Finance, Part 2
This week, you will continue building your knowledge and skills in financial management. We will examine cash flow, risk, and capital budgeting.
After completing this lesson, you should be able to:
- Describe how a firm calculates the rate of return
- Explain how depreciation, sunk costs, and cannibalization affect estimating cash flows
- Identify the three main sources of capital
- Analyze a project’s estimated cash flows
- Describe a Modified WACC and how to get the best WACC
- Describe the break-even formula (BEP)
- Explain the relationship between risk and return
Professor's Notes
Risk and Capital Budgeting
Now we will identify how a firm's required rate of return on capital budgeting projects is calculated.
Note:
If you are experiencing issues with the video player, please use your personal computer to download the media file from the Download Media section of this course.
Read Textbook
BUS 5602: Essentials of Business Development 2
Introduction to Corporate Finance
- Chapter 7: Risk, Return and the Capital Asset Pricing Model
- Chapter 10: Risk and Capital Budgeting
Read Case
“HBS Hansson Private Label, Inc."
Use the Harvard Business Case, “HBS Hansson Private Label, Inc.” as the basis for answering the following questions:
- Using assumptions made by EVP of Manufacturing Robert Gates, estimate the project’s FCFs.
- Are Gates’ projections realistic? If not, what changes would you suggest?
Post your replies to this week's discussion board
Due Sunday, 11:59 PM, ET
Suggested Practice Problems
- Chapter 7 Problems 7-4, 7-8, 7-11, 7-20, 7-21, 7-22, and 7-23
- Chapter 10 Problems 10-2, 10-5, 10-6, 10-9, and 10-10
Practice Quiz
- Untimed and ungraded quiz. For practice only.
- 16 multiple choice
Quiz 1
- Multiple choice
- 20 questions
- 100 minute time limit
- Due Sunday, 11:59 PM, ET