Beta and Capital Budgeting

Part 1: Beta

Visit the following web site or other websites:

www.yahoo.com/finance

1.  Search for the beta of Amazon

2.  In addition, find the beta of 3 different companies within the same industry as Amazon.

3.  Explain to your classmates what beta mean and how it can be used for managerial and/or investment decision

4.  Why do you think the beta of Amazon and those of the 3 companies you found are different from each other? Provide as much information as you can and be specific.

Part 2: Capital Budgeting

Before you respond to Part 2 of discussion 6 review the following information on Capital Budgeting Techniques

To avoid damaging its market value, each company must use the correct discount rate to evaluate its projects. Review and discuss the following:

• Compare and contrast the internal rate of return approach to the net present value approach. Which is better? Support your answer with well-reasoned arguments and examples.

• Is the ultimate goal of most companies–maximizing the wealth of the owners for whom the firm is being operated–ethical? Why or why not?

• Why might ethical companies benefit from a lower cost of capital than less ethical companies?

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2 Discussion.

Working Capital Management

Cash Conversion Cycle

Cash Budget

Close to 50% of the typical industrial and retail firm’s assets are held as working capital. Many newly minted college graduates work in positions that focus on working capital management, particularly in small businesses in which most new jobs are created in today’s economy.

To prepare for this Discussion: select two of the following components of working capital management: the cash conversion cycle, the cash budget, inventory management, and credit policies.Think about scenarios in which your selected topics were important for informing decision making. Be sure to review the video links above and conduct additional research using academically reviewed materials, and your professional experience on working capital concepts to help develop your scenarios. Support your discussion with appropriate examples including numerical examples as necessary.

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3 Discussion

Discuss Your Learning Outcomes

Write a critical evaluation of your learning outcome. In your response, consider:

1. Consider the content of this class as they relate to financial acuity and managerial decision making.

2. Base on the course content, discuss new skills you acquired from this class?

3. How would you apply your new knowledge your current and/or future profession?