and $3.14 in 2005 or a full $1.00 less of EPS over the past two years. Without dealer build, HOG would have reported net income without inventory build of $891 MM in 2006 and $838 MM in 2005 versus $889 MM in the base year 2004 placing the current P/E of the firm at an estimated 18x versus the current 15.6x. " (Seeking Alpha, 2007)
Accounts Receivable Trends Over Past Four Years
Source: Seeking Alpha…
Harley-Davidson Reports 2007 Third Quarter Results - Harley-Davidson Inc. (2007) Form 8-K (Current Report Filing) Filed 10-24-07 for the period Ending 10-19-07. Online available at http://www.shareholder.com/Common/Edgar/793952/897069-07-1900/07-00.pdf recent MSN Money report relates that Harley-Davidson related on December 21, 2007 that it would announce its fourth quarter 2007 financial results before market hours on Friday, January 25, 2008.
Harley-Davidson, Inc. Web-Cast Conference for Friday, January 25, 20089. (2007) MSN Money Online available at http://news.moneycentral.msn.com/ticker/article.aspx?symbol=U.S.:HOG&feed=PR&date=20071221&id=7973673
Hog (Harley-Davidson) Analysis (2007) Financial News and Investments. 6 October 2007.
Harley Davidson Inc. HOG (NYSE) (2007) Reuters News - Key Developments. 30 Dec 2007. Online available at http://stocks.us.reuters.com/stocks/keyDevelopments.asp?symbol=HOG
Investment higher education important investment anticipating a national return.This relevant tool promoting economy eradicating poverty world. However, a huge problem taking consideration, inequality barriers colleges universities admission-based social demographic background.
Investments in Higher Education
The economic situation of most countries is in decline as a result of several environmental factors. The level of poverty is numerous countries has become a problem for these countries, but also for richer countries that must invest in helping poor regions in the world to improve their situation. The number of people living under subsistence levels is increasing, which means that something must be done in order to redress the situation.
The answer to the problem of promoting economy and eradicating poverty seems to be higher education. Whenever state governments present their long-term strategy for economic development, they consider investments in higher education the most important tool that can provide a national return. In other…
1. Alon, S. (2009). The Evolution of Class Inequality in Higher Education: Competition, Exclusion, and Adaptation. American Sociological Review. Retrieved April 10, 2013 from http://people.socsci.tau.ac.il/mu/salon/files/2010/10/the-evolution.pdf .
2. Desai & Kulkarni (2008). Changing Educational Inequalities in India in the context of Affirmative Action. Retrieved April 10, 2013 from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2474466/ .
3. Tienda, M. (2009). Hispanicity and Educational Inequality: Risks, Opportunities, and the Nation's Future. Retrieved April 10, 2013 from http://www.ets.org/Media/Research/pdf/PICRIVERA1.pdf .
A stock is a share of ownership in a company, representing a claim on the company's assets and earnings. The importance of being a shareholder is that the investor has a claim on assets and is entitled to a portion of the company's profits, which may be paid out in the form of dividends (Stock basics, 2011).
There are positive and negative aspects to stock ownership. One such positive is that the shareholder is protected by limited liability, that is, he or she is not personally liable if the company is not able to pay its debts. Owning stock means that, no matter what, the maximum value an investor can lose is the value of the investment. Another advantage of owning common stock is that shares are highly liquid for the most part, with many stocks traded daily (Stock basics, 2011).
One of the risks of becoming…
Bond basics: What are bonds? (2011). Investopedia. Retrieved May 10, 2011, from http://www.investopedia.com/university/bonds/bonds1.asp
Folger, J. (2011). Investing in the metals markets. Retrieved May 13, 2011, from http://www.investopedia.com/articles/stocks/11/how-to-invest-in-the-periodic-table.asp
McGrath, J. (2011). How do bonds work? How Stuff Works website. Retrieved May 10, 2011, from http://money.howstuffworks.com/personal-finance/budgeting/bonds1.htm
Mutual funds: What are they? (2011) Investopedia. Retrieved May 10, 2011, from http://www.investopedia.com/university/mutualfunds/mutualfunds.asp
Using Investment Philosophy and Strategy to Make Investment Decisions
1. Which investments did you chose?
The portfolio requires a mix of United States companies and foreign companies. The three investment that I chose consist of China Life Insurance, Proctor & Gamble, and Wells Fargo. The following is a portfolio that delineates all the pertinent information of the investments:
Number of Shares
Proctor & Gamble Company
Wells Fargo & Company
China Life Insurance
In total, the investment of these three stocks will amount to $351,626.88 with the rest of the funds being set aside for future investments.…
Morrell, A. (2017). Wells Fargo beats on earnings, misses on revenue. Business Insider.
Qwoter. (2017). 6 Different Investment Philosophies. Retrieved from: http://www.qwoter.com/college/Trading-Psychology/different-investment-philosophies.html
Yahoo Finance. (2017). China Life Insurance Company Limited. Retrieved from: https://finance.yahoo.com/quote/LFC?p=LFC
Yahoo Finance. (2017). The Proctor & Gamble Company. Retrieved from: https://finance.yahoo.com/quote/PG?ltr=1
Yahoo Finance. (2017). Wells Fargo & Company. Retrieved from: https://finance.yahoo.com/quote/WFC/
Debt Management and Retirement Planning
It is very important for Howe to pay all their debts and free themselves of the liability since a lot of loan like credit card loan, car loan, student loan, are hampering Howes to save up more. If they have plans for retiring in 22 years, they need to free themselves of all the loans and credit they have on them, thus saving up the interest money that goes out monthly. They can use that money for other expenses and purposes. In short term they might feel like they have lesser funds but they can have the relief that they don’t own anything to anyone and focus on saving for their future. There will be one more debt addition because of Pat’s college education, so it’s better they slowly focus on paying off the loans first and then proceed to making progress with the savings…
Suppose Jagdambay manufacturing sells a bond paying a coupon rate of 5% per year with par value (face value) of $200,000 when the market rate is only 4% per year. The bond has 5 years until maturity.
What is the bond’s price today if market rate is 5%? Show your computations
The issuance of bonds is done with a fixed par value and the dividends paid out to preferred stockholders is done on the basis of a percentage of that par value at a fixed rate. The present day bond price is calculated as follows:
Bond Price = c / (1 + i) + c / (1 + i)2 + …+ c / (1 + i)n + M / (1 + i)n
In this case,
C is the coupon payment = $200,000
I is the interest rate = 5 percent
M is the value at maturity…
Investopedia.com (n.d.). Bond basics. Retrieved from: http://www.investopedia.com/university/bonds/
Investopdia. (n.d.). Bond Laddering. Retrieved from: https://www.investopedia.com/terms/b/bondladdering.asp
Woodside. (2009). Woodside to Issue $US 1 Billion in Corporate Bonds. Retrieved from: http://www.woodside.com.au/Investors-Media/Announcements/Documents/25.02.2009%20Woodside%20to%20Issue%20US$1%20Billion%20in%20Corporate%20Bonds.pdf
Investopedia. (2017). Why do interest rates tend to have an inverse relationship with bond prices? Retrieved from: https://www.investopedia.com/ask/answers/04/031904.asp
What effect does compound interest more frequently than annually have on its future value and the effective annual rate (EAR)? Explain. How would you explain the difference between the annual percentage rate (APR) and effective annual rate (EAR) to a friend with no background in finance?Compound interest allows interest to compound on itself over a specific holding period. As a result, owners of a particular asset earn interest on their original investment plus the interest that was accrued in prior periods. This creates a compounding effect that can take small sums of money and overtime, create very large sums of money (Belser, 1919). For example, a $1000 investment that earns 5% per year will earn $1050 at the end of one year. However, at the end of the second year the investment will be $1102.50. The interest in year two was 5% more than interest in year one, which is…
1. Belser, F. C. 1919. Rapid calculation of compound interest processes. Journal of Accountancy (April): 241-248
These types of investments are often illiquid, so the investor needs to view them as long-term investments. However, the lack of liquidity also means that for the most part they have low levels of correlation with the broad market.
