Managerial Accounting Analysis of Concepts and Techniques

Managerial Accounting Analysis of Concepts and Techniques Managerial Accounting BUS 630 Managerial Accounting Analysis of Concepts and Techniques Introduction/Thesis Statement Managerial accounting is a concept used in businesses to manage internal systems. Understanding the importance of effective decision making, planning and control creates a foundation for value within the company on a more in depth level. Planning and controlling is measured by performance based on budgeting accounts. Understanding the concepts and techniques used in managerial accounting helps to insure functioning operations within each department and has the ability to create a completive edge. Competitively speaking, managerial accounting gives†¦show more content†¦Therefore, management decides it would be much more beneficial to be a citywide organization instead. Role of Managerial Accounting The role of managerial accounting serves many purposes such as financial reporting, budgets, forecasting, internal controls and management support. The accounting department also supports management in different business operations, providing analysis and support for different decisions and investments (Vitez, 2013). Management accountants work at the beginning of the accounting cycle, recording the financial transactions of a company as they occur (2013). This business role ensures that companies have a good understanding of their financial health, giving executive management the ability to make informed decisions. Companies use budgets to ensure that they do not spend more money on business operations than is necessary to generate profits (2013). Management accountants will prepare budgets for each department and then add them together to create one companywide budget. Tracking expenses that over exceeds the budgeted amount is an important step in the managerial process to insure the company is within the profit and loss guidelines. Capital improvements are also included in the budgeting process so businesses can plan on improving current facilities (2013). Forecasting is based on past information and is used to remove random variations within eachShow MoreRelatedAccounting753 Words   |  4 PagesCampbellsville University School of Business and Economics SYLLABUS Course Title: ACC 601 Managerial Accounting Semester/Dates: Graduate Term 1: August 29, 2011 – October 23, 2011 (Traditional MBA) Meetings: Thursday (6:00 PM – 10:00 PM), AD 25 Faculty: Dr. Sunny Onyiri Office: AD 29-b Phone: (502) 365 4424 Read MoreBUS 630 Final Paper1617 Words   |  7 PagesDecision Making with Managerial Accounting Managerial accounting is essential for decision making. Making the best choice depends on the managers goals, the anticipated results from each alternative, and the information available when the decision is made (Schneider, 2012). The different techniques associated with managerial accounting are very helpful in the decisions that need to be made. In order to truly understand decision making with managerial accounting one must first discern exactlyRead MoreOverview of Burns and Scapens Framework for Analyzing Managerial Accounting Change921 Words   |  4 PagesThe Burns and Scapens framework for analyzing managerial accounting change was built on the study of old institutional economics, which sees economics as a process of social provision, subject to multiple and cumulative causation. This view culminates in a model that argues that the managerial accounting practices at institutions are subject to a process of constant change, influenced by routines and rules. The institution s contribute to these routines and rules, but so do actions on the part ofRead MoreRole Of A Strategic Management Accounting Essay1317 Words   |  6 PagesGoddard 2008) investigating the role of strategic management accounting in an organizational setting? The role of strategic management accounting (SMA) is a relatively new concept especially within organizational settings (Juras, 2014). In addition to being new, it posits as an interesting field of study since existing literature evidences that conducting management accounting in relationship with strategy is problematic (Endraria, 2015). Accounting managers endure challenge of aligning functional activitiesRead MoreEssay about Role of Managerial Accounting1112 Words   |  5 PagesAccountants have been a necessary tool in all organizations such as individual companies, partnerships, schools and governments. 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A Patriot s History Thesis - 1758 Words

