Investment Essays

Traditional Investment Appraisal Techniques

Introduction “If you can’t measure it, you can’t manage it”. This basic principle of Peter Drucker is nowadays especially important when it comes to the valuation and management of strategic investments, which have the potential to bring sustainable change to the business processes of a company. When it comes to the process of assessing strategic investment proposals through investment appraisal techniques there might be doubts about the capability of traditional methods to recognize strategic intangible benefits which might be difficult…

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Sole Trader Companies

Sole trader companies are the ones which are opened individually. For example, there is one person and he fascinated about doing business so he can invest money into the business and he has to do it by himself. It means he has to find out where can sources of finance come and how to control it because he must work by himself without shareholders. There are some sources of finances as follows: * Retained earnings: this is profits of a…

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Weighted Average Cost of Capital and Marriott

Q1: The first financial strategy “Manage rather than own hotel assets” is consistent with growth objectives. The company sold out the hotel assets while keeping a long-term management contract. We calculated the Return on Assets (ROA) from 1978 to 1987, it increased a little in 1979 and kept decreasing to 1987(Exhibit 1). By managing rather than owning the hotel assets, Marriott is able to increase its ROA thereby increasing potential profitability and its financial position in the market. Marriott also…

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Capital Budgeing Case Study

There are at least six capital budgeting tools a firm can use in analyzing a capital expenditure. They are: net present value (NPV), internal rate of return (IRR), profitability index (PI), payback period (PB), discounted payback period (DRP), and modified internal rate of return (MIRR). This case study will focus mainly on NPV and IRR, in addition to the remaining four capital budgeting tools. Net Present Value (NPV) The NPV of an investment proposal for a project is the same…

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Best Use of Vacation

A vacation begins at the end of examination .Students breath a sigh of relief as a heavy burden has been unloaded .They pine for some change from the drudgery of their daily routine. During the vacation, some students visit historically important places. Some, who are away from their parents gladly go home .Others may spend (or waste?) the vacation in entertainment. It is, then evident that a vacation can be utilized in a variety of ways. A vacation is not…

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Introduction to Banking

1) Outline three ways in which the behavior of the financial system could affect the level of aggregate demand in the economy. The creation of liquid assets, the expansion of banking and money and the changes in people’s financial wealth are three ways by which the financial system could affect the level of aggregate demand in the economy. For a real economy to expand, liquidity of assets is a requirement and the availability of liquid assets increases the aggregate demand…

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Metapath’s Capital Structure

Questions: 1. Analyze Metapath’s capital structure, in particular the various forms and prices of preferred stock from the previous rounds of financing. How has this capital structure affected the offer from Robertson & Stephens? How would RSC’s participating preferred interact with the other tranches of preferred stock? Up to the date in issue, Metapath has raised $9m in four rounds of financing, of which two occurred simultaneously in the beginning. The two participating investors, Bessemer and STI, which supplied the…

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executive Financial Plan Summary

I want to take this opportunity to thank you for reaching out to me. One of the first steps towards financial clarity and meeting your financial goals is to reach out to specialists who can identify your needs and financial position. I am pleased to help you get started on your journey and look forward to seeing you meet your goals! Throughout this document, I will be using various numbers and concepts under the assumption that they represent your financial…

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Finance Tutorial

(a) Explain what is meant by the liquidity of a company. Define two common accounting measures of liquidity. (b) Why is liquidity an important indicator that an investor should consider when analysing share investment opportunities? Answer: 7. a) A company must ensure that it has access to sufficient cash to be able to meet its current commitments and take future advantage of future business opportunities. This is indicated by the company’s level of liquidity, that means having ability to continue…

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Is Coca Cola the Perfect Business_

A. One of the most important skills to learn in managerial economics is the ability to identify a good business. Discuss at least four characteristics of a good business. Based on the article about Coca-Cola, there are five essential characteristics of a business for it to be considered as a “Good Business”. First, it should be appealing to both young and old alike. Second, it must have a distinct characteristic which cannot be easily imitated by others. Third, it must…

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Tyco International Pty Limited

Tyco International Pty Limited is a Foreign owned Proprietary companies that is ranked number 189 out of the top 2000 companies in Australia. The company generates the majority of its income from the Fire and Security System Services in Australia industry. Polaroid faces several business risks that will affect its financing policy. Although the company enjoys a de facto monopoly on instant chemical photography, digital imaging technologies pose a substantial threat. It is not clear how fast these technologies will…

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Theoretical Framework of Fdi

Foreign direct investment has increasingly been identified as a major growth-enhancing component in most developing countries. FDI promotes economic growth in the host country in a great number of ways. From a more compressed perspective, these effects of foreign investment could be direct through a certain investment source or indirect through certain spillover effects. In a more broad view however, FDI could be said to put pressure on the firms in their host countries to improve their competitiveness leading them…

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White Nights and Polar Lights_ Investing in the Russian Oil Industry

1.The valuation process firms undergo when looking to acquire a company is very complex, but when a company, especially a foreign one, makes the conscious decision to enter another foreign market is even more complex and tricky. In this case three western oil firms the neophyte Philbro; the legacy Mobil; and, the middle weight Conoco all have to determine if and how they want to enter the newly open Russian Oil market. The Russian oil market is characterized as high…

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Investment Theory

The efficient market hypothesis (EMH) is an investment theory that states it is impossible to beat the market because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information. According to this theory, the stock always trade at their fair value on stock exchanges. This makes it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. EMH provides that it should be impossible to outperform the overall market through expert…

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Kraft’s Acquisition of Cadbury

The Kraft Foods Group Inc. (“Kraft”) operates in the food and beverage industry. Kraft is the U.S.’s #1 food company and #2 in the world (after Nestlé) in sales according to Hoover’s 2009. Their competitive advantages are: global scale [distribution around 150 countries, (LexisNexis, 2012)]; modern technology, equipment and R&D (“Kraft deploys SAP Tech. platform”, 2008); their partnerships with companies like AOL TWX, Rainforest Alliance, etc. (“Kraft Foods partners with Rainforest Alliance on sustainable coffee initiative”, 2009); and their supply…

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