Derivatives are another possibility, and their potential impact on the portfolio will be discussed in the next question. They can either increase risk or decrease risk, depending on the type of derivative and how it is used.
Overall, the impact of alternative investments is to reduce the degree to which the portfolio is subject to the equity and fixed income markets. Alternative investments are often used as an ancillary component of the portfolio, to reduce the portfolio's overall volatility but with the hopes that returns will not suffer as a result.
3. Derivatives can be used for a couple of different purposes in a portfolio. The first is to increase leverage…
De Santis, R. & Sarno, L. (2008). Assessing the benefits of international portfolio diversification in bonds and stocks. European Central Bank working paper. Retrieved May 6, 2010 from http://www.ecb.int/pub/pdf/scpwps/ecbwp883.pdf
Driessen, J. & Laeven, L. (no date). International portfolio diversification benefits: Cross-country evidence from a local perspective. International Monetary Fund. Retrieved May 6, 2010 from http://www.luclaeven.com/papers_files/Diversification_JBF_final.pdf
Lhabitant, F. (2000). Derivatives in portfolio management: Why beating the market is easy. EDHEC. Retrieved May 6, 2010 from http://www.edhec-risk.com/edhec_publications/RISKReview1055927251987929638/attachments/EDHEC_WhyBeatingTheMarketIsEasy.pdf
Schweizer, D. (2008). Portfolio optimization with alternative investments. European Business School. Retrieved May 6, 2010 from http://www.wbiconpro.com/339-Schweizer, D.pdfYavas, B. (2007). Findings indicate that co-movements among the U.S., Germany and Japan markets are significant. Pepperdine University. Retrieved May 6, 2010 from http://gbr.pepperdine.edu/072/diversification.html
74). This dearth of information was likely caused by a reluctance to examine investment decisions on the part of investors themselves; nobody likes finding out that their "thought-out" considerations are not any more accurate than gut choices, and in fact, those gut choices likely had more influence than all of their mental work.
In the last decade, however, strides have been made in the study and analysis of investment behavior, revealing surprising details about what goes in to making stock trades. The first important work in the study of individual investment behavior was the realization that human beings do not always act rationally in regards to financial decisions, because according to the previously quoted Brad Barber and his co-author Terrance Odean, "the field of modern financial economics assumes that people behave with extreme rationality, but they do not" (Barber & Odean, 1999, p.41). Although "differences in investor literacy about financial…
Barber, Initials, & Odean, Initials. (1999). The courage of misguided convictions. Financial Analysts Journal, 55(6), 41-55.
Dhar, R, & Zhu, N. (2006). Up close and personal: investor sophistication and the disposition effect. Management Science, 52(5), 726-740.
Grinblatt, M, & Keloharju, M. (2001). What makes investors trade?. The Journal of Finance,
In the future, this could result in some kind of major restructuring to deal with these issues. The problem is that these changes will occur when the company is facing greater challenges. This will hurt their competitive position, profit margins, stock performance and brand image. The above information will impact an investor's decision, by making them more cautious about purchasing the company over the long-term. ("The Coca Cola Company," 2012) ("Pepsi Co," 2012)
As far as Pepsi Co is concerned, the management has taken a continuing focus on expanding into new areas. This has resulted in the company owning different food, beverage and snack manufacturers. In these situations, the firm is concentrating on the impact that key acquisitions will have on Pepsi and its ability to enter new markets. ("The Coca Cola Company," 2012) ("Pepsi Co," 2012)
This strategy has proven to be highly successful. As the company is able…
The Coca Cola Company. (2012). Yahoo Finance. Retrieved from: http://finance.yahoo.com/q/pr?s=KO+Profile
Pepsi Co. (2012). Yahoo Finance. Retrieved from: http://finance.yahoo.com/q/pr?s=PEP+Profile
Pepsi Co Concludes. (2011). Seeking Alpha. Retrieved from: http://seekingalpha.com/article/293068-pepsi-concludes-wimm-bill-dann-buy-in-largest-ever-foreign-acquisition-of-russian-company
Bell, L. (2003). The Story of Coca Cola. North Mankato, MN: A +
Investment spending is very significant because it is an essential ingredient in economic development and growth. The decrease in the level of investment spending may cause a recession. Most recessions occur as a result of fall in investment spending (Paul & Krugman, 2007). Swings in investment spending are very dramatic than those in customer spending. eduction in consumer spending is normally a result of a progress that starts with a slump in investment spending. The most significant factors that determines investment spending are the rate of interest and anticipated future real GPD. To understand the kind of reasoning, first there is a need to note that planned investment spending is the investment spending that firms intend to pass through over a given period, in contrast to investment spending that happen but is not planned (William & Greene, 2008). Planned spending on investment projects is negatively the same as the interest…
William H. Greene, Econometric Analysis, 5th Edition, Pearson Education, 2008, Table F3.1, U.S. Investment Data, 1968-1982
Paul R. Krugman, Robin Wells, Kathryn Graddy, Economics: European Edition, Worth Publishers, 2007
N.E. Savin and Kenneth J. White, The Durbin-Watson Test for Serial Correlation with Extreme Sample Sizes or Many Regressors, Econometrical, Vol. 45, No. 8 (Nov., 1977), pp. 1989-1996
R.W. Farebrother, The Durbin-Watson Test for Serial Correlation when there is no Intercept in the Regression, Econometrical, Vol. 48, No. 6 (Sep., 1980), pp. 1553-1563
Investment in Higher Education as a Tool for Promoting a Stronger Economy: Examining the Literature eviews of Previous Dissertations
The following research is an exercise where three dissertations under a similar topic were mined in order to better understand their organizational structure, thematic content, and approach to examining the current discourse. The primary topic here is going to highlight how reinvestment into higher education can help facilitate for a stronger, more stable economy based on a number of factors and indicators. The research which follows explores three similar dissertations that show a clear connection between investment in higher education and positive economic factors.
Carnoy, Martin. (2006). Working paper no. 297: Higher education and economic development: India, China, and the 21st century. Stanford Center for International Development. Web. http://www.stanford.edu/group/siepr/cgi-bin/siepr/?q=system/files/shared/pubs/papers/pdf/SCID297.pdf
I. Education and Economic Growth
A. Macroeconomic Approaches to the Education-Economic Growth elation
i. Previous studies have shown that when there…
Carnoy, Martin. (2006). Working paper no. 297: Higher education and economic development: India, China, and the 21st century. Stanford Center for International Development. Web. http://www.stanford.edu/group/siepr/cgi-bin/siepr/?q=system/files/shared/pubs/papers/pdf/SCID297.pdf
Howe, Caroline. (2009). The Role of Education as a Tool for Environmental Conservation and Sustainable Development. Imperial College London. Web. http://www.iccs.org.uk/wp-content/thesis/phd-howe,caroline09.pdf
Lundvall, Bengt-Ake. (2007). Higher education, innovation and economic development. Department of Business Studies Aalborg University, Denmark. Web. http://dimaricerca.univpm.it/EconInno/Economics%20of%20innovation/BengtAkeLundvall_higher_educ.pdf
usinesses experience profit cycles implying that market fluctuations are inevitable in an economy. Market demand plays a crucial role in the profitability of an enterprise and consequently affects the investment trend. A profitable firm is more likely to invest money to improve production facilities or to extend its business into other domains. Investors will analyze the profitability of any undertaking and only if the expected revenue is greater than the cost of capital will they invest in the project. Keynesian theory also states that the Marginal efficiency of Capital is inversely related to investment. "[t]o induce new investment 'the rate of return over cost must exceed the rate of interest'. [Richard C.. Johnsson] For all businesses profit is the ultimate motivation and any new venture is undertaken only if the internal rate of return is above the cost of capital defined by the prevailing rate of interest. Hence…
J. Bradford DeLong, From Investment Demand to the IS Curve: Low Interest Rates," Accessed on June 7th 2004, http://www.j-bradford-delong.net/multimedia/ISLM2.html
Richard C.B. Johnsson, 'The Liquidity-Trap Myth', Accessed on 7th June 2004, http://www.mises.org/fullstory.asp?control=1226
83% in 2008 compared to 2007, but by 127.10% when compared to 2004. Shareholder equity is also included in the ascendant trend revealed by Apple for all financial highlights. By 2008, it had increased by 314.30% relative to 2004. Compared to the previous year, the growth was of 44.71%.
