...repaid in two payments, one at the end of each year over the next two years. 4.1 The Timeline (cont’d) • Differentiate between two types of cash flows – Inflows are positive cash flows. – Outflows are negative cash flows, which are indicated with a – (minus) sign. Copyright © 2011 Pearson Education. All rights reserved. 4-3 Copyright © 2011 Pearson Education. All rights reserved. 4-4 1 20/09/2011 4.1 The Timeline (cont’d) • Assume that you are lending $10,000 today and that the loan will be repaid in two annual $6,000 payments. Textbook Example 4.1 • The first cash flow at date 0 (today) is represented as a negative sum because it is an outflow. • Timelines can represent cash flows that take place at the end of any time period – a month, a week, a day, etc. Copyright © 2011 Pearson Education. All rights reserved. 4-5 Copyright © 2011 Pearson Education. All rights reserved. 4-6 Textbook Example 4.1 (cont’d) 4.2 Three Rules of Time Travel • Financial decisions often require combining cash flows or comparing values. Three rules govern these processes. Table 4.1 The Three Rules of Time Travel Copyright © 2011 Pearson Education. All rights reserved. 4-7 Copyright © 2011 Pearson Education. All rights reserved. 4-8 2 20/09/2011 The 1st Rule of Time Travel • A dollar today and a dollar in one year are not equivalent. • It is only possible to compare or combine...
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...The College Cafe is a student-to-student Internet marketplace providing college students with the opportunity to buy, sell and trade college textbooks, participate in auctions, post classified ads, provide teacher evaluations, and buy products for college. The College Cafe's target market consists of over 15.8 million college students who spend $200 billion annually. The College Cafe was founded in July and is presently in its start-up stage. 1.1 Solution The College Cafe will enable students to buy, sell, and trade used textbooks directly to other students, by-passing the university bookstores. By selling textbooks to other students, the seller can receive more money than the bookstore will pay and the buyer can pay less than the bookstore charges. In addition to textbooks, students will be able to sell class notes, old tests, computers, dorm accessories, used CDs, tutoring services or anything students wish to sell via an online student-to-student marketplace. In addition, the College Cafe will offer other services such as classifieds, teacher evaluations, weblogs (bloggers), specialized content and retail. The College Cafe will establish itself as the leading online student-to-student marketplace by combining extensive market-specific expertise with Internet technologies to generate revenue while creating a win-win solution for students. The College Cafe will achieve market dominance by utilizing extensive domain experience, a local grass roots marketing strategy...
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...The College Cafe is a student-to-student Internet marketplace providing college students with the opportunity to buy, sell and trade college textbooks, participate in auctions, post classified ads, provide teacher evaluations, and buy products for college. The College Cafe's target market consists of over 15.8 million college students who spend $200 billion annually. The College Cafe was founded in July and is presently in its start-up stage. 1.1 Solution The College Cafe will enable students to buy, sell, and trade used textbooks directly to other students, by-passing the university bookstores. By selling textbooks to other students, the seller can receive more money than the bookstore will pay and the buyer can pay less than the bookstore charges. In addition to textbooks, students will be able to sell class notes, old tests, computers, dorm accessories, used CDs, tutoring services or anything students wish to sell via an online student-to-student marketplace. In addition, the College Cafe will offer other services such as classifieds, teacher evaluations, weblogs (bloggers), specialized content and retail. The College Cafe will establish itself as the leading online student-to-student marketplace by combining extensive market-specific expertise with Internet technologies to generate revenue while creating a win-win solution for students. The College Cafe will achieve market dominance by utilizing extensive domain experience, a local grass roots marketing strategy...
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... My decision to accept the proposal is supported by the net present value method. The net present value of this project is $33,035. Our textbook, Managerial Accounting, provides an explanation of this concept: “Under the net present value method, the present value of a project's cash inflows is compared to the present value of the project's cash outflows. The difference between the present values of these cash flows is called the net present value” (Garrison, 2012, p.583). Furthermore, our textbook, states: “Whenever the net present value is zero or greater an investment project is acceptable. Whenever the net present value is negative (the present value of the cash outflows exceeds the present value of the cash inflows), an investment project is not acceptable” (Garrison, 2012, p. 583). Below is a chart taken from our textbook, Managerial Accounting, found on page 583: EXHIBIT 13–1 Net Present Value Analysis of a Proposed Project I included this chart because it clearly explains the rules of when to accept or reject a project. And it further supports my decision to accept the proposal of the new machine because the net present value is a positive value: $33,035. According to this analysis Clark Paints should purchase the new machine. References Garrison, R. (2012). Managerial Accounting (14th ed). McGraw-Hill Learning Solutions. Retrieved from...
