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Managerial Finance Questions ***Original Answers Please**** Each question should be labeled and references cited per question. Plagiarism report MUST be attached!!!! Each number answered in full graduate level work required!!!

1.  Analyze the Capital Asset Pricing Model (CAPM). Using the course text and an article from ProQuest as references, address the following:

  • Explain how the CAPM assists in measuring both risk and return.
  • Explain how the CAPM assists in calculating the weighted average costs of capital (WACC) and its components. 
  • Illustrate why some managers have difficulty applying the Capital Asset Pricing Model (CAPM) in financial decision making.
  • Identify the benefits and drawbacks of using the CAPM.

Develop a 200 – 300 word answer supporting your position.

2.  Imagine you are a representative of management in the company you have selected for your Week Six assignment and you must make a capital budgeting decision.  The decision is to implement a new computer network system to decrease the time between customer order and delivery. The cost will be 10% of last year’s profits. You are charged with describing the important considerations in the decision-making process to upper management.  In your response, be sure to include the following:

  • A description of the important factors, in addition to quantitative factors, that were considered when making this capital budgeting decision.
  • An explanation of how these factors are significant to the company.
  • A summary of how you will determine the criteria to rank capital budgeting decisions and whether some criteria are more important than others.
  • A calculation of the proposed return on investment based on criteria you select and justification for that ROI.

Develop a 200 – 250 word explanation supporting your recommendations.

Tip: For help with reading an annual report access this handy guide from Money Chimp (http://www.moneychimp.com/articles/financials/fundamentals.htm)


3.  Go to
MSN Money. (http://investing.money.msn.com/investments/key-ratios)  and type in a ticker symbol for a  company  with the first letter of your last name.

Next, complete the following:

  1. Select “Key Ratios” on the left menu panel.
  2. There are several categories listed for ratios. Select one “Financial Condition Ratio” and one “Management Efficiency Ratio”.
  3. Open the Profile section on the left menu panel and you will see “Industry” is identified. Find a competitive company within that industry and compare those ratios to the ones you just found.

Examine your findings and determine whether your company outperforms its competition based on financial ratios.  Identify where your firm seems to lag. Describe how your firm compares with the industry and speculate as to why you believe your firm is performing as it is.

Develop a 200 – 300 word answer supporting your position.

 
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