The final row of the table deals with the net cash provisions used by the investing operations. These do not reveal a trend, increasing in some years and decreasing throughout others. They however show that Apple has been active in seizing investment opportunities, and that, while some project have returned a significant return on investment, in other cases, the benefits have yet to materialize. In 2008 as compared to 2007, the cash provisions used by the investment operations met an increase of 152.04%. This is the single sign in the financial analysis which may suggest that Apple should not invest any…
2009, Website of Apple Inc., http://www.apple.com/last accessed on February 11, 2009
2009, Website of Dell Inc., http://www.dell.com/last accessed on February 11, 2009
2009,Website of the IBM Corporation, http://www.ibm.com/us/last accessed on February 11, 2009
2009, Investopedia, http://www.investopedia.comlast accessed on February 11, 2009
Using values found in a table of factors for calculating the present value of a dollar; the periods one through four have the following present value factors:
Year One= .9259
Year Two= .8573
Year Three= .7938
Year Four= .7350
Next these factors are multiplied individually by the net cash flow generated by the investment in each period.
Year One= $500,000
Year Two= $450,000
Year Three= $350,000
Year Four= $320,000
The multiplication calculation reveals the discounted cash flow values:
Year One= $500,000*.9259= $462,950
Year Two= $450,000* .8573= $385,785
Year Three= $350,000* .7938= $277,830
Year Four= $320,000*.7350= $235,200
The total sum of the cash flows net present value is $1,361,765; as such the net present value as compared to the overall investment of $1,200,000 is positive $161,765, and therefore the projected rate of return on this investment is greater than the eight percent cost of capital, and the investment…
Marshall, D. & McManus, W. (1996). Accounting: What the Numbers Mean.
Third Edition. McGraw Hill.
Investment in South Africa
In your judgment, were the possible utilitarian benefits of building the Caltex plant in 1977 more important than the possible violations of moral rights and of justice that may be involved? Justify your answer fully by identifying the possible benefits and the possible violations of rights and justice that you believe may be associated with the building of the plant, and explaining which you think are more important.
The possible utilitarian benefits of building the Caltex plant in 1977 were not more important than the possible -- or actual -- violations of moral rights and justice involved. The violations of moral rights and justices should have been prioritized. Looking back on the situation, of course, we have the benefit of knowing history, and the case of the South African apartheid is an exemplary case for the power of socially responsible investment movement.
In 1977, when the…
1. Jack Magarrell, "U.S. Adopts Stand on Apartheid: Backed on Many Campuses," The Chronicle of Higher Education, 12 March 1979.
2. See Herman Nickel, "The Case for Doing Business in South Africa," Fortune, 19 June 1968, p. 72.
3. Investor Responsibility Research Center, Analysis E-Supplment No. 9, 7 April 1977, p. E 114.
4. Texaco Proxy Statement, 1977, item 3.
This would play a role in helping to bring the Czech Republic into the EU in 2004. The effect that this would have on the Prague Stock Exchange is that it would cause it to rise to 1,940. At which point, it would have a severe down trend economy during 2008 and into 2009. The only difference is: that the various reforms and economic policies that the government was using at the time, helped to contribute to mitigating the effects of the slowdown (as the economy would experience a less severe economic contraction of 3.4%). ("Czech Republic")
The price movements of the Slovak equity market in the last 10-15 years
The ratislava Stock Exchange was founded in 1991 and has been in operation since 1993. ("asic Information") Like what occurred in the Czech Republic the Slovak stock market went through two bear markets that would last until 1998 -- 1999.…
"Basic Information." Bratislava Stock Exchange. 2010. Web. 24 Apr. 2010
"Czech Republic." State Department. 2009. Web. 24 Apr. 2010
"History of the Exchange." Prague Stock Exchange. 2009. Web. 24 Apr. 2010
Take for example investments in quality management as part of the industry-wide supply chain. Process re-engineering of these areas could dramatically reduce the amount of shortages and overages in the supply chain of not only gasoline but the key chemicals and raw materials necessary for its production. Second, the processes of gasoline refining could be made more efficient through process re-engineering and then automated to make them more cost effective over time. The bottom line is that the fluctuations in gasoline prices should not be a decision factor in investing in improving gasoline production efficiency. Rather, the continual pursuit of greater efficiencies in the entire process of gasoline production must first be considered if the entire industry is going to stay profitable and have the potential for longer-term growth. (Lin, Fan, Newman, 2009)
Huiping Lin, Yushun Fan, Stephen T. Newman. (2009). Manufacturing process analysis with support of workflow modelling and…
Increasing Investment in Gasoline Production
As a leader of any corporation or organization that faced the decision of whether or not to invest in the continual improvement of processes and systems that would make gasoline production more efficient, I would. In making this decision, the fluctuation in gasoline prices attributable to the unique oil market dynamics would be of secondary concern relative to the streamlining of the value chain the entire industry is based on. From the initial mining and exploration to the refining and sales of oil-based products including gasoline, there is significant room for improvement at the process and system level. Concentrating on process flow-based manufacturing analysis there are many opportunities in any company to see significant gains from business process management and business process re-engineering (Lin, Fan, Newman, 2009). These gains in efficiency can be driven first through process improvement and re-engineering with technologies integrated into these processes secondarily. By taking this approach the processes themselves will be as efficient and automated as possible. Take for example investments in quality management as part of the industry-wide supply chain. Process re-engineering of these areas could dramatically reduce the amount of shortages and overages in the supply chain of not only gasoline but the key chemicals and raw materials necessary for its production. Second, the processes of gasoline refining could be made more efficient through process re-engineering and then automated to make them more cost effective over time. The bottom line is that the fluctuations in gasoline prices should not be a decision factor in investing in improving gasoline production efficiency. Rather, the continual pursuit of greater efficiencies in the entire process of gasoline production must first be considered if the entire industry is going to stay profitable and have the potential for longer-term growth. (Lin, Fan, Newman, 2009)
Huiping Lin, Yushun Fan, Stephen T. Newman. (2009). Manufacturing process analysis with support of workflow modelling and simulation. International Journal of Production Research, 47(7), 1773. Retrieved March 6, 2009, from ABI/INFORM Global database. (Document ID: 1645330821).
41 in the next three years. The current price for al-Mart implies strong growth prospects. The company does have a sound strategy to retain its new customers and refocus growth efforts on less-saturated markets overseas.
