Category: Finance

Assume you are the CFO of a medium-sized company and you are advising the CEO on some upcoming strategic initiatives that will have long-term implications. In other words, these are important decisions.
For your initial discussion forum post, address the following questions posed by the CEO:
It appears we may need to raise more capital. Is expanding debt a good idea? Why or why not and should our given assets impact this decision?
In our economic environment, should we issue bonds, common stock, or preferred stock? What would be some pros and cons?
Or should we forego this immediate opportunity and buy back some of our outstanding common stock? What market conditions would make this a good move; what might be some pros and cons?
Should we issue a dividend, or should we retain cash in the company for future opportunities? How might this impact future growth? Are we obligated to pay our shareholders a dividend?
Your initial response should be a minimum of 300 words. Graduate school students need to learn how to assess the perspectives of several scholars. Support your response with at least one scholarly and/or credible resource in addition to the text.

Start reviewing and responding to the postings of your classmates as early in the week as possible. Respond to at least two of your classmates.  Participate in the discussion by asking a question, providing a statement of clarification, providing a point of view with a rationale, challenging an aspect of the discussion, or indicating a relationship between one or more lines of reasoning in the discussion. 
Do you agree with their position? Why or why not?
STUDENT 1:
Amanda Dennis
A project cash flow forecast includes cost estimates for a project, as well as a schedule of when you will incur those costs. This forecast also displays the project’s revenue and a schedule of when you will receive that revenue (Marker, 2024). 
One way to ensure a project’s cash flow forecast is accurate is to utilize a forecast calendar, which will include payment due dates based on the supplier or vendor’s payment terms, and show the true cost of the project. A forecast calendar can help organize the various phases of the project, with each phase showing a breakdown of the work to be completed. Including payment due dates will ensure there are no missed or late payments made to vendors. Reviewing the vendors’ contracts will ensure the payment terms are correct. The forecast calendar should also include all costs associated with the project, such as direct and indirect costs. In addition to the outgoing cash flow side of the project, the calendar should also include incoming cash flow. This will include payments that are due from customers. 
In addition to utilizing a forecast calendar, one can ensure there are open lines of communication between the various departments involved in the project. Each department provides important figures for the forecast. Maintaining open lines of communication will ensure any updates that are needed to the forecast are made. 
One last way to ensure the accuracy of a cash flow forecast is to create multiple scenarios. This can include the best-case scenario, worst-case scenario, and the most likely to occur. An example of a possible scenario could include possible tariffs that could occur on purchased materials from overseas.
Capital Structure
Debt is one of the two main ways a company can raise money in the capital markets. Companies benefit from debt because of its tax advantages; interest payments made as a result of borrowing funds may be tax-deductible (Tuovila, 2024). Using equity in a company’s capital structure can be more expensive, but the benefit is a capital structure based on equity does not need to be paid back.
While both types of capital structures have their advantages and disadvantages, I would have to lean towards using a debt-based capital structure.  Companies that have a high leverage ratio and an aggressive capital structure tend to have higher growth rates than those that utilize an equity-based capital structure.
To continue to monitor how much debt the company has leveraged, it’s important to conduct a debt-to-equity (D/E) analysis and compare it to the industry’s averages. If the company is seen as having too much debt financing, future investors can view it as a credit risk. The key is to find a good balance of both debt and equity in the capital structure. 
References
Marker, A. (2024, March 20). Project-based cash flow analysis guide. Smartsheet. Retrieved May 6, 2024, from https://www.smartsheet.com/content/project-cash-flow
Tuovila, A. (2024, February 25). Capital structure definition, types, importance, and examples. Investopedia. Retrieved April 4, 2024, from https://www.investopedia.com/terms/c/capitalstructure.asp
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STUDENT 2:
Kassandra Coleman
As an analyst forecasting a project’s cash flow can be difficult and you can encounter many risks. To be as accurate as possible there are a variety of techniques you can use to include a multitude of formulas such as the net present value (NPV) and the Weighted Average Cost of Capital Calculations (WACC). This can present you with a better picture of your project’s outcomes. In important part of forecasting cash flow is that it provides a more complete picture to investors as “published profits can be manipulated, whereas cash generated by a company cannot” (Fight, 2006).
In addition to formulas, you can use historical analysis which is the “starting point for projecting a firm’s future performance under future conditions” (Fight, 2006). Looking at how a company or is similar project has done in the past is a good predictor on how it will progress. Another way to project is by using forecasting models such as the Monte Carlo Simulation which is “used to predict the probability of a variety of outcomes when the potential for random variables is present” (Kenton, 2023). There is no absolute way to alleviate risk however a study found that when “companies use financial analysts to provide cash flow forecasts, the accuracy of earnings forecasts improves, while understanding of cash flow persistence and accruals also increases” (Oh et al., 2020).
In some cases, firms use more debt in their capital structure to enhance the owners’ return on their investments. This would be considered the trade-off theory verse the pecking-order theory. The trade-off theory there is an “optimal amount of debt for any individual firm” (Ross, 2021) verse the pecking order theory where there is no level of debt. An example of the trade-off theory was employed by Coca-Cola whereas the pecking order theory was utilized by Intel.
In 2014 The Coca-Cola Company (Coke) had a long-term debt of $19,063 million and a net income of $45,998 million. The debt ratio at Coke is optimal and is maximizing its market capitalization value at their debt levels. The company has a long-term debt of less than one year’s current net earnings. Consequently, a single year earnings can pay the debt. Intel is a company that follows the pecking order theory, particularly because of its high-risk industry. Although the company is large, considering the technology industry is forever changing at a rapid pace, the company struggles to remain relevant, which creates the industry to be high risk. Because of the large market and competition, the company has to create innovative products and quickly get them to market. This causes a problem by not allowing revenue to fund the company’s growth, and the firm has to rely on debt to satisfy the market. (Business, 2019)
Based off the examples alone the trade-off theory would seem to be superior. In addition, the trade-off theory appears to the more ethical and less risky. However, ultimately it appears to be up to the circumstances in which each firm finds themselves in on how to pursue investments.
References:
Business, D. (2019). Trade-off and Pecking-order Theories. Elijah Clark & Associates. https://elijahclark.com/trade-off-and-pecking-order-theories/
Fight, A. (2006). Cash flow forecasting. Elsevier/Butterworth-Heinemann. Fight A. Cash Flow Forecasting. Butterworth-Heinemanhttps://search-ebscohost-com.su.idm.oclc.org/login.aspx?direct=true&db=e900xww&AN=130272&site=ehost-live&scope=site
Kenton, W. (2023, March 26). Monte Carlo Simulation. Investopedia. https://www.investopedia.com/terms/m/montecarlosimulation.asp
Oh, H. M., Park, S. B., & Kim, J. H. (2020). Do Analysts’ Cash Flow Forecasts Improve Firm Value? International Journal of Financial Studies, 8(4), 60. https://doi.org/10.3390/ijfs8040060
Ross, S. (2021). Corporate Finance (13th ed.). McGraw-Hill Higher Education (US). https://digitalbookshelf.southuniversity.edu/books/9781264112180

