...Information Technology Investment Decision-Making Learning Objectives After completing this chapter, you should be able to: • • • • • Describe different types of IT investment decisions manager face. Briefly describe some of the methodologies that are used in IT investment decision-making. Explain why IT investment decision-making is important as a subject to study. Explain some of the limitations that should be considered when using IT investment methodologies. Explain the role of IT investment decision-making within organizational planning. Prologue Information technology (IT) investment decision-making impacts all industries but sometimes in different ways. For example, Karadag et al. (2009) explored the importance of IT investment decision-making methodology in lodging industry. The research found that evaluation activities for hotel IT investments have not been performed widely and consistently and that some types of hotels tend to use more financial and non-financial IT evaluation methods, since all investments are expected to show a positive return on investment. The research findings highlight the importance of the use of IT investment evaluation techniques and the 3 4 Information Technology Investment: Decision-Making Methodology major differences in their use require a substantial need for understanding a wide variety of IT investment methodologies to satisfy decision-making needs. To provide useful decision-making in IT investments today requires a broad...
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...EXAM Introduction This report provides an insight into the investment behavior of 50 couples. Using different statistical methods and observing the trend followed by the effect of various independent variables on a single independent variable , a conclusion will be reached. The following are the main tools used for analysis of investment behavior of 50 couples who are selected from a sample size of 194 couples. 1. Descriptive statistics 2.Histograms 3.Pivot tables 4.Multiple Regression In this model , a scrutiny of the above statistical data will give the tendency to invest in retirement plans and the type of couples who invest and take advantage of the attractive investments in order to avail tax exemption. This report also elaborates on how the different independent variables - Number of children, Salary, Mortgage and Debt- have an effect on the dependent variable, i.e. the percentage of salary invested. Consequently the below tasks will be fulfilled. Step 1-Extracting a sample of 50 couples Step 2-Constructing histograms and point estimates with given confidence intervals Step 3-Inference from pivot tables to explain the preferences of different couples on investments based on independent variables Step 4-Performing multivariate regression and conducting significance tests on beta coefficients R^2 and F-tests and hence establish a correlation of different variables and ensuing effect on investments made. Dataset We have a sample of 194 couples whose financial...
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...your future. Using the information contained in Chapter 14 of the textbook, Managing Portfolios: The Practice, you will use the Nine-Step Investment Process to create your own personal investment plan. Details of the Nine-Step Investment Process are found beginning on p. 14.3, and they include the following: The Nine-Step Investment Process 1. Develop an understanding of the client’s goals (your goals) 2. Identify a target rate of return 3. Agree on a time horizon 4. Determine the client’s tolerance for and capacity for risk 5. Define the asset classes 6. Determine an appropriate asset allocation 7. Create the IPS 8. Select the investments themselves 9. Monitor and adjust as needed Instead of planning for a client, you are planning for yourself and your own personal goals, assuming you have just received $1 million today. In doing so, you should consider your own investment horizon and specific life situation, as well as the current condition of the global markets. Your report must contain a narrative section for each of the 9 steps of the investment process, except for Step 7. You do not need to create an Investment Policy Statement. Each section of your report should consist of at least one paragraph, or in the case of steps 5 & 6, charts or several bullet points. When doing your asset allocation and resulting investment selection, please make sure to use concrete historical return data to support your choices, and please...
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...Investment Regulations Jerald Carpenter American Intercontinental University MGMT220-1104A-04 Unit Four Individual Project Foreign investment is an important part of our economy. There are many benefits to foreign investment in any country. It would be very difficult or impossible today to close the doors to foreign investment. The fact is foreign investment is responsible for providing a great deal of needed capital in this country. This capital is an asset in the continuous modernization and expansion of our manufacturing and other productive facilities. Without investment in our factories and processes we would fall behind in the world market. These investments lead to increased competitiveness within the international community. This flow of money also helps to keep down inflation. The US depends on this investment capital to make up for lacking domestic capital (Richardson, 1989). The countries of the world are increasingly interdependent on one another. With this interdependency among nations also comes more competition, which cannot be taken for granted. Though it is healthy to have foreign investment, too much unregulated investment could be damaging. There must be regulations to protect the US, or any country from seeing diminished control over its own assets. The same holds true for US investors abroad. With the interdependence between countries, it is healthy for businesses to have investments in foreign markets. Other countries depend on this capital as well...