In short, while there can be little doubt as to al-Mart's operational excellence, it is not necessarily a great investment. Growth has in recent years been of the slow and steady variety. The company's present valuation may be symptomatic of its status as a safe haven for investors during tough economic times. This means that the growth implied by its current share price may not be justified. Therefore, while al-Mart is a great company to own, it may not be the best investment at its current price and with the market beginning to show signs of recovery. The 0.20 beta and historic low volatility mean that al-Mart shareholders will not reap the benefits of market…
Wal-Mart 2009 Annual Report. Retrieved June 7, 2009 from http://walmartstores.com/sites/AnnualReport/2009/
Some financial data and ratios from MSN Moneycentral. Retrieved June 7, 2009 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=WMT
Cheng, Adriana. (2009). Wal-Mart needs to prove it's more than a recession play. Marketwatch. Retrieved June 7, 2009 from http://www.marketwatch.com/story/wal-mart-needs-to-show-legs-beyond-recession-play
Loth, Richard. (n.d.) Financial Ratio Tutorial. Investopedia. Retrieved June 7, 2009 from http://www.investopedia.com/university/ratios/
Investments are the assets or items purchased with the anticipation to generate the income in the future. In the economic sense, investments refer to the goods and services purchased and not consumed today for the purpose of generating wealth in the future. Similarly, going to a university or building a factory to produce goods and services are the examples of investments. Within a financial environment, investors purchase assets with the hope that they will appreciate in the future, thus, creating wealth for the investors. Examples of investment in the financial circle include purchasing of stocks, or real estate property with the anticipation that they will appreciate in the future. Despite the benefits that can be derived from the investment purpose, the investment is not something an individual can take lightly. Investors are to implement a careful planning to reap the benefits of an investment. Typically, an investor can lose his…
Costa, D. (2011). The Portable Private Banker Investing Efficiently through Mutual Funds and ETFs. UK. CreateSpace Independent Publishing Platform.
Morningstar (2014). Exchange Traded Funds, Morningstar website. Avaliable from:
Morningstar (2014). ProShares Ultra Nasdaq Biotechnology BIB, Morningstar website. Avaliable from: http://performance.morningstar.com/funds/etf/total-returns.action?t=BIB®ion=usa&culture=en-U.S .
A low payout on investments makes sense at certain times and in certain circumstances. Individuals or entities that receive a lower payout are oftentimes doing so to address issues such as higher tax rates and a deferred tax liability. If the investor's tax rate from income is lower than the tax rate for capital gains, then it makes complete sense to take a lower rate of payout because it saves the investor money on taxes.
Another reason for accepting a lower yielding investment from a business viewpoint is that it can decrease the amount of capital that needs to be raised for certain projects or investments. As one recent study determined "there is extensive literature in corporate finance on the proper way to incorporate flotation costs in the determination of project net present values (NPV)" (Simonds, 2006, p. 25). If a company's flotation costs can be lowered through the…
Economist, (2006) Instant returns, Vol. 381, Issue 8498, pp. 80
Simonds, R.R.; (2006) Income capitalization, flotation costs, and the cost of capital, Journal of Property Tax Assessment and Administration, Vol. 3, Issue 4, pp. 23 -- 29
Investment boils down to the very simple concept of risk versus reward. Investors, in aggregate must be compensated for the risks embedded within a particular security. lthough risk is subjective and varies die to differences in valuation technique, reward is universal. Investors are constantly seeking investments that offer the highest returns given the risk. In particular, due to market inefficiencies investors are often looking to achieve "lpha." lpha is simply a return achieved above the required return. In this pursuit of higher returns, investors risk losing large sums of money as unforeseen events occur. Chart 1 provides a visual representation of this concept.
Investors, seeking higher return must unfortunately take higher risk. Risk in this instance is NOT defined as Beta as many academics use. Instead, here risk is defined as the propensity for permanent capital loss. s investors move further left, notice the variance of returns becomes larger. lthough…
A second comment should be made about the dynamics of the startup industry and how it relates to individual investors. In the introduction, I mentioned that all investors are looking for high return investments that offer Alpha. I then went on to define Alpha and its relation to startups. One aspect that was omitted was that of industry dynamics. Although this is partially represented in the required return, changes in industry dynamics can often discourage investment in startups. In particular, unforeseen changes can quickly halt or change progress of a startup. For example, within the technology space, change occurs so rapidly that an industry leader quickly becomes an industry laggard. These changes can cause expected returns to decline to below the cost of capital. Investors realizing this will therefore become discouraged to continue the investment required to maintain the operations of the startup.
Thorp, Edward (2010). Kelly Capital Growth Investment Criterion. World Scientific. ISBN 9789814293495. Pg 3-56
nvestments: Stock Selection
On March 9, 2009 the stock market settled on a 12-year closing low with the Dow Jones ndustrial Average (DJA), a barometer of the economy and stock market trajectory, closing at 6,547.05. (Twin, A. March 9, 2009). The precipitous plunge for the DJA from an "all-time high of 14,164.53" (Twin, A. October 9, 2007) reached on October 9, 2007 marked the timeline of the country's worst recession since the Great Depression. From the historic lows however, the market has rebounded dramatically closing at 12,105.78 on February 23, 2011, a gain of over 75% from the March lows (CNBC.com. February 23, 2011). The vicissitudes of the stock market over the past three plus years limn the debate over whether an investor who is risk averse would choose to invest in a stock market in which all stocks rise and fall together, or a market in which individual stocks…
Investors are marked by two extremes, the active investor who tracks, analyzes, and disseminates information on the companies in their investment portfolio, the economy, and global financial news which may influence the direction of their stock investments. At the other extreme is the investor who is socking away their five percent contribution with company match into their 401K. This investor cedes to expert portfolio managers, or trusts in the long run upward trend of equities as defined in index funds: S&P 500, Wilshire, and DJIA. While there are investors at both extremes the vast majority fall at some point on the spectrum, engaged but not able to fully commit the time or resources to portfolio management.
In this context the risk-averse investor will likely fall in with the preponderance of investors who have investment portfolios but are not actively managing them. The investor's portfolio may have individual stocks, mutual funds, or index funds. Which leads to the question, which environment would an investor desire to be in to attain their goal of reduced risk concomitant with acceptable return? The answer ironically comes from the same source, yet at bifurcated ends of an investment philosophy.
Warren Buffett considered the world's most accomplished and successful investor for over fifty years posits that a risk-averse individual could reach their investment objectives in either economic environment. In 2009, Warren Buffett entered into an agreement to purchase the remaining shares of Burlington Northern Railroad which his firm Berkshire Hathaway did not already own. His rationale for the purchase was simple "I basically believe this country will prosper and you'll have more people moving more goods 10 and 20 and 30 years from now, and the rails should benefit; it's a bet on the country, basically" (Crippen, A. November 3, 2009). This statement defines an investment strategy which suggests that over the long-term the stock market will generally move higher, the rising tide lifts all boats metaphor. Yes, stocks will fall, sometimes dramatically, across
So, the financial obligation of futures is potentially very large. Thus, the risk in futures is larger than for options where the premium represents the maximum amount that a purchaser of an option can lose. The gain on an option can be realized by exercising the option when it is in the money (For a call option, when the option's strike price is below the market price of the underlying asset. And for a put option, when the strike price is above the market price of the underlying asset), going to the market and taking the opposite position, or waiting until expiration and collecting the difference between the asset price and the strike price. In contrast, gains are attributed to the futures accounts of the parties at the end of every trading day.
Options and futures. http://www.discountcommoditybrokeronline.com/articles/Options-and-Futures.html
What is the difference between options and futures? Investopedia. http://www.investopedia.com/ask/answers/05/060505.asp
Options and futures. http://www.discountcommoditybrokeronline.com/articles/Options-and-Futures.html
What is the difference between options and futures? Investopedia. http://www.investopedia.com/ask/answers/05/060505.asp
Three Community Functions of Social Welfare
At the heart of the ideas of community are notions of social justice (p. 9). The authors argue that the objectives of social welfare programs, redistribution of wealth to increase well-being and the creation of communities and sustaining them in healthy ways are vitally interrelated (p. 9-10). At least six community functions of social welfare are discussed. I focus on three including the functions of production, contribution, and consumption; the function of socialization; and, the function of social control in the fostering of social welfare and in the building of communities.
