There are four questions in this part. Please level each question separately and provide minimum of three paragraphs answers. PLEASE PROVIDE AT LEAST OND INTEXT citation and reference for each question.
capital budgeting as a tool to determine whether a long-term asset should be purchased. The process we follow could be used in other applications, such as the following: Mergers and acquisitions of companies,Decisions to expand or downsize a business,Decision to change jobs,Decision to take online courses, orPricing a product.
explain specifically how the capital budgeting tool could be modified to be used in one of these applications—or in a completely different application you identify. Feel free to use an example you have experienced in your career.
Question 2 :
When we are studying capital budgeting, we go through a lot of work to come up with an investment decision. However, we have made many assumptions along the way to form what seems like a value-maximizing decision. Choose an assumption that we make and discuss the risks associated with that assumption.
Options are particularly difficult to understand. Put and call values are determined by the price of a stock, and yet you do not need to own the stock to buy a put or a call on that stock. In addition, if you buy a put or a call, you have the right to walk away from a contract to limit your losses. When we compute the price of an option, we use two models that are difficult to understand and have computations that are particularly challenging. Please share with others some of the challenges you encountered when studying this module. How did you overcome them?
Question 4 :
There are multiple theories were presented that influence capital structure decisions or dividend policy decisions affecting the price of a stock. Choose one of these theories and explain its strengths and weaknesses.