Week 10 Discussion Response- Managerial Finance

Week 10 Learning Resources

Managerial Finance

The Capital Asset Pricing Model (CAPM)

Assessing the relationship between a systemic risk and expected return is one of the most important aspects of choosing an investment. The capital asset pricing model (CAPM) describes this relationship. As a manager who makes or has input in investing decisions, you can apply this model to determine how risky security may be and what sort of returns you could expect to be generated. Through these resources, you will examine the capital asset pricing model.

· Brigham E. F., & Houston, J. F. (2022). Risks and rates of return. In  Fundamentals of financial management (16th ed., pp. 273–308). Cengage Learning.

· Kermode, M. (2011, October 15).  Example of the capital asset pricing model using Excel  Links to an external site.  [Video]. YouTube. https://www.youtube.com/watch?v=9PmDyGShF4I Note: The approximate length of this media piece is 10 minutes.

· McClure, B. (2021, May 4).  What beta means when considering a stock’s risk  .Links to an external site.  https://www.investopedia.com/investing/beta-know-risk/

· Taylor, C. (n.d.).  How to calculate CAPM in Excel  .Links to an external site.  https://www.sapling.com/8696905/calculate-capm-excel

· MoneyChimp.com. (n.d.).  CAPM calculator  Links to an external site. . http://www.moneychimp.com/articles/valuation/capm.htm

Stock Valuation

Consider a publicly traded company that you know well and search for its stock price. If possible, consider what it was worth 3 months ago, 1 year ago, or 5 years ago. It is likely that you will find some fluctuations. What determines the current price and those fluctuations? Although there are likely to be multiple factors, those factors reflect that organization’s stock valuation at different points in time. Using these resources, you will explore the concept of stock valuation, including determining the valuation for the current and projected worth of a stock to determine whether an investment is undervalued or overpriced.

· Brigham E. F., & Houston, J. F. (2022). Stocks and their valuation. In  Fundamentals of financial management (16th ed., pp. 319–346). Cengage Learning.

· Subjectmoney. (2013, January 3).  Dividend discount model (DDM) - Constant growth dividend discount model - How to value stocks  Links to an external site.  [Video]. YouTube. https://www.youtube.com/watch?v=n76Pz3HOBPo

· Kugele, L. (2015, August 5).  E 1 non-constant growth stock - Step-by-step  Links to an external site.  [Video]. YouTube. https://www.youtube.com/watch?v=Ub-1e0H4uT0

· Finance Formulas. (n.d.).  Preferred stock  .Links to an external site.   https://financeformulas.net/Preferred_Stock.html

Project Evaluation Tools

Managers evaluate possible projects using the capital budgeting process so that they can choose ones that will prove beneficial and add value to their organizations. They can apply this process in scenarios where the organization is considering buying a new building, purchasing new equipment, or offering new training programs to their employees. They will use multiple evaluation tools to determine whether the new undertakings will be acceptable or unacceptable according to the goals of the organization. Using these resources, you will explore the concepts related to capital budgeting, including the evaluation tools that are used in this process.

· Brigham E. F., & Houston, J. F. (2022). The basics of capital budgeting. In  Fundamentals of financial management (16th ed., pp. 389–420). Cengage Learning.

· Brigham E. F., & Houston, J. F. (2022). The cost of capital. In  Fundamentals of financial management (16th ed., pp. 360–388). Cengage Learning.

· I Hate Math Group, Inc. (2012, July 30).  How to calculate WACC (simple example) weighted average cost of capital  Links to an external site.  [Video]. YouTube. https://www.youtube.com/watch?v=XL20IFTYdBY

· Carlson, R. (2021, February 9).  Net present value (NPV) as a capital budgeting methodLinks to an external site. . https://www.thebalancesmb.com/net-present-value-npv-as-a-capital-budgeting-method-392915

· Carlson, R. (2019, November 13).  Payback period in capital budgetingLinks to an external site. . https://www.thebalancesmb.com/payback-period-in-capital-budgeting-392916

· Carlson, R. (2020, June 29).  What is the weighted average cost of capital?  Links to an external site.  https://www.thebalancesmb.com/calculate-weighted-average-cost-of-capital-393130

· Jan, O. (2019, June 5).  Modified internal rate of return  Links to an external site. . Xplaind. http://xplaind.com/882858/modified-internal-rate-of-return

· Good Calculators. (2021).  WACC calculator  Links to an external site. . https://goodcalculators.com/wacc-calculator/

· Walden University, LLC. (2021).  How to calculate NPV and IRR  Download How to calculate NPV and IRR [PDF]. Walden University Blackboard. https://waldenu.instructure.com

· Walden University, LLC. (2021).  What are NPV and IRR? [Video]. Walden University Canvas. https://waldenu.instructure.com