The function of production, contribution, and consumption in social welfare is to link individuals into the larger Canadian economic community in a non-exploitive manner so that individuals have control over their lives (p. 99-100).
The function of socialization in social welfare is to integrate immigrant communities and first nation's peoples fully…
" Investment banking is not for the weak minded or the soft hearted and I must continue to develop my emotions towards this way of thinking.
I know there is much more to learn in the realm of investment banking. The profession itself demands knowledge of more than just business and economic jargon. Good investors know how to spot trends and cycles that others cannot do as easily. This ability, to more or less predict the future, must continually be honed in order to become successful at this profession. Keeping an open mind is absolutely imperative in sustaining a solid development towards understanding and success in this field. Practicing entertaining new ideas, that may seem strange or odd at first should be kept in mind when approaching new subjects for the first time.
Where I Am Going: Short- and Long-Term Plans
My first priority is to finish my MBA program…
Casparie, J. (2007). What Exactly is an Investment Banker? Entrepreneur, 12 June 2007. Retrieved from http://www.entrepreneur.com/article/179958
King, M. (2012). How to get into investment banking. The Guardian UK, 20 April, 2012. Retrieved from http://www.guardian.co.uk/money/2012/apr/20/how-get-into-investment - banking
Rosenthal, J. (2013). Who wants to be an investment banker? The Economist, 21 Nov 2012. Retrieved from http://www.economist.com/news/21566442-dinner-party-problem-who - wants-be-investment-banker
Stephenson, D. (2012). A Career in Investment Banking: Worth the Investment? Firmex, 3 Oct 2012. Retrieved from http://www.firmex.com/blog/a-career-in-investment-banking - worth-the-investment/
(Steward, 2008, ¶ 15).
II: BODY (TITLE TO BE DETERMINED)
To explore the thesis, introduced at the start of the paper, the writer addresses the question: Do the investment risks that customers of conventional banks and financial houses may experience differ from those customers of sharia compliant financial institutions may encounter? During this segment of the research paper, the writer relates relevant information to Investing (Including Risks)
Investing (Including Risks)
Sukuk depict one type of bonds that meet the sharia requirement that interest cannot be charged or received. Sukuk often work so that those who hold them as investments are entitled to a share of the profits of the company that issued the sukuk.
A. Analytical summary
1. Investing (Including Risks)
3. Contemporary Considerations
B. Thesis reworded
C. Concluding statement
Adam, N.J. & Thomas, A. (2004). Islamic bonds:…
Wecker, M.. (2010). The promise of Islamic banking and finance. The Arab-American News
Retrieved September 28, 2010 from HighBeam Research:
It is important to note, from the onset, that a lot has been said about efficient markets, behavioral finance, and investment strategy in the past. The approach Kevin Daly uses could be used to build a case against efficient markets whereby all there is to know about a firm’s value can be derived from the available information about the prevailing stock prices. This is more so the case given that he has been successful relying on a wide range of metrics, apart from current stock price, to identify opportunities. Like Daly, Kenneth French does not believe in efficient markets theory. He is convinced that the markets can be incredibly noisy and driven by emotion such as overconfidence. As a matter of fact, French, like Eugene Fama, is skeptical of the skill most active money managers proclaim to have. He is convinced that in some instances, performance is misinterpreted,…
investment management in the financial sector. The paper highlights the world's present macroeconomic situation. It further details the macro economic situation and the way it affects investment decisions in several investors. In addition, the paper describes a sample investment programme and provides critical decisions to investors as well as investment vehicles used by the investment moguls. The paper summarises practical exercises in compound investment management growth and the use of capital investment.
Investment management is an important part of the global financial sector, which is key in financing vast business empires. Investment management is incorporated under state laws employing several individuals and creating revenue to key players in the financial market. It is the management of several securities and assets to meet specific objectives for the benefit of the investors. The products used known as investment vehicles can be of minimal risks such as government bonds; carry high risks such…
Development Policies and Anaysis Division. (2012). World Economic Situation and Prospects. Retrieved May Friday, 2012, from www.un.org: http://www.un.org/en/development/desa/policy/wesp/index.shtml
B.P.Eregha. (2010). Interest Rate Variation and Investment Determination in Nigeria. International Business Management Journal, 41-46.
Blume, M. (1978). Inflation and Capital Markets. Cambridge: Ballinger.
Contrarian Investor's Journal. (2008, July 6). Effects of inflation on value of investment. Retrieved May Friday, 2012, from www.cij.com: http://cij.inspiriting.com/?p=482#
Private Sector Investment and Economic Development
Investment and economic development
The ole of Private Sector investment in Economic Development
In the past few decades there has been overwhelming support for growth and development rooted in private investments and market-oriented strategies. A move from public sector driven growth has come as result of the need to reduce the widening gap in the balance of payment account, increasing public debt, rising inflation rate, growing foreign debt fundamentally falling living standards. There has been a shift from the need for large public corporations undertaking productive activities in an economy owing to the realized inefficiency in resource allocation. Corruption and misappropriation of public funds is observable owing to the lacking need to optimally reap benefit from the investment. Unlike in the public sector, private sector investment guarantees optimal productive activities, efficient allocation of productive resource, technological advancements to reduce cost and increase productivity (Dao,…
DAO, M.Q. 2008. The Impact of Investment Climate Indicators on Gross Capital Formation in Developing Countries. The Journal of Developing Areas, 42, 155-163.
GROSSMAN, G.M. & HELPMAN, E. 1994. Endogenous innovation in the theory of growth. Journal of Economic Perspectives, 8, 23-44.
HARRISON JR., W., HORNGREN, C.T. & WILLIAM, C.T. 2012. Financial accounting 9th edition., U.S.A., Prentice Hall
JORGENSON, D. 1971. Econometric Studies of Investment Behavior: A Survey. Journal of Economic Literature, 9, 1111.
Determining the ranking of mutually exclusive projects is another step used by firms in the decision making process. Investments are determined on an annual basis by a business's board in agreement with and limited by the company's spending budget for the year. Once the capital budgeting and sensitivity analysis reports are complete on all projects, the projects are then reviewed on additional factors such as overall purpose within the company, and are ranked from best to worst (Bacon, 1977). Those projects that fail to meet certain numerical hurdles are simply eliminated from the list and not considered by an investment board. Some decisions may be close to certain numerical hurdles but also have other overarching reasons for acceptance. Some examples may include investments for improvements in compliance with legislation. These investments must be done regardless of their overall worth, and typically are more beneficial to a company if done sooner…
Bacon, Peter (1977). The Evaluation of Mutually Exclusive Investments. Financial Management. Vol 6.2, 55-58.
Barney, Dwayne; Danielson, Morris (2004). Ranking Mutally Exclusive Projects: The Role of Duration. The Engineering Economist. Vol 49.1, 43-61.
Mills, Geofrey (1996). The Impact of Inflation on Capital Budgeting and Working Capital. Journal of Financial and Strategic Decisions. Vol 9.1, 79-87.
Pannell, D.J. (1997). Sensitivity analysis of normative economic models: Theoretical framework and practical strategies. Agricultural Economics. 16, 139-152.
