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Financial Management

How do you calculate the present value of an annuity?

This course is called Introduction to Financial Management and is based on the textbook- (H) Financial Management: Principles and Applications
Sheridan Titman, Arthur J. Keown & John D. Martin, 2018
Pearson.
I have attached the study guide/notes for the course- this essay is for “Unit 2” pages 42-81 in the attached file.
Prompt for the essay is answer the following question:
How do you calculate the present value of an annuity? A perpetuity? A growing perpetuity? Which would you prefer?

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Financial Management

Describe the costs and benefits to investors of owning mutual funds.

This is a course called Introduction to Financial Management, based on the textbook (H) Financial Management: Principles and Applications
Sheridan Titman, Arthur J. Keown & John D. Martin, 2018
Pearson. I have attached the course study guide, this is “Unit 1” of the course, notes are in the study guide pages 1-40.
Prompt for the essay is answer the following question:
Describe the costs and benefits to investors of owning mutual funds.

Categories
Financial Management

What is the net present value (NPV) of the project?

(Answer all questions; submit as a single, well-organized, properly formatted essay, including multiple APA references and citations)
Robertson Real Estate Recapitalization
Founded 25 years ago by CEO Steve Robertson, Robertson Real Estate (RRE) purchases commercial real estate (land and buildings), rents both to tenants. The company has shown consistent annual profits over the past 18 years, and shareholders have been pleased with the company’s management. Before he started RRE, Steve was also the founder and CEO of a now bankrupt Ostrich farm. This previous bankruptcy has made him extremely reluctant to undertake any type of debt financing, and he has financed the real estate company 100% with equity. Robertson Real Estate stock currently trades at $37.80 per share and has 8 million shares of common stock outstanding.
The company has been reviewing an opportunity to purchase a large segment of land in the southeastern United States for $85 million and plans to lease this property to one or more farming operations. The land purchase is expected to increase RRE’s annual pretax earnings by $14.125 million in perpetuity. Raylynne Givins, the company’s new CFO, determined the company’s current cost of capital is 10.2%. She feels the company would be more valuable if it added some debt to its capital structure, so she is evaluating whether the company should issue debt to fully finance the project.
Based on conversations with several investment banks, Raylynne believes RRE can issue bonds at par value with a 6% coupon rate. Her analysis suggests a capital structure using 70% equity / 30% debt would be optimal. If the company’s debt structure exceeds 30%, RRE’s bond rating would be lower and require a significantly higher coupon due to the increased exposure to financial distress and the associated higher financing costs. RRE has a combined state and federal corporate tax rate of 23%.
Questions:
1. If RRE seeks to maximize total market value, should the company issue debt or equity to finance the land purchase? Explain.
2. Suppose RRE decides to issue equity to finance the purchase.
a. What is the net present value (NPV) of the project?
b. Construct RRE’s market value balance sheet after it announces the firm will finance the purchase using equity.
i. What would be the new price per share of the firm’s stock?
ii. How many shares will RRE need to issue to finance the purchase?
c. Construct RRE’s market value balance sheet after the equity issue but before the purchase has been made.
4.
i. How many shares of common stock does RRE have outstanding?
ii. What is the price per share of the firm’s stock?
3. Suppose RRE decides to issue debt to finance the purchase.
. What will be the market value of RRE if the purchase if financed with debt?
a. Construct RRE’s market value balance sheet after both the debt issue and the land purchase. What is the price per share of the firm’s stock?
4. Which method of financing maximizes the per-share stock price of RRE’s equity?

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Financial Management

How can layoff of lab employees be prevented while decreasing labor costs, without impacting patient care?

Response Post:
As part of the thorough review, direct expenses related to laboratory personnel was evaluated. In your response post, describe a strategy that can be implemented to retain all laboratory employees but at the same time, reduce expenses associated with Labor costs with minimum impact to patient care or testing quality. How can layoff of lab employees be prevented while decreasing labor costs, without impacting patient care?

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Financial Management

Discuss strategies that would reduce these conflicts of interest.

