# help with response due in 24 hours

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- 8 days ago
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AVERY’S POST:

Hello Class!

1. Discuss the concepts that were most challenging for you in the readings and review material. How did the practice exercises help clarify these?

I think the practice exercises really helped me understand the difference between corporate finance and managerial accounting. Each lesson focused on a different perspective. Until now, we looked at projects from a manager's point of view, dealing with money and measuring results. But now, we're shifting our focus to banking, CFOs, and investment funds.

Also, I knew Excel had functions to help with calculations, but the ones in the practice guide were a bit tricky. The practice exercise enabled me to use the excel functions and gave me some difficulty was 6.42. I was stuck for a bit, so I had to turn to good old YouTube for more help.

2. What did you learn that will help you determine which assets to invest in and where to disinvest to help LGI improve its operations, generate cash flow, and improve the bottom line?

I think the most important thing for helping LGI is knowing the present value of its assets. The present value is like the current worth of money we'll get in the future, considering a certain interest rate. If a manager understands this, they know that money received in the future isn't as valuable as the same amount received today.

And, if you don't spend money now, it won't be worth as much in the future because of things like inflation or the return on investments. Not investing has a cost, called opportunity cost.

Understanding these types of concepts can help managers make decisions that make the company more profitable and bring in more cash.

References

Davis, C. E. & Davis, E. (2011a). Chapter 5: The Time Value of Money. https://learning.oreilly.com/library/view/fundamentals-of-corporate/9780470876442/16_chapter05.html#ch5-sec001

Gallo, A. (2014) A Refresher on Net Present Value. Harvard Business review. Retrieved from https://hbr.org/2014/11/a-refresher-on-net-present-value

BRIAN’S POST:

1. Discuss the concepts that were most challenging for you in the readings and review material. How did the practice exercises help clarify these?

I enjoyed reading about the time value of money and the future value of money. The course reading in Chapter 5 brings to light some minor things that I wouldn’t have previously considered that would have ultimately negatively impacted my calculations. I think these two concepts set me up for success for the rest of the reading. However, multiple cash flows and all the different aspects of annuities and perpetuities proved to be a bit more difficult for me. I may just be thinking of these concepts as difficult due to all the calculations that involved in the which could cause an error if a number is off. But, as the book mentions multiple times, I will do my best to ensure correctness at each step due to the lack of a financial calculator, though I intend to use a spreadsheet, to ensure the overall result is correct (Davis & Davis, 2011a). These topics aren’t exactly difficult, just strenuous and a bit time consuming to ensure correctness.

The information in the practice guide was helpful to reinforce the information provided in the book. I appreciate the extra examples given as well as the detail in all of the formulas used. Problem 6.42 was especially helpful in enhancing my understanding of the concepts described above that caused me some trouble.

1. What did you learn that will help you determine which assets to invest in and where to disinvest to help LGI improve its operations, generate cash flow, and improve the bottom line?

Some of the concepts that I think will assist me with Project 4 are time value of money, future value, and compounding interest. All of these concepts will aid me in determining which assets to advise LGI to invest or disinvest in. Understanding the concept of time value of money will help me analyze which assets would give LGI the most financial flexibility in the future and help to align its financials with its goals (Davis & Davis, 2011a). The concept of future value will help me to build upon that analysis and provide close estimates on returns, future values, etc. Lastly, the concept of compounding interest will further build on the previous two concepts to provide LGI with an outlook of how its money will grow with certain investments over different periods of time.

**References:**

Davis, C. E. & Davis, E. (2011a). Chapter 5: The Time Value of Money.
__https://learning.oreilly.com/library/view/fundamentals-of-corporate/9780470876442/16_chapter05.html#ch5-sec001__

Davis, C. E. & Davis, E. (2011b). Chapter 6: Discounted Cash Flows and Valuation.
__https://learning.oreilly.com/library/view/fundamentals-of-corporate/9780470876442/17_chapter06.html#ch6-sec001__

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