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...12 Integer Programming In Chap. 3 you saw several examples of the numerous and diverse applications of linear programming. However, one key limitation that prevents many more applications is the assumption of divisibility (see Sec. 3.3), which requires that noninteger values be permissible for decision variables. In many practical problems, the decision variables actually make sense only if they have integer values. For example, it is often necessary to assign people, machines, and vehicles to activities in integer quantities. If requiring integer values is the only way in which a problem deviates from a linear programming formulation, then it is an integer programming (IP) problem. (The more complete name is integer linear programming, but the adjective linear normally is dropped except when this problem is contrasted with the more esoteric integer nonlinear programming problem, which is beyond the scope of this book.) The mathematical model for integer programming is the linear programming model (see Sec. 3.2) with the one additional restriction that the variables must have integer values. If only some of the variables are required to have integer values (so the divisibility assumption holds for the rest), this model is referred to as mixed integer programming (MIP). When distinguishing the all-integer problem from this mixed case, we call the former pure integer programming. For example, the Wyndor Glass Co. problem presented in Sec. 3.1 actually would have been an IP problem...
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...to understand what a security is. According to our textbook (p.647), the definition of security: (1) An interest or instrument that is common stock, preferred stock, a bond, a debenture, or a warrant (2) An interest or instrument that is expressly mentioned in securities acts; and (3) an investment contract. Next, we can use the family resemblance test to determine if the notes issued by Co-Op can be categorized as securities. The family resemblance test refers to a method of analyzing a debt instrument that is having a horizontal commonality. Horizontal commonality means pooling of interests, not only between the seller and each individual buyer, but also among all those who buy an investment contract in the same venture The following are the four factors to be considered while applying the family resemblance test: The motivation that prompts a reasonable buyer and seller to enter into the transaction in question: The Co-Op sold the notes in an effort to raise capital for its general business operations, and purchasers bought them in order to earn a profit in the form of interest. The plan of distribution of the instrument: the Co-Op offered the notes over an extended period to its 23,000 members, as well as to nonmembers, and more than 1,600 people held notes when the Co-Op filed for bankruptcy. The reasonable expectations of the investing public: The advertisements for the notes here characterized them as “investments,” and there were no countervailing factors that would...
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...Quotient (say 10) and (3) Rates. In other words, it can be expressed as a to b; a: b (a is to b) or as a simple fraction, integer and decimal. A ratio is calculated by dividing one item or figure by another item or figure. Analysis or Interpretations of Ratios The analysis or interpretations in question may be of various types. The following approaches are usually found to exist: (a) Interpretation or Analysis of an Individual (or) Single ratio. (b) Interpretation or Analysis by referring to a group of ratios. (c) Interpretation or Analysis of ratios by trend. (d) Interpretations or Analysis by inter-firm comparison. Principles of Ratio Selection The following principles should be considered before selecting the ratio: 234 A Textbook of Financial Cost and Management AccounQd~ (1) (2) (3) (4) (5) (6) Ratio should be logically inter-related. Pseudo ratios should be avoided. Ratio must measure a material factor of business....
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...Discuss the role of the financial manager. Follow the layout of the text. Determine the future value and the present value of a sum of money. Determine the future value and the present value of an annuity. Determine the interest rate given the beginning and ending amount of money. Determine the length of time it takes a sum of money to double given the interest rate. Define the terms found on a balance sheet. Define the terms found on an income statement. Compute various financial ratios. STUDY MATERIALS Textbook Readings ● Read Chapters 1 and 7 in Basic Finance: An Introduction to Financial Institutions, Investments, and Management, 10th ed., by Herbert B. Mayo. Study Notes The goal of the financial manager is to maximize the value of the firm. This value is reflected by the share price of the firm's common stock. Decisions that increase a firm's value lead to an increase in stock price. Bad decisions, likewise, lower the stock price. As you go through the textbook, you will find that debt may be good, that time has a money value and money has a time value, and that taxes have an impact on many financial decisions. Following is a link to chapter study notes: ● Study Notes for Chapter 7 Copyright © 2013 by Thomas Edison State College. All rights reserved. ACTIVITIES Module 1 has two activities. Please consult the course Calendar for the due dates. Introductions Forum In the Introductions Forum, start a discussion topic titled "Introductions/[Your Name]...
