Accounting Week 3 Strategic Financial Management Please answer each discussion with 250 -300 words, APA style. DO NOT FORGET THE CITATION!!!! Then write a

Accounting Week 3 Strategic Financial Management Please answer each discussion with 250 -300
words, APA style. DO NOT FORGET THE CITATION!!!! Then write a response to 2
students for each discussion week with 100 words min, and directed at them in a
positive manner not in 3rd
person! The other students discussion posts can also be used as an example on
how your initial post should be done. So by the end of this assignment your
should have done 1 discussions and 2 responses!!! Read and watch all materials.
Materials needed are attached!! the 48 hours are just for the initial post, I
will then extend the time to 2 additional days. Discussion week 2 finance strategic financial planning
Please answer each discussion with 250 -300 words, APA style. DO NOT FORGET THE
CITATION!!!! Then write a response to 2 students for each discussion week with 100 words
min, and directed at them in a positive manner not in 3rd person! The other students
discussion posts can also be used as an example on how your initial post should be done.
So by the end of this assignment your should have done 1 discussions and 2 responses!!!
Read and watch all materials. Materials needed are attached!! the 48 hours are just for the
initial post, I will then extend the time to 2 additional days.
Readings chapter 9,10 and 11
Initial discussion post
Please respond to A., or B., or both.
A. What is meant by the “cost of capital”, as the term pertains to common shareholders’ equity? We can
easily determine the cost of debt, which is the stated rate multiplied by one minus the marginal tax rate;
and the cost of preferred stock is usually based upon the annual dividend plus the flotation cost per share
for a new issue; but why do we also calculate a “cost” for issuing common stock, other than the flotation?
As you may know, a company does not have to pay dividends, and some elect not to, period. With no
obligation to “repay” the common shareholders, why do we still consider that there is a cost?
B. There are several accepted methods of determining the monetary advantage of one investment
opportunity over another: The payback method; zero discount rate; net present value; internal rate of
return; modified internal rate of return; etc. Discuss one or more non-monetary factors that may influence
a manager’s otherwise objective decision in choosing one criterion over another. Also, which method do
you consider the best?
Student # 1 Edward ( see instructions above)
B. There are several accepted methods of determining the monetary advantage of one investment
opportunity over another: The payback method; zero discount rate; net present value; internal rate of return;
modified internal rate of return; etc. Discuss one or more non-monetary factors that may influence a
manager’s otherwise objective decision in choosing one criterion over another. Also, which method do you
consider the best?
There are a number of non-monetary criteria that a manager should consider when choosing one opportunity
(project / capital spend) over another in addition to the monetary calculations. If a project or opportunity is
not part of the company’s strategic long term plan it would probably not make sense to move forward with it
even if it has the most attractive monetary advantage. A project with a lesser value but that is aligned to the
company’s longer term goals might make more sense to move forward with. Another item that I found to be
true is ensuring that the correct resources (specifically the people) would be able to be applied to the project
and can make a significant difference on the whether the return is met or not. If the project takes longer to
complete or if the project does not meet the customer’s expectations and rework is needed then the
opportunity’s benefits would probably be minimized. If the correct resources are not available to support the
opportunity it might make sense to start the project when they are available.
The article by Wilkinson, entitled Capital Budgeting Methods identified another subjective criteria that should
be considered when determining if a project or opportunity should be pursued or not is risk, “Risk
considerations political risk, monetary risk, access to cash flows, economic stability, and inflation should all
be considered in the evaluation process since all are hidden costs in the capital budgeting process”. It might
be the risk if a company does or does not move forward with a project or the risk of two “competing”
projects. An example of this is two projects for a new system that would improve a company’s
productivity. One of the project has the system being coded within driving distance of the company and the
second project has the system being coded overseas. The coding being done overseas would be less
expensive however more risk due to communication of requirements being done in English and that not
being the primary language of the people doing the coding. The inability to meet face to face and time
difference would also add to the risk of going overseas.
As identified in our text and the article by Wilkinson, if you had to pick one the most credible method is the
Net Present Value (NPV). However the text identified that today with the power of computers and programs
the best answer would be to use all of the different methods and analyze the results to make the best
informed decision possible.
References:
Brigham, E. & Ehrhardt, M. (2014). Financial Management: Theory and practice (14th ed.). Delhi, India:
Cengage Learning.
Wilkinson, James. (2013, July 23). Capital budgeting methods. The Strategic CFO. Retrieved from:
https://strategiccfo.com/capital-budgeting-methods-2/.
Student #2 Diana ( will upload once someone else posts)
There are several accepted methods of determining the monetary advantage of one investment opportunity over
another: The payback method; zero discount rate; net present value; internal rate of return; modified internal
rate of return; etc. Discuss one or more non-monetary factors that may influence a manager’s otherwise
objective decision in choosing one criterion over another. Also, which method do you consider the best?
Because of my background in technical program management I am most familiar with net present value
(NPV) as it is used in capital budgeting to analyze if a proposed project would be profitable.
NPV includes the current value of a series of present and future cash flows. provides a method for evaluating
and comparing products or projects with cash flows spread over many years. NPV accounts for the time value
of money, which basically means 1 dollar today is worth more than 1 dollar 20 years from now. A positive net
present value indicates that the projected earnings generated by a project exceeds the anticipated costs.
(Kenton, 2019). When we have limited resources and multiple ideas NPV can provide more information to
base critical decisions on.
The challenge is that NPV relies on assumptions and estimates so there is room for error. Sometimes Product
Managers will opt to use the payback method as a simpler alternative to NPV. The payback methods calculate
how long it will take for the original investment to be paid back.
Non-monetary factors that might influence a decision to move forward with a project might include:
•
Current market trends
•
Could this be developed in house or through a vendor? (make or buy analysis)
•
Does this project enhance our brand?
•
Is this project or initiative in alignment with the company’s roadmap/goals/strategy?
A boiled down example of how those non-monetary factors would be applied, consider The Pokémon
Company’s decision to move forward with Pokémon GO development. Market trends at the time indicated it
would be well received, they identified a strong partner with Niantic for development and management, and
the game would enhance the brand. Hypothetically they could have had another product idea which didn’t
meet the above criteria even though it might have had a positive NPV.
Reference:
Kenton, W. (Jan 23, 2019). Net Present Value – NPV. Retrieved from
https://www.investopedia.com/terms/n/npv.

Purchase answer to see full
attachment