Financial Decision Making Coursework Example | Topics and Well Written Essays - 750 words

Financial Decision Making - Coursework ExampleThe price earnings symmetry measures the relationship between stock dividend payout and a stocks market price in align to compare a stocks performance against any other stock. One can alike use earnings per share in order to determine how a accompany compares to another in terms of circulating(prenominal) dividend paid. This two key investment ratios can only be utilize with companys that are publicly traded and issue stocks Additionally there is a wealth of investment advice and current company profiles and analysis available on the internet, which make the task of choosing an investment much easier for the private investor. For a company that is not publicly traded, an individual must use other forms of financial analysis in order to determine what the best investment option is and how much the required arrange of return demand to be in order to justify the risks associated with a specific company. We have been presented with th ree individual companies as possible investment alternatives none of the companies are publicly traded. The three possible investment choices are 1) bloom Consulting-Although the initial investment of the company is low at $50,000,the company will be a outset up venture so the risks related to the investment are always highest with a new company. line of longitude will be a management consulting firm with a high level of expertise and realise specializing in marketing and distribution of high technology products and solutions in the international market. The initial operating concentrate on for the company will be the European and Latin American markets and the American market for foreign clients. superlative will provide high value services at the highest costs the market will come out the company will be targeting primarily large manufacturers of high technology products such as IBM, apple and HP as potential clientele. 2) Interstate Travel Center- Is also a start-up compan y which will live of a will be full service truck stop and service center to be located in Texas. The initial start up costs for the project will be 2.75 gazillion in order to buy the land and build the 6,000square foot facility which will include a restaurant, convenience store, gas/ diesel islands and service facilities and amenities. The required capital investment will be $250,000 from an investor/s and a 2.5 million loan. 3) Silvera and Sons- This is a successful well establish business dedicated to the distribution and exporting of premium Brazilian Arabica Coffee beans. Its main customers are premium American specialty roasters and wholesale to the local anesthetic Brazilian market. For the last six years demand for the companys products has exceeded capacity, so the company has had to resist a lot of larger shipments, therefore losing a lot of potential sales and customers. The company wants to fatten up their production capacity in order to fulfill the additional deman d. The company is confident that they will be able to sell all additional production of their premium Arabica beans. Since the investment will be used to fulfill the demand for their products, and it is a successful profitable company, it seems that the safest investment for an individual would be to invest in Silvera and Sons. Although it was not required in this assignment to calculate the discount rate for each company, I took the first in my research of learning how to calculate the discount rate. In order to calculate the required rate of return or discount rate one must determine what the risk free vex rate is, the average market return, market risk premium