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...CP Sessions: Qi Xu, qi.xu@rhsmith.umd.edu (hold help sessions in CP, grade all homeworks and cases for session 0501, and grade hw #1,2,3 and case #1,2,3 for session 0502) DC Sessions: Julia Zhu yantong.zhu@rhsmith.umd.edu (hold help sessions in DC, grade all homeworks and cases for session DC C1, and grade hw #4, 5, 6,7 for session 0502) Help Sessions: Mondays: 7:30-8:30pm @VMH, Room: VMH 1505 Mondays: 5:00-6:00pm @DC, Room: C2 Course Description This course covers modern theories and techniques for investments and asset pricing. The main topics covered are: portfolio theory, pricing models, market efficiency, fixed income investment, forwards and futures, and options. Canvas: Course materials such as lecture notes, required homework assignments, worked solutions to problems, and other useful information will be available on the course web page at Canvas: https://myelms.umd.edu/ Course Materials The following textbook is required and will be used throughout the course: Investments, by Zvi Bodie, Alex Kane and Alan J. Marcus, 9th Edition, published by McGraw Hill. Henceforth this book will be referred to as BKM. We will cover three cases in this course. Case #1 Markov's Trilemma (No. UVA-F-1341) http://store.darden.virginia.edu/markovs-trilemma Case #2 Dimensional Fund Advisors, 2002, HBS (No. 203-026) http://hbr.org/product/dimensional-fund-advisers-2002/an/203026-PDF-ENG Case #3 Ito’s Dilemma (No. UV2481) http://hbr.org/product/ito-s-dilemma/an/UV2481-PDF-ENG I will post...
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...4 SWOT Analysis 4 Strengths 4 Weaknesses 5 Opportunities 5 Threats 6 Assumptions & Missing Information 6 Problem Statement 7 Development & Evaluation of Alternatives 7 Alternatives 7 Alternative One: Build an e-Commerce platform 7 Pros 8 Cons 8 Alternative Two: Strategic Partnership with NSM 9 Pros 10 Cons 10 Alternative Three: e-Textbook Options 11 Pros 12 Cons 12 Alternative Four: Client Focused Strategy 12 Pros 13 Cons 13 Alternatives Matrix 14 Index 14 Conclusion 15 Solution Objectives 15 Recommendation 15 Build an e-Commerce platform 15 Strategic Partnership with NSM 16 Client-focused strategy 16 References 18 Introduction Dag Juul Moller is the owner and president of Juul Moller Bokhandel, a bookstore located in Norway. Dag speaks to Dagfinn Nettland, a master of management student at the Norwegian School of Management. Dagfinn was enrolled in a course that required students to take an existing company and analyze how it could use the internet as a sales channel and source of information. Dag was interested in the fact that the required textbooks weren’t available until several weeks into the course. Some students purchased their books using Amazon.com, others resorted to using other bookstore websites. Some students had purchased other products through the internet with minimal savings due to the costs associated with customs and sales tax. Although Dagfinn wanted to continue working with Juul Moller, he was...
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...College Costs and Potential Solutions for Students College cost becomes a main factor for an individual who is deciding whether or not higher education is the most reasonable decision. Based on statistics alone, the majority of students planning to further their education will most likely take on debt in the process. As a result, students may find it necessary to seek alternative resources in order to receive their education. This issue of tuition costs, specifically, have also been addressed several times by President Barack Obama, who has devised plans to eventually lower the costs. In addition to tuition costs, students must also spend a significant amount of money on books. Unless alternative approaches are taken, the costs of higher education will continue to increase, which may deter students from attending college immediately after high school. In today’s society, a college degree has become a necessity for anyone planning to establish a career. Because the concept of college is so valued, ambitious students want to make the best of their education. However, as the demand for a degree increases, the cost of college also progressively increases. This allows for colleges to manipulate the cost of tuition for their own benefit, as they are aware that some students would be willing to pay the full cost. The students, who are unwilling or unable to pay these high tuitions, might ultimately have to seek other options even if they are good students. However, even if the...
