August 28, 2022

Cisco uses ‘robust NPV analysis’

    Question: In Berk and DeMarzo (2020) the authors’ interview David Holland, who at the time was a Senior Vice President and Treasurer of Cisco, […]
August 28, 2022

The ‘workhorses’ of capital budgeting

  Question: Two of the ‘workhorses’ of capital budgeting are the Net Present Value (NPV) and the Internal Rate of Return (IRR) calculation. In practice, we […]
August 28, 2022

The fundamental components to estimate their hurdle rate

Question: When exploring the Weighted Average Cost of Capital (WACC) we were introduced to the fundamental components that firms use to estimate their hurdle rate. Berk […]
August 28, 2022

The Miller and Modigliani propositions I and II

  Question: Berk and DeMarzo (2020) indicate that “With perfect capital markets, financial transactions neither add nor destroy value, but instead represent a repackaging of risk […]
August 28, 2022

Firms tend to underutilize debt

Question: Figures 15.7 and 15.9 in Berk and DeMarzo (2020) highlight a couple of interesting findings. The first is that certain industries are more likely two […]
August 28, 2022

Align managers’ interests with that of the shareholders

    Question: Within the context of financial management, it is important that organizations attempt to align their managers’ interests with that of the shareholders. In […]
August 28, 2022

Capital budgeting with leverage

  Question: In Chapter 18, Berk and DeMarzo (2020) illustrate the differences between the three main methods that corporations use for capital budgeting with leverage and […]
August 28, 2022

Investors are indifferent between the firm distributing funds

    Question: Two other interesting points brought up by Miller and Modigliani, as highlighted in Berk and DeMarzo (2020) were that “In perfect capital markets, […]
September 1, 2022

Types of business suited for doing business online

    There are many types of business suited for doing business online. Those types of businesses give customers the convenience of instantly purchasing what they […]
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