Cover
Memo  (1 Page)
Report
Covers:
I.       
Overview/Summary of Industry Outlook for Future
– Devloped by the TEAM
Members  (1 Page Max)
II. 
Stock Review  (For YOUR
Stock)
– Background (What they do,
Current Products) and Outlook for
Future (New Products, etc.)
– Chart of Closing Prices,
Moving Average 5 Day, Moving Average
20 Day, FOR a Major Price
Change
– Explanation of Major Price
Changes
– Results of Trading Methods
(Moving Average Crossover, Hi-Lo,
Last – First)
– Stockbrokers Recommendations
– Your Recommendation for
Stock (Buy, Sell, or Hold) for Long
Term and Short Term

Shohei Ohtani recently signed a $700 million 10- year contract with the Los Angeles Dodgers of Major League Baseball.
The terms of the contract are that Shohei will receive $2 million a year, for ten years. At the end of the 10 years, Shohei will receive $68 million per year for the following 10 years.
A paminthe Begestra of each year, whats that he
present value of Shohei Ohtani’s contract? You must show all of your work to receive full extra credit.

Wills are public record and can be found at your local courthouse. The public nature of wills allows anyone to look at the will of a deceased neighbor or even a celebrity.
Using the checklist below, dissect the will of Walt Disney , Does each item exists in your chosen will? What are the exact terms given in the will?
Checklist
for a Will
Part What is it? Is it Here?
Testator
Identified Clearly identifies testator.  
Declaration Clause Clearly and specifically (by date) revokes all
prior wills.    
Bequest Clause Directs distribution of assets.  Usually multiple bequests.  
Residuary Clause Directs transfer of assets not specifically
listed in bequest clauses.  
Identifies Executor Clearly identifies executor and the extent of
their powers.  May include compensation
for executor.  
Identifies Successor Executor Clearly explains what happens if the first
executor is either unwilling or unable to fulfill duties.  
Guardianship Clause Clearly identifies who will care for surviving
children or dependents.  
Payment of Debts/Taxes Clearly explains how debts and taxes will be
paid.  Typically done with residuary.  
Simultaneous Death Clause Clearly explains what to do in the event the
testator dies at the same time as a beneficiary.  
Survivorship Clause Requires beneficiary to survive for a specified
period of time after the testators death in order to inherit.  
No-Contest Clause Substantially decreases or eliminates bequest
to any beneficiary who challenges the will.  
Disclaimer Clause Reminds heirs they can disclaim bequest and may
allow control over specific disclaimer.  
Attestation Clause At least two qualified witnesses saw testator
sign will.   
Self-Proving Clause Notary signs that he saw witnesses and testator
sign.  

type in Ricottone as last name in excel
finish excel with equations and such. if any questions please revert back