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...critical thinking as expressed in the taxonomy. Corporate governance, an interdisciplinary subject addressed in all these disciplines, explores the inter- workings of both for-profit firms and not-forprofit firms and is an area requiring business students to evaluate ethical issues when making decisions. Despite the broad responsibility of teaching corporate governance in the finance classroom, the pedagogy of finance has been restricted to ideas derived primarily from economics, statistics, and finance. Competing ideas from other disciplines are generally unwelcome and/or are treated with skepticism. Even the ideas of some researchers from the fields of economics and finance such as Hart (1995) and Tirole (2001) who promote alternate solutions to corporate governance beyond agency theory are ignored or overlooked. As a result, business ethics and corporate governance topics often are introduced in apro forma, compulsory fashion that may...
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...Shanti Business School PGDM Batch 2015-17 Semester II Course Outline 1 Shanti Business School, Ahmedabad PGDM 2015-17: Program Structure Semester-1 Semester-2 Semester-3 Semester-4 Course credit Course credit Course credit Language Skills @ Written Analysis & Communication @ Soft skills II @ Employability Skills @ IT & MIS 2 Soft skills I @ Computing skills 2 Social Media Marketing @ 2 Legal Aspects of Business 2 Business Strategy 3 Management Control Systems 3 Micro Economics 3 Macro Economics 3 Business Environment 3 Business Ethics & Corporate Governance 2 Quantitative Methods-1 3 Business Research Methods 3 Quantitative Methods-2 3 Core Elective-1 3 Core Elective1 3 Core Elective-2 3 Core Elective2 3 Elective-1 3 Elective-1 3 Elective-2 3 Elective-2 3 Grand Project-1 3 Grand Project-2 3 Principles of Management Basic Building Blocks Autumn Break Executive Skills Organisational Behavior Human Resources Management 3 Marketing Management 1 3 Marketing Management -2 3 Understanding Financial Statements 3 Financial Mgt 3 Operation Management Management Domain 3 3 Basics of Business Planning 2 Electives Credits Autumn Break credit SUMMER INTERNSHIP Course ...
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...CHAPTER 1 Auditing and Assurance Services LEARNING OBJECTIVES | | |Exercises and | | | |Problems | | |Review Checkpoints | | | | | | |Define information risk and explain how auditing and assurance services play|1, 2, 3 |48, 50 | |a role in reducing this business risk. | | | | | | | |Define and contrast accounting, auditing, and assurance services. |4, 5, 6, 7, 8 |47 | | | | | |Describe and define the management assertions embodied in financial |9, 10, 11 |52, 54 | |statements, and why auditors use them as a focal point of the audit. ...
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...of Ethics and Standards of Professional Conduct, familiarity with the Global Investment Performance Standards, and familiarity with corporate governance issues and risks affecting companies. Study Session 1 Ethical and Professional Standards Reading Assignments 1.* “Code of Ethics and Standards of Professional Conduct” Standards of Practice Handbook, 9th edition (CFA Institute, 2005) * 2. “Guidance” for Standards I – VII, Standards of Practice Handbook, 9th edition (CFA Institute, 2005) * 3. Introduction to the Global Investment Performance Standards (GIPS®) Global Investment Performance Standards (GIPS®), pp. i–iii and 1–9, (CFA Institute, 4.* 2005) A. Preface: Background of the GIPS Standards B. I. Introduction C. II.0. Provisions of the Global Investment Performance Standards – Fundamentals of Compliance * 5. The Corporate Governance of Listed Companies: A Manual for Investors (CFA Institute, 2005) Learning Outcomes 1. “Code of Ethics and Standards of Professional Conduct” The Code of Ethics establishes the framework for ethical decision making in the investment profession. The candidate should be able to state the six components of the Code of Ethics. The Standards of Professional Conduct are organized into seven standards: I. Professionalism II. Integrity of Capital Markets III. Duties to Clients and Prospective Clients IV. Duties to Employers V. Investment Analysis, Recommendations, and Action VI. Conflicts of Interest VII. Responsibilities...
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