Assessment 2 evaluation of capital projects 5014

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Use the resources linked below to help complete this assessment.

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Time Value of Money and Calculations

The following resources may be useful in learning about time value of money (TVM) and how to calculate TVM in Excel:

Discounted Cash Flow Valuation

  • Seeking Alpha. (2016, March 28). Does Warren Buffett use discounted cash flow? https://seekingalpha.com/instablog/5969741-the-value-pendulum/4868716-warren-buffett-use-discounted-cash-flow
  • Ross, S. A., Westerfield, R. W., Jaffe, J. F., & Jordan, B. D. (2021). Corporate finance: Core principles and applications (6th ed.). McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link.
    • Chapter 4, “Discounted Cash Flow Valuation,” pages 82-128.

Impacts to Common Stock Prices

  • Ross, S. A., Westerfield, R. W., Jaffe, J. F., & Jordan, B. D. (2021). Corporate finance: Core principles and applications (6th ed.). McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link.
    • Chapter 6, “Stock Valuation,” pages 164-193. Find out how the valuation of these securities determines the ultimate value of the entire enterprise.
  • Edspira. (n.d.). Capital stock (common stock and preferred stock) [Video] | Transcript https://www.youtube.com/watch?v=TZ2uWgtQXBo
  • TheFinCoach. (2012). Session 08: Objective 1 – common stock valuation [Video] | Transcript https://www.youtube.com/watch?v=uajW4BWh_zY
  • Harper, D. (2018, February 18). Forces that move stock prices. https://www.investopedia.com/articles/basics/04/100804.asp

Bond Valuation

  • Ross, S. A., Westerfield, R. W., Jaffe, J. F., & Jordan, B. D. (2021). Corporate finance: Core principles and applications (6th ed.). McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link.
    • Chapter 5, “Interest Rates and Bond Valuation,” pages 129-163. This chapter illustrates the employment of time value of money concepts to determine the value of corporate debt/bonds and common/preferred stock.
  • McCracken, M. (n.d.). Bond valuation [Video] | Transcript http://www.teachmefinance.com/bondvaluation.html

Capital Budgeting Tools

  • Ross, S. A., Westerfield, R. W., Jaffe, J. F., & Jordan, B. D. (2021). Corporate finance: Core principles and applications (6th ed.). McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link.
    • Chapter 7, “Net Present Value and Other Investment Rules,” pages 194-228. This chapter introduces the process of capital budgeting, which determines the value of a potential investment/project to a firm. That is, it weeds out good investments from the bad. Evaluating capital budget projects is a critical function for any business professional involved with finance decisions.
    • Chapter 8, “Making Capital Investment Decisions,” pages 229-261. The key to valuation of investments and projects is the cash they generate. This chapter illustrates the way to figure the all-important cash flows from investment projects.
  • Van Dalsem, S. (2017). Capital budgeting cash flows tutorial [Video] | Transcript https://www.youtube.com/watch?v=X6HvKl__rLY&t=19s
    • View the segment, 12:36-27:36.

Capital Budgeting and Risk

  • Nockolas, S. (2015). How do you calculate payback period using Excel? https://www.investopedia.com/ask/answers/051315/how-do-you-calculate-payback-period-using-excel.asp
  • Ross, S. A., Westerfield, R. W., Jaffe, J. F., & Jordan, B. D. (2021). Corporate finance: Core principles and applications (6th ed.). McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link.
    • Chapter 9, “Risk Analysis, Real Options, and Capital Budgeting,” pages 262-286. The concept of risk is introduced in this chapter. Risk is an important aspect of business and investment, and the impact of risk needs to be measured on all capital projects.
  • Sham, G. (n.d.). Capital budgeting: Wrapping it all up. https://www.investopedia.com/university/capital-budgeting/conclusion.asp

Additional Resources for Further Exploration

 

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