There is a debate on conflicts of interest that exist between certain bond ratings agencies, such as Moody’s and Standard & Poor’s, and the corporation’s bonds that they rate. There is also a debate on conflicts of interest that exist between financial firms, such as Goldman Sachs and J.P. Morgan, and the corporation’s equity that rate. Discuss strategies that would reduce these conflicts of interest.
Read “Related to bond rating conflicts of interest” and “Related to equity rating conflicts of interest” on the Module 4: Lecture Materials & Resources page. LINKS BELOW…
https://www.theguardian.com/business/2011/aug/22/ratings-agencies-conflict-of-interest
https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.363.3392&rep=rep1&type=pdf

There Is a Simple Solution to the Conflict of Interest of Bond Rating Agencies


https://money.usnews.com/investing/investing-101/articles/2017-08-10/stock-analysts-are-more-biased-than-you-think
https://www.economist.com/finance-and-economics/2016/12/01/sell-side-share-analysis-is-wrong
https://www.investopedia.com/articles/financialcareers/11/sell-side-buy-side-analysts.asp

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Financial Management

Why did Disrupter succeed?

Please answer these 4 questions using bullet points (Use concepts AND INCLUDE TERMS FROM THE BOOK from chapters 1, 2, 3, 5, 6, 8, & 12, give chapter numbers, and show relevancy):
Why did Disrupter succeed? Nathalie

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Financial Management

From what you have learned in this chapter, what can an entrepreneur do to increase the chance of success?

Given that many new businesses fail in the first few years after they are established, how should an entrepreneur think about the risk of failure associated with a new business? From what you have learned in this chapter, what can an entrepreneur do to increase the chance of success?
Requirements:
Your discussion board response should be approximately 200 words. APA format for all references is expected – at the very least, your textbook should be listed as a reference for your discussion board posting.
Pagnattaro, M. (2019). The Legal and Regulatory Environment of Business (18th ed.). McGraw-Hill Education.

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Financial Management

Describe the similarities and differences between the two stock exchanges.

Overview
Investing in stocks is an option when planning for retirement or other financial management decisions. In this activity, you will research how to evaluate stocks as an investment option.
Instructions
In a 1–2-page paper, please respond to the following:
Explain the differences in stock trading between two different stock exchanges.
Identify two different stock exchanges in the United States.
Describe the similarities and differences between the two stock exchanges.
Explain how a company’s free cash flow impacts its growth potential. Cite the free cash flow of example companies.
Identify one company on each of the two stock exchanges you researched in 1.
Determine the free cash flow from 2019 and 2020 for each company.
What inferences can you draw from the companies’ free cash flow?
Apply financial ratios to evaluate the strengths and weaknesses of stocks as investments.
Using the 2019 and 2020 financial statements for both stocks, prepare two financial ratios for each of the following categories: liquidity ratios, asset management ratios, and profitability ratios. You should have a total of six ratios for each stock, per year.
What challenges, strengths, or weaknesses do you see when you examine these ratios?

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Financial Management

Explain the market capitalization and what it means to the investor.

Select a Fortune 500 company or another company you are familiar with. Consider pharmaceuticals, computer hardware, retail, or automotive industries for your selection. If you choose a company that is not in the Fortune 500, ensure that enough financial information and key performance indicator results are available to complete the assignment.
Imagine your manager has asked you to help with a presentation on the company’s financial performance at the company’s annual meeting.
Research financial information and key performance indicators for the company.
Create a 10- to 16-slide presentation for investors to assess the company’s financial growth and sustainability.
Identify key performance indicators for the company you selected, including the following:
The company and its ticker symbol
Cash flow from operations
Price-to-earnings ratio
Stock dividends and the yield, if any
Earnings per share ratio
Revenue estimates for the next 12 months
Revenue from the previous 3 years
Statement of cash flows and identify net cash from operating, investing, and financing activities over the past 3 years
Average trade volume.
Current stock price, 52-week high, and 1-year estimated stock price
Analysts’ recommendations for the stock (buy,sell, hold)
Market cap for the company
Relate the stock price to price-to-earnings ratio.
Explain the market capitalization and what it means to the investor.
Evaluate trends in stock price, dividend payout, and total stockholders’ equity. Relate recent events or market conditions to the trends you identified.
Determine, based on your analysis, whether you think the organization is going to meet its financial goals, the outlook for growth and sustainability, and explain why you recommend this stock for purchase.
Cite references to support your assignment.
Format your citations according to APA guidelines.

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Financial Management

Why is understanding ROE and EPS important to a company’s value?

You are a research analyst for a publicly traded company, and you’ve been assigned to give a presentation on how a company uses performance metrics in corporate valuation.
Respond to the following in a minimum of 175 words:
Think about how you would present return on equity (ROE) and earnings per share (EPS) to a group of investors or senior management.
Explain the use of ROE and EPS in evaluating the value of a company. Include how to calculate ROE and EPS.
Why is understanding ROE and EPS important to a company’s value?
Share an example of a company whose ROE and EPS you calculated. What do these results say about the company?