Daniel Giaime 10/27/2014 Part 1: The Introduction A Patriot’s History: Thesis Larry Schweikart believes despite the excessive racism, sexism, and bigotry throughout the history of the United States, when the story is told â€Å"fairly,† all that can be taken away is a sense of awe at the obstacles overcome, the blood split, and the nation built. Although corruption can be seen over the course of time, the freedom of the nation overcame all else and created a bright light of a society in a world of dark oppression. Schweikart emphasizes the idea that history is often taught from a single, biased perspective, clouding the true image of the American nation as it progressed over time. He also emphasizes the ideals of character, tied to liberty, tied to property, and how they were all necessary for success. More generally, Schweikart believes that throughout the history of the United States, it has proven time and time again to be a nation based on the principles of freedom and justice, exemplified through its actions in every aspect, such as the liberation of people’s and bringing them to a higher state of living, and the sharing of power with those who had none, no matter where they came from, or who they were. â€Å"All men are created equal†; the United states is the â€Å"last, best hope† of earth; and America â€Å"is great because it is good† all extend Schweikart’s basic ideals that the United States’ history, when viewed with the basic ideal of â€Å"the ends justify the means,† creates a storyShow MoreRelatedGeorge Orwell s Rhetoric Of Language And The Underlying Fascism852 Words   |  4 PagesGeorge Orwell’s thesis that words can and will be used as political tools is absolutely correct, because speech can be twisted and used as a weapon to obscure, change, or manipulate the true context or meaning behind a thought or action. 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Bill Proposal Free Essays

This bill will require all police stations to make sure all of thee r officers take a est. every year over information learned at police academy, including civil right TTS, state and local laws, incident reporting, crime investigation, constitutional law, and criminal p psychology. This bill will also require that if an officer makes below a 75% on the test, they will have to take classes in order to pass the test before they can resume work. We will write a custom essay sample on Bill Proposal or any similar topic only for you Order Now This bill will be implemented by the chief police officers of each station in the state. Also, there will be test ad ministration who create the test with the appropriate information listed above from the police academy. Police chiefs will require and make sure that all of their officers take the test and pas s, if they do not test the officers, the station will be fined $5,000 dollars. This bill will need funding for the test administrators. The funds will come from the money made from certain traffic c violations. It will be enforced by the head of each police station, they will require for their office errs to take the test and be rectified. The agencies involved in this bill include all of the police SST actions, police academies of the state, and the test administrators. The police stations will be responsible for giving the tests for recertification, and the test administrators will have to word k with the police academies in order to create the yearly tests. The reasoning behind this bill is to reinforce the important information police officers learn during training, so that they are ABA el to perform their job in an accurate manner. This bill will make the actions of police officers MO re trustworthy and reliable due to the fact that their knowledge is up to date and enforced. How to cite Bill Proposal, Papers

Marketing and Competitive Environment University of Adelaide

Question: Discuss about the Marketing and Competitive Environment of The University of Adelaide. Answer: Background The University of Adelaide is a public university of Australia. It is situated in Adelaide, South Australia. The university has been founded in 1874. The university mainly possesses five faculties, such as- faculty of engineering, computer and mathematical, faculty of medical and health care, the faculty of humanities, the faculty of professions and the faculty of science. It is considered as one of the leading university in the world and Australia. It is the third-oldest university of Australia. In 2010 the University of Adelaide has taken a notable initiative to make the university campus smoke free (Adelaide.edu.au, 2017). The University management has introduced a smoke free policy in the university campus to prevent the tendency of smoking among the students. The university management provides a safe and enthusiastic atmosphere to their students to encourage them. The management pays special attention to the extracurricular activities of the students. They have included many new policies into the university rule book to motivate their students to achieve their goal. There are many other public universities of Australia that are giving tough competition to the University of Adelaide. The management is implementing new marketing strategies to promote the name of the University. They have strengthened all the segments of marketing to attract a large number of students from all over the world. The below mentioned article has concentrated on the marketing segment of the University of Adelaide. It discusses about the competition that the university is facing and different marketing segments. Market summary and demand assessment Labour market in Australia is not flexible and unemployment of this economy is also moderately high (Bishop Plumb, 2016). As Australian government has taken several initiatives for reform in higher education since 2012, demand for enrolment in the universities has increased. Higher education sector revenue in Australia is expected to grow at 4.5% over the five years from 2016-17. Figure 1: University ranking of Australia (Source: jll.com.au, 2015) Government brought a reform