TASK 1- decide on a PUBLICALLY LISTED company(Option2.1) or choose MACROECONOMIC data (option 2.2) . to analyse stock price of a pubklically listed company – eg Apple, Tesla etc (dont choose these common companies and end up having high plagirism with others. There 55214 publically listed companies in the world. All variables must cover calendar year 2023 at daily frequency (at least 200 observations). You can download the data for Option 1 using Bloomberg, Yahoo Finance, or any other financial database of your choice. As you will be online for the coming weeks the easiest way is to download the data from yahoo finance. TASK 2- Constructing the dataset (I will describe this in detail in the week 7 online lecture class) For your assignment analysis, you must construct a dataset including a continuous dependent variable (?),two continuous independent variables (?1 and ?2 ), and a dummy independent variable (?3 ). You choose any of the options below Option 2.1: Time Series
To perform a time series analysis using Yahoo Finance and Excel with the specified variables, follow these steps:
2.1.1 Download Daily Stock Returns of your selected company (Y)
check this link for video – https://youtu.be/S39Lx-Lh3fQ?si＝dyGmKTmPeOqG3HKF SAME as above
Go to Yahoo Finance.
Search for your chosen company.
Navigate to the ″Historical Data″ tab.
Set the time range to cover the calendar year 2023, daily
Download daily stock price in csv excel 2.1.2 Download Daily Index Return (X1)
check this link for video – https://youtu.be/S39Lx-Lh3fQ?si＝dyGmKTmPeOqG3HKF SAME as above
Go to Yahoo Finance.
Search for a relevant stock market benchmark (e.g., S&P 500) Navigate to the ″Historical Data″ tab.
Set the time range to cover the calendar year 2023, daily
download daily index in csv excel and calculate returns means – apply simple or log returns to the index (pt/Pt-1 or Ln(Pt/pt-1)
2.1.3 Download Daily Commodity/Currency Returns: (X2)
check this link for video- https://youtu.be/S39Lx-Lh3fQ?si＝dyGmKTmPeOqG3HKF SAME as above
Go to Yahoo Finance.
Search for a relevant currency or commodity (e.g., USD, oil) Navigate to the ″Historical Data″ tab.
Set the time range to cover the calendar year 2023, daily
download daily currency / commodity in csv excel and calculate returns means returns- apply simple or log returns to the index (pt/Pt-1 or Ln(Pt/pt-1)
2.1.4 Create dummy variable: (X3)
Open a spreadsheet in excel
copy the downloaded data (Y, X1, X2)ONLY date and CLOSING PRICES needed into the spreadsheet.
calculate returns of Y, X1, X2 means – apply simple or log returns Yt,X1t and X2t in the format of (pt/Pt-1 or Ln(Pt/pt-1)
create a new column for the dummy variable. Define the criteria for the dummy variable (e.g., positive or negative returns).
Use a formula or coding to assign 1 or 0 to the dummy variable based on the defined criteria.
you are yet to complete the last 2 steps in the weeks lectures so leave that for the time being
Option 2.2: Cross Section Data
check this link for video -How to download data from the World Bank Website(Easy & Quick) (youtube.com)
2.2.1 Download Dependent Variable (?):
Real GDP per capita growth (constant USD) in 2022.
2.2.2 Download Independent Variables:
?1: Log of GDP per capita (constant USD) in 2021.
?2: Macroeconomic indicator (e.g., inflation, unemployment, gross capital formation) in 2022.
?3: Dummy variable based on relevant geographic, development
Steps
Visit World Bank, IMF, or Other Economic Database: Go to the official websites of the World Bank (worldbank.org), IMF (imf.org), or another reputable economic database.
eg: https://databank.worldbank.org/home.aspx ; https://data.imf.org/?sk＝388dfa60-1d26-4ade-b505-a05a558d9a42
Locate the Databases or Data Repositories: Explore the sections of the websites that provide access to economic indicators and datasets.
Select the Variables: Look for the specific variables needed for your analysis (Real GDP per capita growth, Log of GDP per capita, Macroeconomic indicator for 2022, and relevant dummy variable).