Since they had so much invested in South Africa, they were in a position of power, and they could have used that power much more effectively. They might even have been able to bring change about sooner than it occurred. While they did not take their responsibility seriously, companies do have a moral and ethical responsibility to themselves, their communities, and their shareholders. The companies that do not recognize this should not gain support or business from their consumers. It is up to the shareholders to hold the companies responsible for their ethical behavior and to how they manage their investments. The company has a responsibility to make money and to stay healthy, but not at the expense of morals or ethics. It does not have to be difficult to act morally and responsibly. It can become a part of the everyday actions of the business, and it should be…
Author not Available. Case study: Investment in South Africa.
Velasquez, M.G. (2006). Chapter two. Ethical principles in business. Business ethics: Concepts & cases, Sixth Edition. Upper Saddle River, NJ: Pearson Education, Inc.
Velasquez, M.G. (2006). Chapter three. The market and business. Business ethics: Concepts & cases, Sixth Edition. Upper Saddle River, NJ: Pearson Education, Inc.
In general, Product Development at Ford involves three major stages, all leading up to the manufacture of the vehicle: Plan, Design, and Verify -- then manufacture. To do this, though, functional areas need to manage costs, plan marketing programs, ensure that needed parts are available, plan manufacturing schedules, hiring (if needed), shift changes, and numerous other data (a/p, a/r, payroll, etc.). The model for Ford is:
(ource: Murthy and Desai)
Thus, on a daily, or ongoing basis, employees in numerous functional areas are able to pull up historical data on models, features, issues; find out stages of development for new models or new programs; chart advertising effectiveness using detailed database parameters, preplan tooling, resource, and supplier needs; access accounting and invoice functions, and, system wide, use the available information for appropriate levels of knowledge management (Maynard 2004).
By department, a needs analysis shows that each individual department has both similar…
Sources: Ford Motor Annual Reports: www.ford.com; http://online.wsj.com/mdc/public/page/2_3022-autosales.html ).
investment banker is a person working for an investment bank. Investment banks finance both public and private companies. They arrange for debt financing and they can help put together equity deals as well. A startup company will often seek partnerships with investment bankers in order to secure the financing needed to expand or to make acquisitions. Investment bankers do not normally work with companies that only have an idea.
The stock market is a secondary market where equities are traded. A company does not turn to the stock market per se to acquire capital. The company gets its equity financing from an investment banker, who may then place the shares on the stock market. The company only sees money from the issue of the stock -- the price on the stock market does not go to the company. Investors on the stock market, however, have votes on aspects of the…
After the economic Collapse, precious metals like Gold and Silver have become the safe heaven investment for the investors. Investors know that they will get a high return by investing in these precious metals. The performance of the Gold can be judged from the below mentioned Gold graph.
The red line indicated that the Gold has completed almost a 100% ride in just 3 years because of the intentions of the people to get out their money from other investment option and park in the precious metals. There are risk provisions attached with the investment in these precious metals. Actually the price of the precious metals has been overbought now after the factor of safe heaven investment associated with it. Cautious must be taken by the investors while taking a buying position in the precious metal's investment. Tool like performance indicator of the precious metal will be used by the…
Chance, D & Brooks, R (2009), Introduction to Financial Institutions, Prentice Hall Publications
Chisholm, A, (2010), Introduction to Financial Instrument, Pearson Group Publications
Donald, J, (2004), Commodity Prices and Precious Metals Analysis, Oxford University Publications
There are several issues to consider when selecting an investment banker for an IPO. First of all, the respective bank (or the banker himself) needs to have an established track record that can be proven with concrete figures and performance thresholds. It is important to have relevant data to back assumptions that guarantee the bank's relevance in the industry, particularly in terms of previous successful IPOs and connections in the field. Another important issue will be the investment bank's capabilities: does it have sufficient resources to properly handle an IPO?
At the same time, it is important for the investment bank to match the profile of the company undertaking the IPO: it is useful to have an investment bank that understands the particularities of the business, not only of the financial perspective on things. It will thus also be able to build easier connections related to the IPO in…
1. Lainee, Francois, Plantier, Eric. 2006. Selecting (an) Investment Bank(s) for the Initial Public Offering of a Venture Capital-backed Company. An EVCA Venture Capital Committee Paper. On the Internet at tblueprint.pe/docs/IPO_Manual_2006.pdf. Last retrieved on July 24, 2014
Value (NPV) Process for a Company's Human Resource Program Investments
Re: Instructional Document: Evaluating Needs Present Value (NPV) process for HR Resource program's investments
We have implemented a new Needs Present Value analysis process that will be used on all current and future HR projects as of Thursday, 12/25/2003. Please become familiar with the NPV pamphlets provided and if you have additional questions, contact me at extension 9999.
NPV is an approach used in capital budgeting where the present value of cash inflow is subtracted from the present value of cash outflows. If the NPV of a prospective project is positive, then it should be accepted. However, if it is negative, then the project probably should be rejected because cash flows are negative.
The changing value of money over time is easily seen in the classic bank savings account.
If someone deposits $100 in a bank…
Cost Benefit Analyses of a Computer Purchase
In today's commercial environment, it is necessary that small as well as large businesses are able to remain competitive. For every investment there will be an opportunity cost, so it is essential that potential investment are assessed to help with the maximization of value creation. One approach that is frequently used is the cost benefit approach. he cost benefit model measures the costs and the benefits, with the underlying principle that an investment or project should only proceed if the benefits are greater than the costs which will be incurred. If a small business is considering investing in a computer, a cost benefit analysis may help with the assessment to determine if the investment is likely to be beneficial. his will start with the assessment of the costs that will be incurred, and the potential benefits. In this case it is…
This shows that there is still a positive outcome; the benefits are greater than the costs. However, the benefits are not as great as the first calculation due to the time cost of money. It is also important to remember that this net present value is speculative as it is making the assumption of a 5% inflation rate or cost of capital. This can change, and as such there is also the ability to apply a higher level to ensure that there would remain a positive value.
Overall, it would appear that, as long as the increased profit projections are correct, that this would be a wise investment and produce benefits that are far greater than the costs.
The type of business may be changed to suit the students needs www.dell.com, correct on the 12th Jan 2015
hat were the external and internal factors that led to the collapse?
There are many factors that could explain the rapid failure of Peregrine's failure that seemed to appear in such a short time frame. It seems fairly obvious that management bears the burden of responsibility on many levels, however, there are other explanations that could also be introduced, although the causes are debatable. However, the mainstream press seemed to focus purely on the management capabilities of the company.
"The collapse of Peregrine Investments Holdings Ltd., the biggest business failure in Hong Kong during the Asian economic crisis, was caused by bad management and not the crisis itself, according to a government inspector's report (Manuel, 2001)."
In fact, it was recommended that the courts restrict the top-level management team from operating for fifteen years based on the management team's incompetence in running the investment bank.
Although such a…
Gargan, E. (N.d.). Hong Kong's Peregrine Soared Like a Falcon, Sank Like a Reckless Bank. Retrieved from NY Times: https://partners.nytimes.com/library/financial/011398asia-hongkong-peregrine.html
Manuel, G. (2001, March 27). Poor Management Triggered Collapse Of Peregrine Investments, Report Says. Retrieved from The Wall Street Journal: http://www.wsj.com/articles/SB985626919629217466
When the market crashes, turns bearish, or severely corrects, investors not only lose objective things such as money, they also lose the sustaining functions of which the investing process (and/or money, which may psychologically represent self-esteem, independence, power, etc.) has been the source. That means, in addition to objectively not having the money to buy that new house or car, self-esteem drops, and the investors capacity to calm themselves down is diminished, motivation wanes, confidence is shaken, and vitality ebbs. A down market represents an injury to our total sense of self and all the functions that sustain it. In a general way it represents a hope or fantasy lost.
For the young investor, with a large amount of earning power remaining in his life, the ups and downs of the market are small obstacles to the long-term objective of amassing a financial nest egg on which to…
Block Sandra. Stable value funds low-cost, reliable investments., USA Today, 11-30-1998, pp 20A.
McEwen David, Best to find out your risk tolerance., The Daily News (Taranaki, New Zealand), 10-08-2001, pp 6.
Luke, Robert. Staff, Step 1: Investors should evaluate tolerance for risk Finance professor's quiz helps determine the asset allocation each individual is most comfortable with.., The Atlanta Journal and Constitution, 04-03-2000, pp S26.
An upsurge of The recent increasing interest in commodity investing is has driving en the development of investment instruments that accommodate the needs ofavailable for investors looking for exposure to commodity prices. Historically, direct exposure to the commodity market has been seen as complicated and often too costlyexpensive for the average investor. However, there are now instruments that offer investors a cheap and easy, inexpensive access to directly exposure to commodity price movements.
This section will explore This part will look more into the different instruments available to investors, and discuss commonly held paradigms about their advantages and disadvantages. This discussion is intended e purpose is to providegive the average investor with more complete and detailed better information about of the instruments well available, before they investing in the commodity market. In this paper, Sseven instruments are discussed in this paper, as follows: Futures contracts, stocks, options, exchange…
This also implies inadequacies in fiscal sustainability, which influences investments in private sectors.
The second channel happens through the level, composition and quality involved within the public investment, which shows the level at which the public investment replaces the private investments (Schmidt- Hebbel, Serven, & Solimano, 1996).
The final channel regards the level of taxation on the corporate earnings and the rules applicable in depreciations.
There have been arguments that fiscal policy and public expenditure reduces the private investments in two different manners. These include increasing the interest rates or lowering the private funds involved in financing the investments.
According to the neoclassical theory, the interest rate is also an imperative variable in finding the level of investment. Consequently, it results into a negative effect because it upsurges the interest payable in investments. Concurrently, McKinnon and Shaw, contends that this is likely to cause a positive relationship between the investment…
Shrestha, M.B. (2005), "ARDL Modelling Aproach to Cointegration Test," Proceedings of the 46th Annual Conference of New Zealand Association of Economists, Paper
No. 13, Wellington, July 2005.
Keynes, J.M. (1936). General Theory on Employment, Interest and Money., London,
eturn on Investment Health Management
Health Management and Services: eturn on Investment Strategy,
Solutions and EM as an Incentive for Increased OI
As the medical field continues to grow and therefore continues to become more and more complex and complicated -- especially in viewing the integration of health services and cost analysis -- one can understand the need for critical improvements in the area of health management and services in order to ensure that companies receive the full benefit of the health management solutions which they employ. Healthcare organizations and the physicians they support are vital to the well-being of the human race, yet, when it comes to the balance sheet, many of these entities are facing real emergencies of their own, as costs for medicine, equipment, and indigent care are increasing -- all while reimbursements are going down (Mannino, 2009, p.2).
With increasing costs and diminishing profits, health systems…
Bigelow, J., Bower, A., Giorsi, F., Hillestad, R., Meili, R., Scoville, R. And Taylor, R.
(2005). Can electronic medical record systems transform health care? Potential health benefits, savings and costs. Health Affairs. 24(5): 1103-1117. Web. Retrieved from http://content.healthaffairs.org/content/24/5/1103.full.pdf+html . [Accessed on 7 February 2012].
Davies, N. (2006). Making IT happen: strategies for implementing the EMR-EHR.
Healthcare Information and Management Systems Society. Web. Retrieved from: http://www.himss.org/content/files/davies/Davies_WP_Implementation.pdf . [Accessed on 7 February 2012].
Fidelity Investments- Human esources
Fidelity Investments- T&D Program
H Transformation strategy- Fidelity Investments
Key Issues identified in interview
Business Case: Context of program application
Table 1- Implementation and Accountability of L&D program
Figure 2 Business Case ationale for T&D program at Fidelity
Figure 3- H edesign Elements
This H Learning and Development (L&D) program proposed for Fidelity Investments is aimed at addressing the key challenges faced by the firms in its human resource management. There are several instances when H function has contributed to the bottom line of firm as well as pursued an egalitarian culture of society. Present program is spanned over 5 weeks and will be implemented in Americas & Canada region initially. With successful implementation of this L&D program in one region (Americas & Canada), further implementation will be recommended in…
Ahadi, H.R. (2004). An examination of the role of organizational enablers in business process reengineering and the impact of information technology. Information Resources Management Journal (IRMJ), 17(4), 1-19.
Bontis, N., & Fitz-Enz, J. (2002). Intellectual capital ROI: a causal map of human capital antecedents and consequents. Journal of Intellectual Capital, 3(3), 223-247.
Deloitte. (2013). 2013 Financial Services Industry Outlook. Retrieved from Deloitte: [ http://public.deloitte.com/media/0146/us_fsi_OutlooksConsolidatedDocument_021813.pdf ]
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alternative investment vehicles have been using by the investors to reduce the risk and maximize the profit. In this paper, we will discuss alternative investments opportunities and reducing the risk of portfolio by using the stock index future. Buying or selling the stocks is highly risky because of weak economic conditions. Investors should include various types of assets in the portfolio so that portfolio will not suffer the impact of a decline of any one security. For example; if an investor uses stocks and bonds in his/her portfolio, if stock price decline due to market fall then, the bonds would get higher return and it will eliminate the risk of decline. In the portfolio management it says that "not putting all eggs in one basket," it means investor should not invest in only one asset; they should construct the portfolio containing various types of assets. Thus, the portfolio must be…
Sushant, Portfolio management, "Tips for diversifying your portfolio," retrieved through; http://www.portfoliomanagement.in/tips-for-diversifying-your-portfolio.html
Hedged your portfolio using stock index future (2002), published by Chicago Mercantile Exchange (pp-1, pp23).
"The Case for Hedge funds," Tremont Advisors Inc. & Tass Research, 3rd edition, Feb 2003 (pp 9)
Absolute Returns: The Risks and Opportunities of Hedge Fund Investing," byAlexander M. Ineichen, published by John Wiley & Sons, 2002,-Page 36.
" (Grabel, 2004) Good institutions serve as the basis for economic growth due to right market-based and market-guided incentives being created which include those stated in this study and specifically: (1) rule of law; (2) competitive markets; (3) low taxation (4) noninflationary monetary policies; and (5) free trade. (2002) Good institutions serve to "Foster other cultural patterns of conduct, hard work, savings and industriousness, honesty and trustworthiness, creativity, and self-responsibility. These are the bases of the wealth of nations." (Easterly, 2002; as cited in: Ebeling, 2002) These tools are helpful in avoiding and mitigating economic risks in development.
Easterly, W (2002) the Elusive Quest for Growth: An Economists Adventures and Misadventures in the Tropics (Cambridge, MIT Press) Chapter 2
Krueger, a.O (1998) Why Trade Liberalization Is good for Growth, Economic Journal 108
Demetriades, P. And Hussein, K.A (1996) Does Financial Development Cause Economic Growth? Time-Series Evidence From 16 Countries,…
Easterly, W (2002) the Elusive Quest for Growth: An Economists Adventures and Misadventures in the Tropics (Cambridge, MIT Press) Chapter 2
Krueger, a.O (1998) Why Trade Liberalization Is good for Growth, Economic Journal 108
Demetriades, P. And Hussein, K.A (1996) Does Financial Development Cause Economic Growth? Time-Series Evidence From 16 Countries, Journal of Development Economics 51, pp387-411.
Grabel, I. (2003) International Private Capital Flows and Developing Countries, in H-J. Chang (ed.) Rethinking Development Economics, London: Anthem Press.