in the education sector by allowing private universities in student enrolment for higher and tertiary education. Both private and public universities are operated by market driven demand policies, where student fees are unregulated. As access for higher education has been made easier, this market has become competitive by removing restrictions on operation. Major universities especially public universities in Australia operate within particular state territory. Therefore, it is difficult for the individual universities to acquire a large market share in the Australian economy. Demand for The University of Adelaide comes both from domestic and international economy for different undergraduate and post graduate courses (australianuniversities.com.au, 2017). Segment and target market Market for higher education is segmented by The University of Adelaide according to the degree and study areas such as undergraduate and post graduate courses. There are separate department for different category of subjects such as humanities, science, music, and nursing. Market is also segment based on time of availing education such as part time, full time, on- campus and off campus study. Figure 2: Statistics of The University of Adelaide (Source: australianuniversities.com.au, 2017) As seen in figure 1, online enrolment percentage in this University is very low compared to offline students. In order to put itself in the competitive position in the international market, this university has to draw more foreign students to enrol in this university. Greater entrance of foreign students can make the revenue stream stronger. It is also seen that female enrolment is less in this university compared to the male student (Ibisworld.com.au, 2017). Therefore, the target group for this University is the online students and female students of Australia. Enrolment of female students at the undergraduate level is main focus group. Current marketing mix analyses This report focuses on the 4 Ps of marketing mix such as product, price, promotion and place. Main products offered by The University of Adelaide are bachelor degree, other technical and non technical undergraduate programme, Masters degree, postgraduate degrees in various subjects of different streams and other educational courses. Research based studies are also offered by this University. Currently, this University charges annual tuition fees AUD$29,900, annual post graduate tuition fees AUD$30,520 (australianuniversities.com.au 2017). On the other hand, international students have to pay Biz fees $83,600, Arts fees $73,500 and Science fees $87,700, which is higher than the domestic students. International student has to pay full amount of the tuition fees. As a current marketing strategy, The University of Adelaide uses online marketing platform in order to draw greater number of the international students. A greater number of students come to study Australia from China. Improvement of online platform for study is the main focus for the University. The University of Adelaide has four campus in Australia, North Terrace, Rose worthy campus, Waite campus and Thebarton Campus (Adelaide.edu.au, 2017). All the campus has convenience for transport and all the facilities available in big cities. PEST Analysis: Political/ Legal Factors: Political and legal factors refer to rules, law and regulations. Although, this rules and regulations help the organization to run successfully, sometimes the rise of the pressure groups influences the law and regulations. It can be harmful for the growth of the university (Ran et al., 2014). Environmental Factors: In this modern era, pollution rate is growing high day by day. High greenhouse gas emission, increment of air, land and water pollution can be harmful for the organizational management to run their organization successfully as high rate of pollution can cause health hazards for the students and faculty members. Social Factors: Every organization highly requires the support from the society and people around the organization. University management may face difficulties to run their organization successfully if there is a difference between the social belief and organizational belief. Technological Factors: Emergence of new technologies has made the life of human easier, but the innovation of mobile phone, laptops, internet and other gadgets has shifted the focus of students from the conventional way of study (Forsyth, 2014). Now days, people especially the youth are very much fond of mobile, laptops and other electronic gadgets. It has become easier for the students to download the study material directly from the internet. They are losing their interest in books and physical study materials. This is one of the biggest threats for the management of University of Adelaide. Competitor Analysis: University of Adelaide is facing challenges due to rise of other public universities like Monash University. Although University of Adelaide is considered as the largest university of Australia and possesses a large number of students, Monash University also has students around 62,567. This university has spread their network in all over the world like University of Adelaide. Monash University consists of 21,953 foreign students. Monash University is quite popular among the international students for its international research reputation and efficient professional courses. The management of Adelaide University is facing difficulties due to the growth Monash University. Monash is giving tough competition to University of Adelaide by providing attractive courses to their students (Frusher et al., 2014). SWOT Analysis: Figure 3- SWOT Analysis (Source: Created by: Author) Strength: University of Adelaide is known for being a leading and oldest university in Australia. It preserves a rich culture that attracts the students from all over the world. It has one of the most experienced and talented faculties (Vivian et al., 2014). Weakness: Being one of the oldest universities in the World, the University of Adelaide is mainly based on conventional study method. It is considered as one of the major weak point of this renowned university. In recent time, the students mostly prefer modern and innovative way of study (Mehan, 2016). Opportunity: As it is one of the renowned universities in all over the world, it is quite famous among the international students and the university provide healthy atmosphere to its student to motivate their creativity. The university management has taken some innovative initiatives like smoke free policy to provide healthy environment to the student for study. It attracts the students from all over the world. Threats: The emergence of other public university is one of the biggest threats for the management of Adelaide University. They are facing various obstacles due to the rise of Monash University, University of New South Wales and other public university of Australia (Pinto et al., 2014). Value and brand positioning analysis While formulating brand value positioning, The University of Adelaide need to focus on academic integrity that are linked with higher education, greater employment opportunity, positive experience during vocational training, offering business friendly courses (go8.edu.au, 2014). These strategies can bring competitive advantage for the University both in the domestic and international market. Ranking of this university is at the lower level compared to other top public Universities. Therefore, gender focus may be given priority to enhance brand value of this University. Conclusion The report has analysed marketing characteristics of The University of Adelaide. This University holds 100th position among the QS World University Rankings 2014 / 2015. The education industry in Australia is competitive with presence of both public and private universities and other higher secondary Institutions. In order to increase student enrolment and increase in profit, marketing can facilitate this University by increasing brand value. The figure of current market and competitive environment has been highlighted, which is helpful for formulating marketing strategy effectively. References Adelaide.edu.au. (2017). About the Uni | About the University of Adelaide. Retrieved 14 April 2017, from https://www.adelaide.edu.au/about/ Australianuniversities.com.au. (2017). University of Adelaide ADELAIDE | AustralianUniversities.com.au. Retrieved 14 April 2017, from: https://www.australianuniversities.com.au/profiles/university-of-adelaide-adelaide.html Bishop, J. Plumb, M., (2016). Cyclical Labour Market Adjustment in Australia.RBA Bulletin, March, pp.11-20. Forsyth, H., (2014).A history of the modern Australian university. NewSouth. Frusher, S.D., Hobday, A.J., Jennings, S.M., Creighton, C., DSilva, D., Haward, M., Holbrook, N.J., Nursey-Bray, M., Pecl, G.T. van Putten, E.I., (2014). The short history of research in a marine climate change hotspot: from anecdote to adaptation in south-east Australia.Reviews in Fish Biology and Fisheries,24(2), pp.593-611. go8.edu.au. (2014). Policy Note Labour market demand for university graduates. Retrieved 14 April 2017, from: https://go8.edu.au/sites/default/files/docs/publications/labour_market_demand_for_university_graduates.pdf. Ibisworld.com.au. (2017). University and Other Higher Education in Australia Market Research | IBISWorld. Retrieved 14 April 2017, from: https://www.ibisworld.com.au/industry-trends/market-research-reports/education-training/university-other-higher-education.html. jll.com.au. (2015). Australian Student Accommodation Market Update 2015. Retrieved 14 April 2017, from https://www.jll.com.au/australia/en-au/Research/jll-australian-student-accommodation-market-update-2015.pdf Mehan, A., (2016). Public squares and their potential for social interactions: a case study of historical public squares in Tehran. Inproceeding of world academy of science, engineering and technology (Vol. 10, No. 2, pp. 544-549). International Scholarly and Scientific Research Innovation. Pinto, M., Garca-Marco, J., Granell, X. Sales, D., (2014). Assessing information competences of translation and interpreting trainees: A study of proficiency at Spanish universities using the InfoliTrans Test.Aslib Journal of Information Management,66(1), pp.77-95. Ran, J., Zhang, J., Yu, J., Jaroniec, M. Qiao, S.Z., (2014). Earth-abundant cocatalysts for semiconductor-based photocatalytic water splitting.Chemical Society Reviews,43(22), pp.7787-7812. Vivian, R., Barnes, A., Geer, R. Wood, D., (2014). The academic journey of university students on Facebook: an analysis of informal academic-related activity over a semester.Research in Learning Technology,22.

