The reading that will contribute the majority of the content for this entry, Archetypes:
Shadow; Anima; Animus; the Persona; the Old Wise Man, by C.G. Jung was rather difficult for
me to really sink my teeth into. However, I was still able to extract a fe
Carmex: Leveraging Facebook for Marketing Research
Question 1. - What are the advantages and disadvantages for Carmex
marketing team in collecting data to narrow the flavor choices from three to
A. An online survey of a cross-section of Interne
November 22nd, 2013 1:00 p.m.
Enron Chiefs Guilty of Fraud and Conspiracy
Enron Chiefs Guilty of Fraud and Conspiracy
Kenneth L. Lay and Jeffrey K. Skilling were the chief executives of Enron. They were in
these positions during the rise and f
Using The NPV Rule To Choose Among Projects When choosing among mutually
exclusive projects, calculate the NPV of each alternative and choose the highest positive-NPV
project. However, this choice between projects may impact future opportunities, so here
Sensitivity Analysis This is the analysis of the effects on project profitability of changes in
sales, costs, and so on. Compares pessimistic, expected, and optimistic forecasts.
Fixed Costs Costs that do not depend on the level of output.
Problem 3: When To Replace An Old Machine (Replacement Problem) We decide to
replace a car not when it breaks down, but when it becomes more expensive and troublesome to
keep up than a replacement.
When deciding, calculate the NPV of the new machine and
Chapter 7: Valuing Stocks - Sec. 7.6 7.7
Section 7.6 - There Are No Free Lunches On Wall Street
It is not easy to beat the market, and even highly paid pros find it very difficult to do so with
consistency. Here are two possible ways to attempt to beat th
Break Infinite Visuals
This graph shows our quarterly increase of wages to all levels of our organization.
As being the industry leader in wages it is important for us to stay that way, to continue to
make our employees happy to keep our morale high. Ou
Chapter 9: Using Discounted Cash-Flow Analysis to Make Investment
Identifying Cash Flows
Discount Cash Flows, Not Profits To calculate net present value (NPV), you need to discount
cash flows, not accounting profits. Income statements are intend
Chapter 8: Net Present Value and Other Investment Criteria
Net Present Value
Net Present Value (NPV) Present value of cash flows minus investment.
In order to calculate present value (PV) we discount the expected future payoff
by the rate of return of
1. Mutually Exclusive Projects When given the choice between competing projects, you
should accept the one that adds most to shareholder wealth, which is the one with the higher
Remember, a high IRR is not an end in itself. You want projects that i
Chapter 10: Project Analysis: Sections 10.1 10.3
How Firms Organize the Investment Process To evaluate investment opportunities properly,
financial managers need unbiased cash-flow forecasts that have not been skewed to sell a
project to upper management.
Semistrong-Form Efficiency A market in which prices reflect not just the information
contained in past prices, but also all publicly available information. In this market it is
impossible to earn consistently superior returns simply by doing homework on
Break Infinite: Q3 - Visuals
(Figure 1) This quarterly wage increase graph gives a good visual on our
increases in our wages over the past quarters. We are increasing the wages on all levels
because we want to keep our wages to our employees
Present value of
Accept project if NPV
The Gold Standard of investment criteria. Only
is positive. For mutually
criterion necessarily consistent with maximizing the
Negatives of the Payback Rule:
1. It does not consider any cash flows that arrive after the payback period. Which could be
2. It gives equal weight to all cash flows arriving before the cutoff period, despite the fact
that the more distant flo
Break Infinite Visuals Y2 D5
(Figure 1) Our level 1 employees, and some supervisors have been complaining
that they have not been receiving enough training. We decided in order to address this
problem, that we would increase our training, and o
Forget Sunk Costs Sunk costs remain the same whether or not you accept the
project. Therefore, they do not affect project NPV. If money is already invested in
something that isnt working then dont feel obligated to pursue that route.
Problems and Some Solutions Capital Budgeting is usually a cooperative effort, which leads
to some problems:
Ensuring That Forecasts Are Consistent To ensure consistency, begin the capital
budgeting process by establishing forecasts of economic indicato
Calculating Cash Flow A projects cash flow is composed of three elements:
1. Cash Flows from capital investments.
2. Operating Cash Flows.
3. Cash Flows from changes in Working Capital.
Capital Investment In order to start a project, a company needs to ma
Bubbles and Market Efficiency These Bubbles are when prices as a whole can no longer be
justified. The stock prices rose to levels hard to reconcile with reasonable outlooks for dividends
and earnings. (Ex. The Dot-Com Bubble, the technology heavy NASDAQ
When calculating to find the Internal Rate of Return (IRR) first try a zero discount rate. If
the NPV is positive then the IRR must be greater then zero. Next, try a discount rate of
50%. If negative then the IRR must lie between 0% and 50%.
When we c
Method 2: Fundamental Analysis This is when investors who attempt to find mispriced
securities by analyzing fundamental information, such as accounting performance and earnings
prospects. This analysis contrasts the technical analysis who focus on past st
Break Infinite Comparative Visuals
This line graph compares our Unit Labor Cost to other organizations within our
industry. It is good to keep this as low a number as possible. Although we are not the
leading firm in this category, we are close to it. B
Break-Even Analysis Analysis of the level of sales at which the project breaks even.
Accounting Break-Even Analysis The level of sales at which profits are zero or, equivalently,
at which total revenues equal total costs.
*Break-Even Level of Revenues = F
Capital Rationing Refers to a shortage of funds available for investment. Some big firms can
obtain large amounts of money at short notice, so why does top management sometimes tell
subordinates that capital is limited and that they may not exceed a speci
Remember Terminal Cash Flows The end of a project almost always brings
additional cash flows. Like the salvage value of selling a plant or equipment.
There are also sometimes expenses in shutting down a project.
Beware of Allocated Overhead Costs A pr
2 rules for deciding whether to go ahead with an investment project are:
1. The NPV Rule Invest in any project that has a positive NPV when its cash flows are
discounted at the Opportunity Cost of Capital.
2. The Rate of Return Rule Invest in any project