Stock Valuation, Risk and Returns

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Part 1: Interest Rates

Many managers do not understand the various ways that interest rates can affect business decisions. For example, if your company decided to build a plant with a 30-year life and short-term debt financing (renewed annually), the cost of the plant could skyrocket if interest rates were to return to their previous highs of 12% to 14%. On the other hand, locking into high, long-term rates could be very costly also with a long period when low short-term interest rates were to be available. As you can see, the ability to know your economic environment and its impact on projected interest rates can be crucial to making good financing decisions.

Describe two to three macroeconomic factors that influence interest rates in general. Explain the effects of each factor on interest rates.

Now think about the industry in which you are employed or one in which you have past experience. To what macroeconomic factors is your industry most sensitive?

Describe two contemporary factors that seem to be impacting your industry today, and identify their impacts on the interest rates experienced within your chosen industry.

Support your comments with your own experiences, the weekly resources, and/or additional research. Use APA throughout and provide appropriate in-text citations and references.

Part 2: Stock Valuation, Risk and Returns

Stock valuation

Dividend Discount Model Stock Valuation

How to value a company using discounted cash flow (DCF)

Stock Valuation and Investment Decisions

The links above contain information on stock valuation, risk, and returns. Please review each one of them. Based on the knowledge gained from the materials presented in the links above, complete the following activities:

Present a detailed discussion of what you learned about stock valuation. Provide examples of how your company has used the concepts. Do you believe financing a company’s operation using stock is better than financing with bonds? Why or why not? Support your discussion with a numerical example.

Based on the materials presented in the “Risk and Return” video, present a discussion on why the materials are important in financial decision-making. How would you incorporate risk and return in your financing decisions?

Sample Solution

Interest rates are determined in a free market where supply and demand interact. Following are a few factors that influence the interest rates in the economy: demand for money; supply of money; and fiscal deficit and government borrowing. Demand for money: typically, in a growing economy, money is in demand. Manufacturing sector companies and industries need to borrow money for their short-term and long-term needs to invest in production activities. Citizens need money as they need for their homes, buy new cars, and other needs. But when an economy isn’t doing that well, companies avoid borrowing if the demand for their products is low. A very high inventory is detrimental, so they produce less. In effect, they borrow less, ergo less demand for money. Consumers also spend less as a bad economy could result in job loss. Other things remain the same, higher the demand for money higher the interest rates.

nd extreme light sensitivity. Since, keratoconus starts from puberty, young children find difficulty in their studies which contributes to low self-esteem. It’s quite important to treat in early stages.

Corneal crosslinking has grown from an interesting concept to its introduction in clinical practice in the late 1990s when it radically modified conservative management of progressive corneal ectasia with the possibility of strengthening corneal tissue. The primary aim of corneal crosslinking is to stop the progression of corneal ectasia/ Keratoconus.

The research shows that good clear understanding of surgery can enables patients to fully participate in the management decisions and care planning of their condition. The nurse-led pre-operative education to the patients undergoing cross-linking may prove to decrease anxiety and enable patient engagement with their care being able to retain and recall instructions which can impact the recovery and decrease infection rates and increase patient satisfaction. It also helps to reduce cancellations which has adverse impact on hospital finances, waste of resources and affect patients psychologically.

 

 

During nurse-led education session, the nurse can assess the patient’s risk factors for procedure, understanding and knowledge/perception of the cross-linking procedure, expectations of intra and post-operative care, stress/anxiety level, cultural or religious beliefs, socio-economic status and support from the family. By keeping the patients at the centre of the pre-operative processes, which can develop confidence, rapport and the confidence in the perception of their care which will aid the educating nurse to develop best plan of care for the individual patient. The education session should be individualised to assess mental and physiological status.

It is the paramount to use the pre-operative patient educational clinic effectively to identify and foresight the patients concerns which can help to minimise disrupted theatre time and it also help for discharge planning of the patients. The patient education session can provide good understanding of the journey ahead, quality care, reduce pre-operative anxiety of patients and families. It also provides holistic needs, support at every step, safe and compassionate care, it also helps to reduce cancellations which has adverse impact on hospital finances, waste of resources and prepare patient psychologically to increase their resilience to

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