Is Google Making Us Stupid Essay Example

Is Google Making Us Stupid? Paper â€Å"Is Google Making Us Stupid? † ?In the article, â€Å"Is Google Making Us Stupid† in the magazine The Atlantic, the author, Nicholas Carr, recounts his difficulties with concentration while reading lengthy articles and books. Carr claims that these difficulties may be caused by an increase in the time he spends on the internet. His principle argument is that the internet provides us with a means of rapidly accessing information that we are searching for and this causes our minds to be used to obtaining information in such a swift manner – this is proof that, contrary to his opinion, Google is making us smart. The internet, as Carr agrees, is a time-saving tool. Carr says: â€Å"Research that once required days in the stacks or periodical rooms of libraries can now be done in minutes. † In today’s world, people simply do not have the time to spend hours or maybe even days in a library sifting through mountains of books and articles to find a sin gle piece of information that is actually pertinent to what they are searching for if they can even find it. What Google does is grant universal access to thousands of resources including books, articles, encyclopedias, and hundreds of other types of media at the click of a mouse. The ability to access such a vast amount of information in such a prompt manner provides us with the time to discover even more information and deepen our knowledge of the subject much further that what could simply be a line or two in a book. ?Some may argue that Google does not make us stupid, but rather lazy. They claim that instead of having the initiative to delve through the reading, society would rather take the â€Å"easy† way and just use the Internet. This is an invalid argument. The internet is simply a highway of information that provides us rapid access, increased efficiency, and better quality of information. Is Google making us stupid? No, Google is making us smarter and provides us with a means to â€Å"work smarter, not harder. † ? ? We will write a custom essay sample on Is Google Making Us Stupid? specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Is Google Making Us Stupid? specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Is Google Making Us Stupid? specifically for you FOR ONLY $16.38 $13.9/page Hire Writer

Corporate finance and Volatility

Corporate finance and Volatility Introduction Stocks’ beta expresses how much the stock prices may change as a result of changes in the financial market prices. A stocks beta of 1.06 indicates that for a 1% change in general market prices, the price of the particular stock will change by 1.06%. Such a stock price is considered to be less volatile.Advertising We will write a custom assessment sample on Corporate finance and Volatility specifically for you for only $16.05 $11/page Learn More Assets’ beta is the average of the different sources of finance that a firm chooses. The assets’ beta for a company that has been financed without debts is equal to equity’s beta. Weighted cost of capital represents the least amount of return that an investment can offer stakeholders. When the expected rate of return from a project is lower than WACC, it is considered unviable. Managers may consider those that break-even because of the economic level of returns. However, a proj ect must have a higher rate of return than WACC before wealth is created for holders of securities. A majority of firms uses debts to finance growth rather than wait for the profits. Fabozzi et al. (2008, p. 507) discuss that when a firm has no debt, â€Å"the beta of its equity is the same as its assets’ beta.† They also note that it is very rare for a company to operate without incurring some debts. Using debts makes a company’s equity riskier. Fabozzi et al. (2008, p. 507) explain that financial leverage causes â€Å"the market risk of a company’s stock to be higher than its asset’s risk.† In that case, equity’s beta exceeds assets’ beta. When the firms choose to fund assets by a combination of equity and debts, the risk involved is shared between the two groups of stakeholders. Fabozzi et al. (2008, p. 508) discuss that the â€Å"asset market risk is the weighted average of the company’s debt beta and equity beta be cause the asset’s risk is shared between creditors and owners.† In simple terms, the asset beta = debts beta (fraction of assets from debts) + equity beta (fraction of assets from equity). The equation of assets’ beta average is true because the variations from equity’s and stocks’ betas are correlated. The effect on one source of capital influences the chance of the other sources volatility.  Corporate taxable income is generated after deductions of interest paid on loans. The effect reduces what a firm pays as tax which makes their burden less. On the other hand, interest received by creditors is taxed after it is paid to them.Advertising Looking for assessment on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More As a result of interest on debt being deductible, debts beta in most cases is assumed to be negligible.  