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...and how it has changed the way we invest in today’s society. The New Era of technology shapes everything that we do within the financial world. Modern technology has changed the way investing has been done in previous years by providing the market easier access, which appears to be faster and inexpensive. With that being said it has allowed money managers to have access to unlimited information at their fingertips. Information technology also has its down falls when it comes down to investing due to security issues. In today’s society you have people who have the knowledge to gain access to your investments and pilferage from your investments. There are many different ways how someone can gain access to your investments and how to prevent it from happening to you. How information technology changed investing Information technology has been the biggest breakthrough in investments it has opened a whole new world for investors. This world has opened up the stock exchange to become open 24 hours a day and 7 days a week and 365 day a year and investors can have access to it at any place in the world via computer or smart phone Apps. As you are reading this, technology is being used for stock trading, 401k and on-line banking between buyers and sellers. Current technology has now made it easier to take risk because most programs now calculate the risk and size factors to give investors a little advantage within the market to help them get their fair share of the financial market...
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...various investment proposals in such a manner that the firm achieves maximum increase in its value. The calculation and method prescribes arranging projects in descending order of their profitability based on their average rate of return, the cash payback period, the net present value, the internal rate of return, and selecting the optimal combination. There are six steps in the Capital Rationing process. First is to identify the potential capital investment projects. Second is to establish a minimum average rate of return or payback period to screen out the projects that aren’t worth exploring. The third step in the process is to evaluate the projects that are left over from the screening process in step two using the net present value or the internal rate of return methods. The fourth step is to consider the qualitative benefits from each project. Fifth is to rank the projects based on the results of steps three and four. The last step in the capital rationing process is to allocate the available funds beginning with the top-ranked project. In capital rationing it may also be more desirable to accept several small investment proposals than a few large investment proposals so that there may be full utilization of budgeting amount. This may result in accepting relatively less profitable investment proposals if full utilization of budget is a primary consideration. Similarly, capital rationing may also mean that the firm foregoes the next most profitable investment following...
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...Capital Budgeting By Joan Shoueka Capital Budgeting is defined in accounting and finance as “the planning of long-term corporate financial projects relating to investments funded through and affecting the firm's capital structure (Wikipedia, 2014).” It allocates resources for major capital or investment expenditures. Creating and implementing a budget is crucial to any business or organization for many reasons. One reason is because “it creates a structured step by step process that enables a company to develop and formulate long-term strategic goals, seek out new investment projects, estimate and forecast future cash flows, facilitate the transfer of information & lastly, monitor and control expenditures (Investopedia, 2014).” “Preparing a capital budget is also necessary in order to increase profits and minimize costs. Most businesses and organizations typically plan a budget for a 12-month period, which allows management to take a look at a bigger picture. A capital budget differs from a short-term budget in that it takes a look at long-term investments, examining the purchase or upgrade of fixed assets such as buildings, machinery and equipment (Ehow.com, 2014).” There are also many reasons to make hefty investments. One important intention is that it helps to expand the level of operations for a business or company. A growing company often needs to acquire new fixed assets in order to produce work in a timely fashion. Then as the company expands its...
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...if any, projects or investments opportunities the organization should undertake. The task of analyzing and comparing financials is a daunting task, but when utilizing the tools of capital budgeting, the process of this type of business decision making can be quite useful. This paper will define capital budgeting and discuss some of the components of this decision making tool. It will also discuss some of the concerns that go along with Capital Budgeting. The Basics of Capital Budgeting What is Capital Budgeting? Organizations looking to expand their business through asset acquisition create a capital budget (Paden, n.d.). Capital budgets exclusively are associated with real estate, equipment and other potential assets used to evaluate asset impact and the potential benefit to the organization. Capital Budgeting is the process in which a business determines whether a project or investment venture are worth pursuing. It is the process of analyzing investment opportunities and deciding which one to accept (Berk & DeMarzo, 2014). Potential ventures are evaluated and the potential expenditures or investments are ranked. Usually, these types of business decisions are for large purchases or investments. Steps of Capital Budgeting There are seven steps involved in capital budgeting (Hofstrand, 2013). They are: 1. Identify long-term goals of the organization 2. Identify potential investment prospects for meeting long-term goals identified in Step 1 3. Estimate and...