Download Data: Use the data download tools provided on the websites to select the variables and download the dataset.
TASK 3- Section A: Ordinary Least Squares (500 words, 15 marks)
LINEST – https://youtu.be/ghxARow323E?si＝lgaNPl5n37vMXB0B
data analysis tool pack- Excel Regression Analysis through the Toolpak (youtube.com)
Excel Walkthrough 4 – Reading Regression Output (youtube.com)
Briefly discuss the dataset you have constructed and present relevant desсrіptive statistics (3 marks). Provide a concise overview of the dataset, including the variables used in the regression analysis. Mention the source of the data and any preprocessing steps taken. Discuss the size of the dataset, the number of observations, and the countries included.
Present relevant desсrіptive statistics for each variable, such as mean, standard deviation, minimum, maximum, and any other statistics that help describe the central tendency and variability of the data.
Estimate the regression equation ? ＝ ?0 + ?1?1 + ?2?2 + ?3?3 + ? via ordinary least squares (2 marks).
Present the estimated regression equation: ? ＝ ?0 + ?1?1 + ?2?2 + ?3?3 Interpret all regression coefficients (including the constant) and assess their statistical significance using a T-test (4 marks).
Explain the role of each coefficient (?)
Interpret the regression coefficients ?0, ?1, ?2, ?3 in the context of the specific variables they represent. Discuss the expected impact of a one-unit change in each independent variable on the dependent variable.
Discuss the explanatory power of the model using the R-squared and the F-test (2 marks). Statistical Significance using T-test: Perform T-tests for each coefficient to assess their statistical significance. Discuss whether each coefficient is significantly different from zero.
Explanatory Power of the Model: Discuss the R-squared value to assess the proportion of variance explained by the model. Interpret the F-test to evaluate the overall significance of the regression equation.
Briefly explain the implications of documented relationships or lack thereof for theory and practice in context of relevant academic sources (4 marks)
Based on the regression results, discuss the implications for theory and practice. Relate the findings to existing academic sources or economic theories.
Highlight any relationships that are statistically significant and consider the practical implications of these relationships or the lack thereof.
Ensure that each section is presented clearly and concisely, providing enough detail to convey the key insights from the regression analysis and its implications.

question 1 An“interest-only” mortgage is made for $80,000 at 10 percent interest for 10 years. The lender and borrower agree that monthly payments will be constant and will require no loan amortization.
a. What will the monthly payments be?
b. What will be the loan balance after 5 years?
c. If the loan is repaid after 5 years, what will be the yield to the lender?
question 2 A partially amortizing loan for $90,000 for 10 years is made at 6 percent interest. The lender and borrower agree that payments will be monthly and that a balance of $20,000 will remain and be repaid at the end of year 10. Assuming 2 points are charged by the lender, what will be the yield if the loan is repaid at the end of year 10?
question 3. A basic ARM is made for $200,000 at an initial interest rate of 6 percent for 30 years with an annual reset date. The borrower believes that the interest rate at the beginning of year (BOY) 2 will increase to 7 percent.
Assuming that a fully amortizing loan is made, what will monthly payments be during year1?
Based on (a) what will the loan balance be at the end of year (EOY)1?
Given that the interest rate is expected to be 7 percent at the beginning of year 2, what will monthly payments be during year 2?
What will be the loan balance at the EOY2?