WACC is used to â€Å"evaluate the impact of debt-financin g on risk and returns to investments† (Geltner et al. 2010, p. 307). Leverage is a term used to describe the common practice used by firms to fund their projects from debts, and equity. The WACC is derived from the formula of basic holding period return (HPR). The formula expresses assets as a sum of debts and equities. It also equates property cash flow to the sum of debt cash flow and equity cash flow. The returns received are shared by holders, and creditors. It is derived from the returns to capital generated by the firm. WACC represents the least rate of return on a project that evaluators consider before allowing a business plan to be implemented. The formula for WACC as presented by Hawawini Viallet (2011, p. 410) is shown below. In this case, kE represents cost of equity and kD is the cost of debt before taxation. Bierman (p. 195) discusses that WACC can be interpreted as â€Å"the cost of both current capital and an additional dollar of new capital if the existing capital structure is maintained†. The existing capital structure refers to the percentage of debt and securities that have been used to finance a project. Debts tend to reduce WACC because of tax deductions. As it can be seen in the formula â€Å"1 – tax rate† has a lesser effect on WACC compared to equity when the cost of capital is considered equal for both equities.  WACC includes returns to creditors and shareholders. Baker and Martin discuss that WACC is the â€Å"cost of raising funds to the firm† (2011, p. 192). On the other hand, it is the rate of return that investors consider before lending a firm. Creditors receive interest on money owed to them. Shareholders expect dividends, and gains in market value. The gains in market value are only possible if the firm chooses growth opportunities with higher rates of return than WACC. A firm can only add value to its capital after exceeding the rate of return owed to investors. The investors evaluate th e firm’s strategy, opportunities of growth, and risk.Advertising We will write a custom assessment sample on Corporate finance and Volatility specifically for you for only $16.05 $11/page Learn More When a business opportunity promises slow growth, investors consider it as a high risk investment. Slow growth reduces a firm’s ability to repay its debts. For this reason, investors may require higher interest rates which may make a project unviable. The rate of return expected by investors also depends on what other financial assets receive as returns. Firms choose to finance their assets with a mixture of debt, preference shares and common equity. They choose a mixture that optimizes the price of their stock. Besley and Brigham (2009, p. 485) discuss that WACC â€Å"represents the minimum return the firm must earn on its investments to maintain its current level of wealth†. Besley and Brigham (2009) provide the formula below for calculati ng WACC. The WACC of most companies represents the average cost of its capital. Lumby and Jones discuss that the WACC of most companies may not be used to rate individual projects because most companies have their investments diversified (2003, p. 427). The WACC in most cases reflects the â€Å"average level of systematic risk throughout all its operations† (Lumby and Jones 2003, p. 427). Companies consider diversification as a means of reducing risk. The volatility of an individual project carried out by a company is unlikely to be represented by WACC because most companies calculate the overall value. The returns expected from different securities vary. Different capital sources carry different weights. Lumby and Jones (2003, p. 748) explain that â€Å"changing a firm’s capital structure changes its WACC†. Debts are an obligation. They are considered before financial assets. Dividends and other benefits are paid to preference shares before common shares.Adver tising Looking for assessment on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Importance of WACC A higher WACC will require that the performance must be higher before generating wealth for stakeholders. Megginson Smart discuss that firms use WACC to value the amount of effort needed before the firm can actually generate returns for shareholders (2010, p. 420). The firm’s market value declines if its WACC increases as a result of factors that the firm cannot control. Megginson Smart discuss that when a firm’s WACC is increased by an event it cannot address â€Å"its existing assets and its prospective investment opportunities become less valuable† (2010, p. 420). Such an effect can be expressed through a drop its market value. Such investments may go for a long period without dividends. Calculating the cost of capital Cost of capital involves what investors are willing to receive regularly as a result offering finances. Benninga Czaczkles discuss that the present value of stock can be obtained from the discounted annuity values using an ticipated growth in dividend streams (2000, p. 28). They give an example in which the expected growth of dividends is 10%. The following year, the dividend received on each share is $3. The present value of each share (Po) can be expressed as shown below. In this case, rE is the cost of equity/discount rate. D1 is used to represent the expected dividend, and g to represent the expected dividend growth rate. According to Benninga Czaczkes (2000, p. 29), the formula is summarized as shown below. This formula holds only for firms with normal growth. This is the Leonhard Euler derivation. For supernormal growth where g rE, the Gordon Model is applied. The formula for the Gordon Model which has been discounted over five years can be expressed as shown below. According to Benninga Czaczkes (2000, p. 31), the cost of equity under Gordon Model is expressed as shown below. Considering that anticipated dividends can be expressed in terms of the dividends received in the current year (Do ). The formula for the cost