Corporate Finance Decisions and Analysis Skills

Understanding Financial Management Concepts

Task:

To make corporate finance decisions, take an advanced finance course, or pursue a career in finance, you will need to understand basic concepts. This includes going beyond the number crunching and reading graphs in order to analyze various financial indicators. This analysis can lead to many important decisions in your financial career. For this part of the final project, you will be given a scenario in which you are asked to illustrate your financial knowledge and analysis skills.

This part of the assessment addresses the following course outcomes:

 Analyze the roles and responsibilities of financial managers in confirming compliance with federal and shareholder requirements
Differentiate between various financial markets and institutions by comparing and contrasting options when selecting appropriate private and corporate investments
 Compute financial ratios, time value, variables, and returns using industry standard tools for optimizing financial success
 Analyze corporate financial data for multiple companies in evaluating past and future financial performances

Part III Prompt

The results of both sections of your employment examination have finally been received, and you were offered the position. You have a few important decisions
to make before you can formally accept or decline the position. When composing your answers to these decisions, ensure that they are cohesive and read like a
short essay.

Your submission must address the following critical elements:

I. School Versus Work
A. The school you would like to attend costs $100,000. To help finance your education, you need to choose whether or not to sell any of your 500 shares of Apple stock you bought five years ago, 100 Apple bonds (each with a $1,000 face value and a 3.25% coupon rate) that are five years from their 10-year maturity date, or a combination of both. Provide the appropriate data and calculations that you would perform to make this decision.

B. What are the advantages and disadvantages of selling a combination of stocks and bonds? Be sure to support your answers.
C. Suppose that you choose to sell your stocks, bonds, or a combination of both. What is your choice, and what is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.

D. Suppose that you choose to accept the job. What is your financial reasoning behind this choice? Be sure to support your answer with quantitative data.

II. Bonus Versus Stock
A. The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock
price of $50 per share. Mathematically, what is the best choice? Why?
B. What are the advantages and disadvantages of each option? Be sure to support your answers.
C. What would you ultimately choose to do? What is your financial reasoning behind this choice? Consider supporting your answer with
quantitative data.
III. Compliance
A. While investigating the shares offered to you by your potential boss, you discover that the company you are considering working for is not registered as required under the Securities Act of 1933. How does this influence you as a potential employee and as a potential shareholder? Be sure to reference any applicable statutes or laws.
B. You know that accepting this job may eventually lead to a promotion into the role of the financial manager. As the potential financial manager, what federal and shareholder requirements would you need to be familiar with in order to ensure that you are being completely compliant?