Using Microsoft Excel or Google Sheets, create a spreadsheet with multiple tabs to answer each of the following questions.
For full credit, your spreadsheet should be dynamic.  For example, if an interest rate such as a tax rate or a required rate of return is required, enter that in a cell by itself so that if someone decides to change the tax rate or required return assumption, the worksheet will automatically recalculate itself.  This is best accomplished by including an input section at the top, and then use the data from the input section to create your formulas.
Upload your excel file (or shared link to a Google Sheet) in the space provided in the last question (do not upload a pdf file because I want to check your formulas). 
Partial credit will be given for a correct result.  To receive full credit, your excel sheet will need to have calculated the result properly, and be flexible enough to produce a correct result if one or more of the assumptions (interest rate, tax rate, etc.) are changed.  
Capital Budgeting
Eyas’ Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.18 million.  The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time, the company expects it will be worthless.  The project is estimated to generate $1.645 million in annual sales, with annual costs of $0.61 million.
1. Suppose the company’s marginal tax rate is 19%. 
In the first tab of your worksheet:
Prepare a pro forma income statement for each of the three years (you may use Table 9.1 in our textbook as a model).
Prepare a series of abbreviated pro forma balance sheets showing the capital requirements for the project (you may use Table 9.2 in our textbook as a model).
Prepare a pro forma statement of operating cash flow (you may use Table 9.4 in our textbook as a model).
Finally, prepare a pro forma statement of total cash flows from assets (you may use Table 9.5 in our textbook as a model).
Based on the results of your worksheet, what is the expected OCF in the first year?
2. In the previous problem, suppose that the required return on the project is 20%.  Create a second tab in your spreadsheet to illustrate the calculation of the project’s Net Present Value (NPV). 
In the space provided below, state the project’s NPV, rounded to the nearest dollar, and indicate whether the company should accept this project.
In the previous problem, suppose that the required return on the project is 20%.  Create a second tab in your spreadsheet to illustrate the calculation of the project’s Net Present Value (NPV). 
In the space provided below, state the project’s NPV, rounded to the nearest dollar, and indicate whether the company should accept this project.
3.Suppose now that the project requires an initial investment in Net Working Capital of $250,000, and the fixed asset will have a market value of$180,000 at the end of the project.  Create a third tab in your worksheet and prepare an updated projection of total cash flows.  Using these cash flows, compute the project’s internal rate of return (IRR).
Using the results of your worksheet, in the space below, state the IRR as a percentage to two decimal places, and indicate whether the project should be accepted using the IRR rule. 
4. Suppose that management applied the payback rule to your projected cash flows and decided to move forward with the project.  Management would like to finance the project over three years.  The company’s bank has presented two options:
A three-year amortized loan with equal quarterly payments made at the end of each quarter, with an interest rate of 11% APR.
A three-year amortized loan in which the company pays interest at the rate of 12% APR, plus equal principal payments, at the end of each quarter.
Create a new tab in your worksheet and prepare two amortization schedules – similar to the ones shown on page 149 of the textbook – showing each  quarterly payment over the term of the loan, the principal and interest portion of each payment, and the beginning and ending balances.  Keep in mind that loan interest rates are subject to change, and it would be useful to have the ability to vary the interest rates on both loans (i.e., treat the interest rates as input parameters). 
In the space below:
Briefly comment on the appropriateness of using the payback rule to evaluate this project, and
Report the total interest paid on each loan, and 
Make a recommendation as to which financing option would be better for the company.  

Comments from Customer
FYI the project must be completedd on excel, which I have attached and the “solver” function on excel must be utilized as well.