of equity is expressed as shown below. In the classic SML (Security Market Line) model, the formula for calculating the cost of equity is expressed as shown below (Benninga Czaczkes 2000, p. 35). In this case, rf represents the rate at which investment is considered safe, and E(rM) represents the interest rates that the financial market are expected to generate. The risk-free rate of return is reflected in financial assets with the least amount of risk such as interest rates on securities issued by government (Bennninga Czaczkes 2000). Treasury bills are considered risk-free indicators because governments are unlikely to default. When the expression is adjusted to integrate corporate tax, the expression becomes as shown below (Benninga Czackles 2000, p. 36). TC is the corporate tax rate. The cost of newly issued stock is expressed as shown below (Calculating the Cost of Capital n.d., p. 3). The cost of retained earnings is expressed below using ris k-free rate, market expected rate, and stocks beta (Calculating Cost of Capital n.d, p. 2). using the discounted cash flow approach. Cost of debt The cost of debt has different approaches. Benninga Czaczkes (2000) discuss that the cost of debt can be estimated using a firm’s existing average cost of debt even though it is not an accurate measure. The cost of debt is expressed as shown below (Calculating Cost of Capital n.d., P. 1). rd is the rate of return expected by investors to be paid on debts. Cost of preference capital Preference capital is associated with preference shares. Debts reduce the amount of corporate tax that a firm is entitled to pay. Khan Jain (2007) discuss that preference share differs from debts because payments on preference shares are made after tax deductions. Some preference shares are redeemable at maturity while others do not have a fixed maturity date. Both types receive annual fixed rates of return. Khan Jain (2007, p. 11.10) express the co st of irredeemable shares in two expressions as shown below. In this case, kp represents cost of preference capital, Dp is the fixed dividend, Po is the expected preference share price, f is the floatation costs expressed as a percentage of share price, and Dt is the tax rate on preference shares dividend. Preference shares that have a maturity date and a stream of earnings are discounted to a present value. Khan Jain (2007, p. 11.10) express that the cost of preference shares with a maturity date â€Å"is the discount rate that equates the net proceeds of sale of preference shares with the NPV of future dividends and principal repayments†. This means that capital gains that an individual obtains today from sales are compared to the gains of holding the preference shares to maturity. The cost of preference shares with a maturity date is expressed as shown below. Po represents share price, f is the flotation cost expressed as a percentage of share price, Dp is for dividend, and Pn is the amount paid at maturity. Kumar (2010) gives a more simplified formula for the cost of redeemable share capital as shown below. D represents dividends, M.V is the value on maturity, N.P is the net streams gains received on preference shares, n is the number of years. Using the average cost of 25% tax, the asset beta can be calculated using the formula below. The asset beta is expressed as: asset beta= Equity beta/ (1 + (1 – tax) D/E) (Asset Beta n.d.). D is the percentage of financing received from debts, and E from Equity. Asset beta = 1.06/ (1+ (1 – 0.25) 0.35/0.65)) = 0.755 However, since the tax rate is still unknown, the cost of equity can be estimated using stocks’ beta and market rate of return. The WACC is then used to express the volatility of expected returns. From this formula equity beta can be generated as follows: cost of equity = risk free rate of return + beta (market rate of return – risk free rate) Cost of equity = 0.0395 + 1.06 (0.0601 – 0.0395) = 0.061336 KE is the cost of equity and KD is the cost of debt before taxation The value of Equity/ total capital can be expressed as: Equity = 45/60 * 100% = 0.75 The value of debt as a fraction of the total capital is represented as: Debt = 15/60 * 100% = 0.25 WACC = (0.75 * 0.061336) + (0.25 * 0.0485) = 0.046002 + 0.012125 = 0.058127 This is approximately 0.058. The WACC estimates the least returns expected from investments. It influences the volatility of stock prices. From the expression in the question: This indicates that the assets’ beta can be calculated from the sum of the product various sources of capital and their beta. Asset beta = (0.75 * 1.06) + (0.25 * 0.058) = 0.795 + 0.0145 = 0.8095 Asset beta = 0.8095 The volatility of the stock market is derived from the asset beta. A value of less than 1 indicates that the assets are less volatile. b) The same formula is applied to calculate the asset value of Coral Gambles’ Asse t beta by first calculating the WACC. This is used as an estimate of the debt beta. From, the explanations above, the debt beta is always close to zero. WACC = (0.65 * 0.061336) + (0.35 * 0.0545) = 0.0398684 + 0.019075 = 0.0589434 WACC value of 5.9% (0.0589) indicates that an additional unit of capital may cost the firm 5.9% interest. The firm must invest in projects that generate above the 6% rate of return for shareholders to get capital gains. Asset beta = (0.65 * 1.06) + (0.35 * 0.059) = 0.689 + 0.02065 = 0.691 According to Bragg (2012, p. 142), the cost of common stock is â€Å"risk-free return rate + beta (average stock return – risk free return†. From this formula, it can be derived that