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...intangible assets. These assets include physical assets (such as land, buildings, equipment, and machinery), as well as assets that represent property rights (such as accounts receivable, notes, stocks, and bonds). When we refer to capital investment, we are referring to the firm's investment in its assets. The term "capital" also has come to mean the funds used to finance the firm's assets. In this sense, capital consists of notes, bonds, stock, and short-term financing. We use the term "capital structure" to refer to the mix of these different sources of capital used to finance a firm's assets. The term "capital" in financial management, a firm's resources and the funds committed to these resources, does not mean the same thing in other fields. In accounting, the term "capital" means the owners' equity, the difference between the amount of a firm's assets and its liabilities. In economics, the term "capital" means the physical (real) of the firm, and therefore excludes the assets that represent property rights. In law the term "capital" refers to the amount of owners' equity required by statute for the protection of creditors. This amounts to the "stated capital", which often is the par value of the firm's stock. The firm's capital investment decision may be comprised of a number of distinct decisions, each referred to as a project. A capital project is a set of assets that are contingent on one another and are considered together. Suppose a firm is considering the production...
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...Homework 4 Option Investment Policies Click Link Below To Buy: http://hwcampus.com/shop/homework-4-option-investment-policies/ STEP ONE: Update securities prices daily. Prepare an Excel Spreadsheet Investment analysis of Investment Returns. Submit the Investment Returns Analysis to the P4-Investment Returns Analysis Assignment Folder. STEP TWO: You have been given an additional $100,000 to purchase a Portfolio of five (5) Option Contracts at Beginning of Week 4 (Note: Recommend Using CBOE.com for Option Information.) Please keep in mind that you do not have the luxury of trading or selling and/or buying securities during your portfolio holding period. After you determine your initial portfolio you must buy the portfolio using the HYPERLINK "http://www.cboe.com/tradtool/virtualtrade.aspx" CBOE Virtual Trade Tool ( HYPERLINK "http://www.cboe.com/tradtool/virtualtrade.aspx" http://www.cboe.com/tradtool/virtualtrade.aspx). The commission costs per trade (using CBOE Virtual Trade) are $9.95/trade for stocks and ETFs and $14.95/trade for options. The securities you select for your portfolio can be selected from any traded securities that are available on CBOE Virtual Trading. (Exception! you may not invest in mutual funds or the S&P 500 market index) STEP THREE: The assignment for the fourth week is to make your first option contract purchases using the CBOE Virtual Trade Tool ( HYPERLINK "http://www.cboe.com/tradtool/virtualtrade.aspx" http://www.cboe.com/tradtool/virtualtrade...
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...The Banker Blueprint: The Last-Minute Guide to Breaking Into Investment Banking A Production http://breakingintowallstreet.com http://www.mergersandinquisitions.com http://breakingintowallstreet.com http://www.mergersandinquisitions.com Feel free to copy this report and send it to all your friends. Actually, scratch that – please copy this report and send it to all your friends. Forward it to as many people as possible. The more the merrier! Print it out, pass it around, and hand out copies to everyone you know. Just make sure you keep the names and logos on each page intact. Table of Contents Why I Wrote This Guide and What You’re Going to Learn ........................................................... 4 Reality Checks and Beaches in Thailand .......................................................................................... 4 Action Plan, Step 1: Plan Your Strategy ........................................................................................... 6 Your Strategy: Action Steps ........................................................................................................... 9 Action Plan, Step 2: Craft Your Story ............................................................................................. 10 Your Story: Action Steps .............................................................................................................. 14 Action Plan, Step 3: Network Like a Ninja .....................................................
