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  • Week 3

    • Dear Students, 
      Lesson 5 is available for your study in PDF and here in Video format.
      Hoping that the course goes smooth, and that you are preparing for the weeks ahead.
      Kind Regards,
      Prof. Belkis M Reyes-Fernandez

    • https://businessleadershiptoday.com/what-is-a-sustainable-business-strategy/#:~:text=A%20sustainable%20business%20strategy%20is,of%20conserving%20and%20protecting%20resources.

    • Get together to work in groups of two, and do some research about AMAZON.COM, INC long term strategy in financial planning, and their sustainable growth success case.

      Prepare to address the case by critically answer by analyzing their business success - Please relate the findings only to the topics and themes covered in Lesson 5. For example: 

      News: https://www.forbes.com/sites/greatspeculations/2021/08/13/amazons-stock-to-rise-as[1]growth-continues/?sh=268b29de4788

      Understand where the funding comes, and how sustainable the business growth has been. Present the article/news and a summary of your findings in a short briefing VLE – 1 paragraph


    • Here Video Lesson 6

    • Ross, S. et al. (2019). Essentials of Corporate Finance (10th ed.) McGraw-Hill Education. Ch.4 p.87-105 and p.120- 121 Brealey, R., Myers, S., Allen, F. (2019). 


      Principles of Corporate Finance (13th ed.). McGraw-Hill Education. Ch. 2 p.20-28


    • Here the recording
    • There are few capital budgeting or investment decisions cases in the lesson that required using the topics covered in the lesson, and most of them include the decisions from the CFO point of view.

      Please review them and compute them based in the information provided. Show calculations and rationale in VLE for credit in a short and brief statement 

      1.    The business you invest 100,000 in a bank account that pays interest of r=7% a year. Compute the value of the business investment in Y1 and Y2

      2.    As a CFO, your business you want to know how much the business have to invest today in a bank account that pays interest of r=7% a year to receive 114,490 at the end of the second year (the present value (PV) of the 114,490 payoff?)

      3.    Company A Ltd wanted to know their net present value of cash flow if they invest $100,000 today, their initial investment in the project is $80,000 for the 3 years of time, and they are expecting the rate of return is 10 % yearly. Calculate the NPV using the formula NPV = Cash Flows /(1+ r)t – Initial Investment

      4.    Present Value of an investment opportunity:

      NapoPizza Ltd is contemplating construction of a warehouse. The total cost of buying the land and constructing the facility is 370,000, and according to your real estate advisor, and due to warehouse space demand for that year, NapoPizza Ltd owners will be able to sell the fully built warehouse for 420,000 in one year. The rate of interest on EU r* =5% per year (discount rate or opportunity cost of capital). Compute the present value or market price of the warehouse, and if the business should invest in the project. Investors believe the warehouse project is as risky as investment in the stock market and that stocks offer a 12% expected return (12% is the opportunity cost of capital – they are giving up by investing in the warehouse and not investing in equally risky securities (tip recalculating NPV with r = 12%)

      5.    Nico Rey is trying to sell an office building in Florida, and yesterday Many Fer offered $10,000 for the property. He was about ready to accept the offer when Benny Bo offered him $11,424. However, the second offer was to be paid a year from now. Which offer should Nico choose? The bank’s insured rate for deposits is 12%. Option 1 $10,000 from Manny Fer Option 2 $11,414 from Benny Bo.

      6.    The ABC Kitchen Company is contemplating investing €1 million in four new stores in Boston. Carol R, the firm’s chief financial officer (CFO), has estimated that the investments will pay out cash flows of € 200,000 per year for nine years and zero thereafter - The cash flows will occur at the end of each year and there will be no cash flow after year 9 – Mrs. R has determined that the prudent and appropriate discount rate for this investment is 15% - this is the rate of return that the firm can earn at comparable projects. Should the ABC Kitchen Company make the investments in the new stores?


    • Formative Assessment: Group Report

      This is a group assessment - teams of 2-3 students. The group will be preparing partial deliveries of the summative assessment 2 by selecting of a Large-Cap publicly traded Global Corporation of the group interest.

      Formative Submission Deliverable 1: Submission of the group report to receive feedback in the criteria’s 1 and criteria 2. OMIT sections a and b (will be covered later in the course)

      1. Executive summary of the report and introduction to the company

      2. Using the business annual report, critically assess the business financial performance by comparing the last two financial years. It would be beneficial for the research if the group discusses some of the recent events that shaped the business financial situation.  

       

      Prepare a 150-word report - Way of submission individually in VLE