Investment and Trade Over the Next 30 Years
Perhaps the most notable trend in recent economic history has been the falling-away of the influence of the G7 nations of United States, Japan, Germany, ritain, France, Canada and Italy and the explosion of economic clout in the developing world (What is the G7, 2012, Wise Geek). All eyes are looking to China, in terms of the trending of trade and investment patterns. China is the world's largest potential market, and still has untapped growth in terms of its vast consumer marketplace. That is why the Chinese economy is often seen as a barometer of the health of global demand. For example, in the last quarter, "trade was a net drag on growth last year as the world's second biggest economy turned in its slowest rate of expansion since 2009, at 9.2 per cent, with each quarter's growth in 2011 successively weaker…
Edwards, Nick. 2012. China surprises with March trade surplus. The Globe and Daily Mail.
Viewed 24 Apr 2012 at http://www.theglobeandmail.com/report-on-business/international-news/china-surprises-with-march-trade-surplus/article2396805/
Greenblatt, Alan.2011. As Europe ages, its economies look vulnerable. NPR. Viewed 24 Apr
2012 at http://www.npr.org/2011/09/24/140736119/as-europe-ages-its-economies-look-vulnerable
This is significant because it shows how some critics of contrarian investing will often point to the various instances of speculation and assume that it is contrarian investing. In some cases the psychology of consumers can become so extreme, that the definition of what is speculative expands greatly. As a result, using contrarian investing in conjunction with other indicators / tools can help prudent investors and traders, be able to identify when the market condition are becoming more extreme.
Contrarian Indicators and Tools
When using the different contrarian indicators / tools in conjunction with one another, you can begin to see how this strategy can be used, to effectively determine if the market conditions are overbought or oversold. There are number of different tools that can be utilized to indentify major changes that are occurring in the trend of a stock or the market averages. These would include: headlines…
"3M Historical Prices," Yahoo Finance, http://finance.yahoo.com/q/hp?s=MMM&a=00&b=2&c=1970&d=04&e=25&f=2010&g=v&z=66&y=0
"3M Reports First Quarter Results," 3M, http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjA2NjEwOHxDaGlsZElEPTMzNDE0MXxUeXBlPTI=&t=1
"3M Reports Fourth Quarter and Full Year 2008 Results," 3M, http://library.corporate-ir.net/library/80/805/80574/items/322063/054431D4-6347-45F1-AF4D-85CCA5F89C52_mmmQ4release.pdf
"American Depository Receipt." Investopedia, http://www.investopedia.com/terms/a/adr.asp
Both short-term investments and long-term investments have advantages and disadvantages. One of the main advantages that short-term investments have is their potential for quick growth as they are only expected to last a couple of weeks to a few months. These types of investments allow a company to have more control over their money. On the downside, short-term investments carry a higher risk and have demonstrated a higher rate of fluctuation as compared to long-term investments (Mussi, 2007).
An advantage of long-term investments is that they have the ability to "gain small amounts of money over a long period of time. The slow-but-steady pace of long-term investments allow for a much greater degree of stability and a much lower risk than short-term investments (Mussi, 2007). Long-term investments that benefit from this growth and stability include savings and retirement funds as these investments mature over the years. Because these types of…
The ASPIRA Association. (n.d.). Short-Term and Long-Term Investment Options: Facilitators
Manual. Retrieved 17 July 2012, from www.aspira.org/files/user/u1/Inv_Fac_M5_V3_FR.pdf
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Price of bond= 0.385543*1000 +6.144567*100= $385.54.64+$614.45
Price of bond= $1,000
So, price of bond B. is $1,000 b. For market interest rate equal to 12%:
Price for bond a:
Market interest rate is equal Coupon rate is equal Face value Frequency Number of years to maturity Number of Periods Discount rate annually Discount rate per period n, periods r, per period 12%
10% $1,000 Annual 20-20-12.00% annual 12.00% 20-12.00%
Now we need to calculate PVIF and PVIFA.
For calculation of PVIFA (i, n) and PVIF I is equal to 20 periods and n=12%
PVIFA= (1- 1/(1+.12)^20)/.12
Price of bond= 0.103667*1000+7.469444*100=$851
Price of bond a = $851
Price of bond B:
Market interest rate is equal Coupon rate is equal Face value Frequency Number of years to maturity Number of Periods Discount rate annually Discount rate per period n, periods r, per period 12%…
company's investment success especially in relation to other companies. The paper aims at establishing how a company's competitiveness can be calculated in relation to others in the same industry and the factors that hinder the calculations or hinder a true picture of the same
Compare industry average and a main competitor
For convenient comparison of industry average, majority of companies place Industry average values next to a company's financial measures for convenient comparison. To get a clear picture, a company can obtain industry average from its competitor by carefully examining (its competitors) stock screen results. (Gray, 2004)
However it is notable that various industries have their peculiarities with some operating under very heavy debts which would companies in other industries. For instance, software companies enjoy high profit margins that other companies envy and that all software companies must attain to stay in the game.
For that case, to see whether…
Gray, A. (2004) Introduction to Marketing, 7th Edition, New York, Prentice Hall
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Titman, S (1988) Journal of Finance, Volume 43, Issue: 1, Publisher: American Finance Association; Blackwell publishing
Yet, what is important to accomplish at this stage is the presentation of the direct effects of the foreign direct investments. If these impacts materialize in growths of the Panamanian economy, it will be safe to conclude that the country reveals an efficient bi-direction foreign direct investment system. In this order of ideas, the following lines reveal some of the most notable impacts of FDIs onto Panama's socio-economic status (they are written in bulleted form to increase readability and clarity):
The first and foremost important impact was given by the massive investments made in the enlargement of the Panama Canal; the effects of such an endeavor were tremendous. On the one hand, the enlarged canal offered greater opportunities for traffic, which in turn materialized in greater revenues from offering services in the canal. Then, this enlargement translated into an increased demand for workforce, which in turn created new jobs, reduced…
Woolford, P., Panama Has the Highest Foreign Direct Investment to GDP Ratio in Latin America, Panama Real Estate Investment, 2008, http://panamarealestateinvestment.org/2008/08/04/panama-has-the-highest-foreign-direct-investment-in-latin-america / last accessed on October 28, 2009
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Panama: Country and Foreign Investment Regime, Low Tax, 2009, http://www.lowtax.net/lowtax/html/jpacfir.html#forinv last accessed on October 28, 2009
Panama FDI Grows 19% in First-Half 2007, Reuters, 2007, http://www.reuters.com/article/economicNews/idUSN1928223720070919 last accessed on October 28, 2009
The success rates of this venture are increased as investors are willing to risk their money in the hope of increased gains. Otherwise put, shareholders "can accept downside risks because they fully share the upside as well" (Dynamic Equity, 2002). egardless of the sources used in contracting the necessary money, the organization would still have to retrieve a minimum of $40 million revenues during the first year in order to be profitable.
7. Exchange ate isk
Some managers at the Wilson Company argued that the organization should contract its loans in enminbi, or the Chinese currency. The measure would, according to them, help the company protect itself against currency exchange risks. Considering that the company comes to disregard this suggestion, the situation would present itself as follows:
the exchange rate is of one M to 0.2 USD, meaning basically that a United States dollar can be purchased for 5 enminbis…
Fabozzi, F.J., Peterson, P.P., 2003, Financial Management and Analysis, 2nd Edition, John Wiley and Sons, ISBN: 0471234842
Hull, J.C., 2003, Options, Futures and Other Derivatives, Prentice Hall, ISBN 0130091448
Roworth, G., 2005, The 7 Keys to Business Success, Buzzle, http://www.buzzle.com/editorials/4-25-2005-69063.asp last accessed on May 18, 2009
Walesh, S.G., 2003, Managing and Leading: 52 Lessons Learned for Engineers, ASCE Publications, ISBN 0784406758