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...INVESTING FOR RETIREMENT Principles of Investment April 10, 2013 Abstract This paper explores the strategies for saving for retirement. It also looks into the reasons for early savings, the various ways to develop a retirement portfolio, and how to fund and maintain a retirement portfolio. This paper examines the advantages and disadvantages to various investment strategies. A close look is taken at the stock market and how this type of investment can benefit an investor. It also explores the dangers of the stock market and other types of investment strategies. This paper also provides an in-depth view of why it is important to save for retirement. DEVELOPING A STRATEGY FOR INVESTING FOR RETIREMENT According to Wikipedia, An investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Usually the strategy will be designed around the investor's risk-return tradeoff: some investors will prefer to maximize expected returns by investing in risky assets, others will prefer to minimize risk, but most will select a strategy somewhere in between. (Wikipedia) The first step in my investment tactic is to define my goal. The second step will be to decide on an investment strategy. I will need to select the best way to put money into investments that have a solid track record. The third step will be to see how much I can afford to invest...
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...budget opportunities. This paper will discuss the most relevant techniques to utilize at Guillermo Furniture. The techniques implemented should utilize Time Value of Money (TVM) for larger investments and for small investments one can utilize a quick method for analysis of opportunity for investment purposes. The TVM is an explanation of the current value of a future dollar. “This concept recognizes that the present value of a dollar received in the future is less than a dollar. For example, you may be willing to pay only $0.90 today for a promise to receive $1.00 one year from today”. (Edmonds, Edmonds, Olds, McNair, Tsay, Schneider, 2007) This technique analysis the amount of money received in future payments and calculates the value of that money as if it were in hand today. Payback Method The Payback method does not take TVM into consideration; however, it can be utilized to evaluate fast turnaround investments. The payback method “shows how long it will take to recover the initial cash outflow (the cost) of an investment. The formula for computing the payback period, measured in years, is as follows”. (Edmonds, Edmonds, Olds, McNair, Tsay, Schneider, 2007) Payback period = Net cost of investment \Annual net cash inflow. This can be better illustrated by taking a $10,000 investment that...
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...one)/(Beginning price)=(P_1-P_0+D_1)/P_0 Dividend Yield: % return from dividends Expected Return and Standard Deviation E(r)=∑_s▒〖p_s r_s 〗 σ=√(∑_s▒〖p_s (r_s-E(r))〗^2 ) Expected end-of-year value of the investment =Dividend+Ending Price Arithmetic and Geometric Averages Arithmetic Mean (AM) =(∑▒HPR)/N Better predictor of future performance Geometric Mean (GM) = π(1+HPR) )^(1/N)-1 Better measure of past performance GM < AM Sharpe Ratio Sharpe Ratio for Portfolios =(Excess Return)/(SD of Excess Return)=(R_i-R_f)/(σ(R_i-R_f)) Measure the attraction of an investment portfolio by comparing its reward (risk premium) and risk (SD) Excess return per unit of risk Reward-to-variability (volatility) ratio Historical Returns on Risky Portfolios Asset classes that provide higher return are more risky Return: Small Stocks > Large Stocks > Bonds > Bills Risk: Small Stocks > Large Stocks > Bonds > Bills Risk Premium Extra reward (returns) for bearing the risk of investing in equities, rather than in low risk investments, such as bills or bonds Risk Premium=E(r)-r_f Asset Allocation: Four Step Process Step 1: Assessing Risk Tolerance Step 2: Measuring Portfolio Risk and Return Step 3: Modeling Investment Options Step 4: Optimal Asset Allocation Step 1: Assessing Risk Tolerance Dominated Assets Easy to remove from consideration Always choose higher risk premium, given the same SD Always choose lower SD, given the same risk premium Simple...
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...ressources - time pressure - brand equity damaged Option 2: expand 32 oz. nationwide PRO - higher gross profit margin - high market share - lower marketing investment as being niche product - nationwide coverage - possible first step for further expanding actions in the future CON - high slotting expenses - large investment in human ressources (sales forcé) - investment in distribution logistic - investment in manufacturing increase - possible conflicto with cannel partners Option 3: introducing children’s multipack in natural foods cannel PRO - high gross profitability - low investment in additional marketing and sales - enforce current distribution lines - excellent positioning for the new product - higher growing rates of this cannel - no additional functional ressources needed - reinforce brand equity CON - insufficient potential revenues - dependence on one channel - “missing the right moment” - increasing competition Recommendations: I would recommend option 3. Froma strategical point of view, the supermarket channel should be an objective. Having in mind that natural products are going to be increasingly relevant in supermarkets in the future, Natureview should profit from its top brand positioning and awareness to be present. But such a strategic step means enormous challenges in production, distribution and marketing...
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