BUS 629 Week 3 Discussion Responses See attachment. Deadline is tomorrow at noon ANSWER ALL RESPONSES.
150 WORDS TO EACH QUESTION. RESPOND TO ALL BELOW. MUST HAVE AT LEAST 1 REFERENCE AND MUST BE CITED IN THE RESPONSE WHERE THE REFERENCE WAS USED.
My college investment is the cost of $28,089. I always thought this price was relatively small compared to what I can get out of it. I work in IT and of the opinion that channeling my efforts in Silicon Valley would be a good move financially. With this in mind, upon graduation, I fully intend to get the most out of my degree including a job change to a Leader of a Legal PMO or Legal Operations Director for an IT organization. I currently work for Cisco so I will apply the pay scale within this organization. Once I get a role at this level, I will see a 18% pay increase annually which is inclusive of merit and company increases and bonuses. I will be able to work approximately 24 more years.
The net present value of my college investment is the measure of the value of an amount that is allowed to grow at a given interest rate over a period of time (Block, et al., 2019). The NPV can be found as follows:
Ultimately, I can say that by pursuing my MBA, I have made a decision that is worth the financial investment. I can make almost $1.5 million more than in my current role by the time I retire and be able to pay off school within the first year after completion (1.491 million / 24 = 62,157.45). Furthermore, I feel that an advance degree can be helpful post retirement in a consultancy on a part time basis. But let’s be clear – I live in Oakland, CA which is ranked number 6 of the most expensive cities in the country (Goetz, 2021). If I stay here, I will still be poor LOL.
There has been a significant change in my thinking process since I started the MBA program. The MBA program has provided me with a considerable understanding of organizational behavior, human capital management, marketing, and the financial aspects of the companies. I am thankful to my employee who is promoting and contributing to the educational development of their employees; they are offering a full tuition fee for the MBA program.
Considering the tuition fee of 35000 dollars for the MBA program and not paying from my pocket gives a Net Present Value(NPV) gain while doing the program. In addition, the company does not bond the employees by any contracts of employee retainment and talent in the education tuition benefits. The education tuition benefit is risk-free and with not create any financial obligation to employees in the future.
In addition to the Present Net Value on the tuition, there are long-term rewards in holding an MBA degree for time invested. Knowledge is power; with the knowledge, one potential ability will increase, and one will have the ability to pursue professional growth. Education is an investment of time, and as MBA students, we are investing quantitative and qualitative hours in learning the skill which can help us in the future endeavor.
Internal rate of return is the rate of return a company can expect from the investment and in terms of an MBA, learning will provide a progression in the professional role and increase in the pay, while the faster we perceive the opportunities, the faster is the returns.
Question 3 (Morgan)
For this discussion, I have chosen to use the article titled Capital Allocation Rules and the No-Undercut Property. The way this article describes capital allocation is by measuring financial risk by implementing the capital allocation rule to determine profit or loss. Similarly to the book, this article discusses that a key purpose for a firm is to distribute the cost of capital and compare it through their performance in what is returned of that allocated capital. Block, Hirt, and Danielsen (2019) described capital allocation as measuring each project against the overall cost of the funds to the firm. Both of these theories that are explained in both the article and the book demonstrate how whatever risk is taken must be measured and reflected through capital allocation. Capital allocation should be approached as being reasonable for necessary properties and give value of the business performance.
According to Block, Hirt, and Danielsen (2019), weighted average of cost capital must be reduced by debt financing. Weighted average of cost capital is used to make investment decisions because it assists with debt financing. Canna, Centrone, and Gianin (2021) described how banks and financial institutions face different sources of riskiness and need to guarantee the ability to hedge such riskiness. In order for investment decisions to be made, these banks and financial institutions need to be able to understand where they need to have their debt, preferred stock, common equity, and weighted average cost of capital come in at for them to still make profit.
Question 4 (Akira)
The capital allocation rule is used in this article to determine profit or loss by measuring financial risk. In a similar vein to the book, this article outlines how a firm’s primary goal is to spread the cost of capital and compare it to the amount of money returned on that capital. According to Block, Hirt, and Danielsen (2019), capital allocation is defined as weighing each project against the overall cost of finances to the company. These theories, which are discussed in the article and the book, show how any risk must be quantified and expressed through capital allocation. The capital allocation should be viewed as acceptable for essential properties and should reflect the value of the company’s performance. Because it helps with debt financing, the weighted average of cost capital is utilized to make investment decisions. Canna, Centrone, and Gianni explained how banks and financial institutions are exposed to various sources of risk and must ensure the ability to mitigate such risk. These banks and financial institutions must comprehend where their debt, preferred stock, common equity, and a weighted average cost of capital must come to make a profit still to make investment decisions.