stock beta = (cost of stock – risk-free rate) / (expected market return – risk-free rate) Cost of stock = 0.0395 + 0.691 (0.0601 – 0.0395) = 0.054 Coral Gambles’ Stocks beta = (0.054 – 0.0395) / (0.0601 – 0.0395) = 0.0145/ 0.0206 = 0.703 9 The common stock’s beta indicates the value by which the firm’s stock price changes as a result of variations in the general stock prices. A value of 0.7039 indicates that when the market value changes by 1%, the stock price of Coral Gambles varies by 0.7%. This shows that Coral Gamble stock price is less volatile that the overall market prices. WACC = (0.65 * 0.0601) + (0.35 * 0.0545 (1 – 0.25)) = 0.039065 + 0.0143 = 0.053365 From this calculation, it can be interpreted that investments must generate above the 5% rate of return for the project to add value to shareholders. The least acceptable cost of capital is 5%. This is the point where the firm operates at break-even. Conclusion The market stock’s beta of the similar company is more volatile than Coral Gamble stocks or the general market price. Coral Gamble stock price is less volatile than the average market prices. The WACC for both companies indicate that the CFO needs to search for growth oppo rtunities that generate more than 6% rate of return. Investors may consider interest rates that are close to 5%. The price (Po) generated in the calculation of share price is the discounted value of the current share price, and expected income streams. The income streams are paid to shareholders as yield per share or dividends. The assets’ beta indicates less volatility than stocks’ beta. However, the stock’s beta generates its volatility from assets’ beta. The Coral Gamble assets’ beta indicates that the firms assets are more stable than shifts in market prices, and interest rates. The asset beta has been calculated as a sum of the impact caused by the volatilities of different sources of capital. It can also be calculated from the equity beta, ratio of debts to equity, and tax rate. Equity beta is the beta quoted by financial reports as stock price volatility. Assets’ beta is equal to equity in situations where a firm has not used debts to finance its assets. The impact of debts’ beta on asset beta is reduced by the fact that it reduces corporate tax. Reference List Asset Beta n.d. Web. Baker, H, Martin, G 2011, Capital Structure and Corporate Financing Decisions: Theory, Evidence, and Practice, John Wiley Sons, Hoboken. Benninga, S, Czaczkes, B 2000, Financial Modeling, Massachusetts Institute of Technology, Cambridge. Besley, S, Brigham, E 2009, Principles of Finance, South-Western Cengage Learning, Mason. Bierman, H 2010, An Introduction to Accounting and Mangerial Finance: A Merger of Equals, World Scientific Publishing, London. Bragg, S 2012, Business Ratios and Formulas: A Comprehensive Guide, John Wiley Sons, Hoboken. Calculating the Cost of Capital n.d. Web. Fabozzi, J. F, Drake, P. P, Polimeni, S. R 2008, The Complete CFO Handbook: From Accounting to Accountability, John Wiley Sons, Hoboken. Geltner, D, Miller, N, Clayton, J Eichholtz, P 2010, Commercial Real Estate Analysis Investments, Ceng age Learning, Mason. Hawawini G, Viallet, C 2011, Finance for Executives: Managing for Value Creation, South-Western Cengage Learning, Mason. Khan, M, Jain, P 2007, Financial management, Tata McGraw-Hill, New Delhi. Kumar, V 2010, Cost of Preference Share Capital. Web. Lumby, S, Jones, C 2003, Corporate Finance: Theory and Practice, South-Western Cengage Learning, Mason. Megginson, W, Smart, S 2010, Introduction to Corporate Finance, South-Western Cengage Learning, Mason.

Impacts of the technology on one's future Essay Example | Topics and Well Written Essays - 750 words

Impacts of the technology on one's future - Essay Example Impacts of the technology on my future as a leader This paper reviews my developed knowledge about contemporary technology and the benefits of the knowledge to my future as a leader, an advocate, and a scholar in specialized education. The scope of information technology that allows for communication among parties at remote sites, and facilitates retrieval of information, has significant contribution in educational and home set ups. In academic environments, for instance, both students and teachers derive benefits from application of the new technologies. Students have for example been captivated into the technology and are explorative of its applications such as analytics and networking, a factor that has developed new learning approaches among students through new fashions in technological usage. The new technology has also promoted practical application of students’ developed knowledge. Ability to work in teams, self-reliance, and development of analytical skills are other benefits that students derive from the contemporary state of technology. The technology has also empowered teachers to make adequate preparations for their classes and to make the classes effective. It also facilitates teachers’ coaching ability and analytical potentials (Hussain and Safdar, 2008). The twenty first century technology has also empowered me to efficient and effective future advocacy. This is because I have learnt of the technology’s potential role in developing useful information towards change, and disseminating developed information to target populations to effect the desired change. While retrieval and analysis of information through the technology develops bases for advocacy, the technology’s communication applications such as the social media facilitate activism to ensure