FINANCIAL STRATEGY COURSE WORK 2019-20
Essay Topic
- How does an owner-manager of a non-financial firm deal with risk? Answer the question specifically in relation to each of the following: a) risk as sensitivity to potential deviation from forecast values of variables that make up Net Present Value (cashflows, project life, initial expenditure etc) (b) risk in respect of the financial return or NPV that should be controlled for by correct choice of a discount rate (c) the same risk as in (b) but discussing how it might be dealt with by certainty equivalent calculations (1000 words approx.)
- Discuss how your company should choose a discount rate were it to be taken over by a diversified owner and explain what theory lies behind that method. (1000 words approx.)
- Discuss in your own words the views that are contained in readings (1) and (2) and comment how they support (or not) what you have said in 2. (1000 words approx.)
Readings:
- Michael T. Jacobs and Anil Shivdasani Do you know your cost of capital? Harvard Business Review July–August 2012 (version available at https://hbr.org/2012/07/do-you-know-your-cost-of-capital)
- The reading by Lubatkin et el on BLE TOPIC 4.
Note: neither your lecturer nor your class teachers will be able to give you advice on completing this assessment which must be done independently. Plagiarism is taken very seriously. It is very important that you use your own words rather than just using slight modifications of other authors’ work. See your guidance on plagiarism matters – no plagiarism of any sort is acceptable and carries stiff penalties. Plagiarism is not excused by citing a work that you use. You are not permitted to use payed-for-assistance to write any part of the answer; in some circumstances you may be asked to demonstrate orally your individual understanding of what you have written.
Essay requirements. You should produce a well-structured essay. Be sure also include your own personal view of the issue throughout and not just replicate the material in the notes or readings. The essay should relate to the course content.
For submission guidelines see BLE along with any other guidance given by your undergraduate office
Ensure that you submit by the due date you have been assigned
