Fin100 Week 4 Assignment 1
WEEK 4 ASSIGNMENT 1
“ASSIGNMENT #1”
BY:
INSTRUCTOR:
FIN100
PRINCIPLES OF FINANCE
10-30-2011
The financial manager of every business is faced with many tough decisions in today’s economy. These decisions involve making choices that will affect the financial welfare of their company and shareholders. Many managers find market prices to be most useful as a means of measuring the value of the options they may be considering for investing or choosing projects and how to pay for them in a competitive market.
Let me explain by first telling you what a market price is. A market price is the current price at which an asset or service can be bought or sold according to Investopedia Financial Dictionary online. So a market price …show more content…
The Net Present Value does so by examining the ins and outs of cash flows at a discount rate. If those inflows are greater than the outflows (or positive NPV) the investment option should be taken. Cost-benefit analysis looks at the projected returns less the projected cost of the entire project with the consideration of the time value of money.
An interest rate is the cost of borrowing money. It is the cost of using money today that you will pay back later. Most of us could not buy a house without a loan or mortgage. Interest rates are based on risk. The less likely you are to repay the money the higher the risk and the higher the interest rate you will pay. Banks would have no incentive to lend money if they did not receive payment in the form of interest for lending to their borrower’s, therefore an interest rate is just a …show more content…
Government. Since these entities are so large, they need to borrow the money from more than one person or bank.“
(http://useconomy.about.com/od/themarkets/f/Bond_Market.htm) Bonds are used to finance things like roads and bridges and schools. Bonds pay interest, just like loans, some by coupons and some only at maturity. Bonds have a fixed interest rate or payment, and tend to be more attractive when the economy, and the stock market decline. Investors are not as interested in bonds when the economy and the stock market are doing well, and the value in bonds declines.
Being a good financial manager requires a great deal of focus and
“ASSIGNMENT #1”
BY:
INSTRUCTOR:
FIN100
PRINCIPLES OF FINANCE
10-30-2011
The financial manager of every business is faced with many tough decisions in today’s economy. These decisions involve making choices that will affect the financial welfare of their company and shareholders. Many managers find market prices to be most useful as a means of measuring the value of the options they may be considering for investing or choosing projects and how to pay for them in a competitive market.
Let me explain by first telling you what a market price is. A market price is the current price at which an asset or service can be bought or sold according to Investopedia Financial Dictionary online. So a market price …show more content…
The Net Present Value does so by examining the ins and outs of cash flows at a discount rate. If those inflows are greater than the outflows (or positive NPV) the investment option should be taken. Cost-benefit analysis looks at the projected returns less the projected cost of the entire project with the consideration of the time value of money.
An interest rate is the cost of borrowing money. It is the cost of using money today that you will pay back later. Most of us could not buy a house without a loan or mortgage. Interest rates are based on risk. The less likely you are to repay the money the higher the risk and the higher the interest rate you will pay. Banks would have no incentive to lend money if they did not receive payment in the form of interest for lending to their borrower’s, therefore an interest rate is just a …show more content…
Government. Since these entities are so large, they need to borrow the money from more than one person or bank.“
(http://useconomy.about.com/od/themarkets/f/Bond_Market.htm) Bonds are used to finance things like roads and bridges and schools. Bonds pay interest, just like loans, some by coupons and some only at maturity. Bonds have a fixed interest rate or payment, and tend to be more attractive when the economy, and the stock market decline. Investors are not as interested in bonds when the economy and the stock market are doing well, and the value in bonds declines.
Being a good financial manager requires a great deal of focus and