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Final
Thoughts
You
have spent the past few weeks analyzing finance from the manager and investor
perspective. Please share what topic interests you the most and why? What topic
did you have the least interest in? After taking this course would you consider
a career in Finance why or why not?
Best
liked topic: Weighted Cost of capital
Least
liked topic: Financial Statement
The
Most Interesting Topic.
After
a detailed financial analysis on the manager and investor perspective, I was
most interested in the weighted average capital cost. The topic is interesting to
me for several reasons; first, the topic is easy to understand and apply in the
real world since one standard formula is used to calculate the weighted cost of
capital of a given business entity. Second, the weighted cost of capital is
very significant for both on-going businesses and in the startup stage. Potential
investors use the weighted cost of capital to evaluate a business enterprise's
value and project the future cash flows without actually investing in such
businesses.
The
business's value is compared with the current market price to determine the
worthiness of investing in such a venture. If the company is found feasible,
the investors go ahead and start, whereas the idea is dropped if found
unprofitable. Hence, investors avoid the inherent risk of failure; on the same
note, management benefits from the weighted average cost of capital in
determining a business's present value. They get to know whether the money
invested outweighs the company assets.
The
Least Interesting Topic
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