Managerial Finance

Week 6 Discussion: Beta and Capital Budgeting

Important: Turnitin is active. Turnitin score greater than 25% will be investigated. In addition, you may lose points if your Turnitin score is greater than 25%. 

Beta and Capital Budgeting

Part 1: Beta

Visit the following web site or other websites:

Yahoo Finance

1.  Search for the beta of your company (Group Project)

2.  In addition, find the beta of 3 different companies within the same industry as your company (Group Project).

3.  Explain to your classmates what beta means and how it can be used for managerial and/or investment decision

4.  Why do you think the beta of your company (individual project) and those of the 3 companies you found are different from each other? Provide as much information as you can and be specific.

Part 2: Capital Budgeting

Before you respond to Part 2 of discussion 6 review the following information on Capital Budgeting Techniques

Capital Budgeting Decision Methods

CAPITAL BUDGETING (PRINCIPLES & TECHNIQUES)

To avoid damaging its market value, each company must use the correct discount rate to evaluate its projects. Review and discuss the following:

• Compare and contrast the internal rate of return approach to the net present value approach. Which is better? Support your answer with well-reasoned arguments and examples.

• Is the ultimate goal of most companies--maximizing the wealth of the owners for whom the firm is being operated--ethical? Why or why not?

• Why might ethical companies benefit from a lower cost of capital than less ethical companies?

 3. Read and respond to at least 3 of your classmates’ posts. Below are suggestions on how to respond to your classmates’ discussions: