Saturday, May 23, 2020

Cost Of Capital And Equity Example For Free - Free Essay Example

Sample details Pages: 3 Words: 959 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? A firm or a business can source its capital either by raising debt or through equity. The composition in which the firm finances its assets through debt or equity forms the Capital Structure of a firm. Therefore , when we talk about a companys capital structure we are basically talking about how a company has set up its financing. Don’t waste time! Our writers will create an original "Cost Of Capital And Equity Example For Free" essay for you Create order This can be seen at the right side of the balance sheet of a company. A company can finance itself by borrowing money i.e. through debt or through equity i.e. ownership of one or more than one owners and many of owners in case of a public company. Definition: A mix of a companys long-termÂÂ  debt, specific short-term debt, common equity and preferred equity. The capital structure isÂÂ  how a firm finances its overall operations and growth byÂÂ  using different sources of funds. The capital structure also tells us how risky a company is, as generally a company which is financed by debt extensively tends to be more risky. Thus, a firms capital structure is then the composition or structure of its liabilities. For example, a firm that sells $30 billion in equity and $70 billion in debt is said to be 30% equity-financed and 70% debt-financed. The firms ratio of debt to total financing, 70% in this example, is referred Figure showing Capital Structure of a company to as the firms leverage. In reality, capital structure may be highly complex and include tens of sources. Gearing Ratio is the proportion of the capital employed of the firm which come from outside of the business finance, e.g. by taking a short term loan etc. ASSUMPTIONS There is no income tax, corporate or personal. The firm pursues a policy of paying all of its earnings as dividends ie 100% dividend payout ratio is assumed Investors have identical subjective probability distributions of operating income(earnings before income and taxes) for each company The operating income is not expected to grow or decline over time A firm can change its capital structure almost instantaneously without incurring transaction costs. The reasons for taking the above mentioned assumptions are to remove the influence of taxation, dividend policy, varying perceptions about risk, growth and market imperfections so that the influence of financial leverage on cost of capital can be understood with more clarity. DEBT FINANCE EQUITY FINANACE What is it? Money is borrowed from the bank or any other financial institution An investor buys stake in your business ex. shares Pros You retain complete ownership of your business and the profits it generates. Interest payments are generally tax deductible. The investor shares the risk. If business fails, theres no need to pay back to the investor. There are no interest payments investors need to be paid a share of profits, which could be more than interest. Cons You have to pay interest on your borrowings. You have to repay the amount you borrowed, even if your growth plans dont come off. In most cases, youll need to offer security for your loan, so this option is difficult if you dont have assets. You share ownership of your business so if its successful, a share of that success goes to someone else. You lose control of your business. An investor may ask to sit on the board and take part in decision marking. Depending on the option you choose, your investor may take a share of profits. COST OF DEBT, COST OF EQUITY AND AVERAGE COST OF CAPITAL Assuming that the debt is perpetual, rD represents the cost of debt. rD = I / D = Annual interest charges / Market value of debt When the dividend payout ratio is 100% and earnings constant, rE represents cost of equity rE = P / E = Equity earnings / Market value of equity rA is the overall capitalization rate of the firm. rA = O / V = Operating income / Market value of firm where V = D + E Since rA is the weighted average cost of capital, it can also be expressed as: rA = rDD / (D + E) + rEE / (D + E) NET INCOME APPROACH According to this approach, the cost of debt, rD, and the cost of equity, rE, remain unchanged when D / E varies. The constancy of rD and rE with respect to D / E means that rA declines as D / E increases. This happens because when D / E increases, rD, which is lower than rE, receives a higher weight in the calculation of rA. NET OPERATING INCOME APPROACH According to the net operating income approach, the overall capitalisation rate and the cost of debt remain constant for all degrees of leverage. Hence rA and rD will be constant for all degrees of leverage. Hence cost of equity can be expressed as: rE = rA + (rA rD) (D / E) The critical premise of this approach is that the market capitalises the firm as a whole at a discount rate which is independent of the firms debt-equity ratio. As a consequence, the division between debt and equity is irrelevant. An increase in the use of debt funds which are apparently cheaper is offset by an increase in the equity capitalisation rate. This happens because investors seek higher compensation as they are exposed to greater risk arising from increase in the degree of leverage. They raise the capitalisation rate rE, as the degree of leverage increases. David Durand has advocated that the market value of a firm depends on it net operating income and business risk. The change in the degree of leverage employed by a firm cannot change these underlying factors. It merely changes the distribution of income and risk between debt and equity without affecting the total income and risk which influence the market value of the firm. Hence the degree of leverage per se cannot influence the market value of the firm.

Tuesday, May 12, 2020

Analysis Of The Poem Ragged Old Flag - 1081 Words

When songwriters begin to pen the lyrics of a song, I believe their ultimate goal is to transcend time in hopes of reaching listeners for generations to come. J.R. Cash, professionally known as Johnny Cash, wrote a song that did just that. â€Å"Ragged Old Flag† is a patriotic song that speaks to every generation. Written in 1974, â€Å"Ragged Old Flag† was meant to tell the story of our country. Johnny Cash recorded â€Å"Ragged Old Flag† live at the House of Cash. Cash wanted the song to be recorded live because it was raw, untouched, and unapologetically real. The basis of this analysis is to show how patriotism spans generations, but also why a song such as, â€Å"Ragged Old Flag† is an important part of patriotism in the United States of America. To begin, America has been through hell, but she always comes back. â€Å"Ragged Old Flag† was Cash’s response to the nationwide frustration brought on by the Vietnam War and Watergate Scandal. Johnny wanted to write a song that would make people feel patriotic and stand together during the Vietnam War and Watergate Scandal. â€Å"Ragged Old Flag† reaches many generations and that is apparent in the first couple of verses. Johnny Cash wrote â€Å"Ragged Old Flag† in first person point of view. The listener will be skillfully taken on a journey through the historical events of the United States. Within the first couple verses we are introduced to a man new to small town. He is walking by the courthouse when he notices an elderly man sitting on a bench. The manShow MoreRelatedRomanticism and Modernism as Strange Bedfellows: A Fresh Look at Jack Kerouacs On the Road12240 Words   |  49 Pages. I tingled all over; I counted minutes and subtracted miles. Jus t ahead over rolling wheatfields all golden beneath the distant snows . . . I pictured myself in a Denver bar that night, with all the gang, and in their eyes I would be strange and ragged and like the Prophet who has walked across the land to bring the dark Word, and the Word I had was ‘wow’ (35). He deems himself the romantic Prophet who bears the â€Å"Word.† Only in this case, the word is only an emotional, childlike utterance—â€Å"wow

Wednesday, May 6, 2020

What Role Do Mobile Phones Play in Society Free Essays

1. What role do mobile phones play in society? Discuss the influence of technology on everyday life: relationships, social movements and education. Mobile phones have a major impact on modern society as they are increasingly useful social tools. We will write a custom essay sample on What Role Do Mobile Phones Play in Society? or any similar topic only for you Order Now In 2004, ‘there were almost two billion mobile subscribers world-wide’ Arminen 2007. The majority of worldwide businesses use this technology to communicate. Mobiles have changed the way people organise activities, meetings and social occasions, and generally the way people go about living everyday life. Mobile phones increase contact with peers, so a person can always know what’s going on with those close to them. They help people communicate more efficiently, anywhere on the planet. Mobile phones have developed multi-features they are more than just a phone and can be used for sending text messages, taking photos, surfing the internet, playing music, using a calculator, setting an alarm, playing games, sending email, checking the time, calendar, maps, GPS, banking, radio, business’s such as voice memos, and are capable of an amazing amount of functions and some have many more functions than a computer, have the added bonus of high portability. On the down side however mobile phones can break down personal barriers where a person can find it hard to have any personal time, or participate fully in their present environment without interruptions as the majority of people never turn off their phone, so there is always constant communication. Modern day society has formed a very strong reliance on mobile phones where most individuals cannot leave home without their mobiles and have developed a need to be constantly contacted. Overall mobiles have a very large influence on relationships. Mobile phones play a huge role specifically in adolescences relationships. Mobile phone technology allows us to communicate with social groups in new ways, and to reaffirm those relationships, regardless of distance. SMS connects individuals in a non intrusive way so time and physical location are no longer important boundaries to communication (Horstmanshof Power, 2005) instead the shortness of the message is more important indicator of uptake giving rise to creative code. Horstmanshof and Power’s research looked at how the new communication was being taken up by what groups, and the rules, communication and social interaction of those groups. The results showed that SMS was mostly used to tighten close relationships. Mobile phones provide an easier way to communicate, and helps some shy adolescences become more social. Furthermore text message or SMS, help adolescences ‘check each other out’ (Cupples Thompson 2010) without embarrassment of getting rejected by a potential partner. Mobile phones assist in taking away any awkwardness on the next appointment or date by getting to know a stranger or potential partner (Cupples Thompson), by facilitating the asking of questions a person wouldn’t normally ask face to face. Despite their many positives mobile phones can have a negative side. All the availability leaves people with little personal uninterrupted. As Horstmanshof and Power describe ‘it’s like you are inviting the whole world into your space’ at any time the mobile is on. The easily accessible, relatively cheap and individualised nature of mobile phones has increased their popularity to the point where they have changed the way people interact at work as well as at home (Geser 2010). Mobile phones are increasingly breaking down the boundaries between work and home. Mobiles have changed the way individuals make decisions from individual to more consultative, the way people report emergencies, the social messages of status or connectedness we send to others who witness our calls, the way people participate in the present with increasing interruptions, the way people keep social obligations and the way people can change appointments at short notice, the way we can access greater amounts of information, and importantly, the change from a specific, location based communication system (landline) to an individual recipient. Geser suggests mobiles allow an individual to carry the cocoon of another place to where we are at present which may be a different place emotionally as well as physically to our current location and we need to skillfully maneuver between the two. This is particularly important in the work home boundaries. We need to make new decisions about when we are interrupted and how to deal with the present social or work situations (Geser) which may result in more self control as well as more social control like requesting people turn off their phones before meetings. Geser also supports that with their great ease mobiles also raise some concerns about people but especially children being less independent, and about mobile phone use contributing to fracturing social cohesion through subgroups potentially challenging the norm and the lesser social influence of more formal networks to increasingly informal networks. Technology has evolved where a person can access almost anything on their mobile phone including the internet, so that information is very easily accessible. Mobiles can help students do calculations through the use of a calculator or using specific programs on a computer such as the SPSS program Swinburne University uses for statistics. Encyclopedias are readily accessed online mostly for free which helps a person access the information they need at any time regardless of library opening hours or physical location. Almost all information is available at a click of a button. There is also computer assistant learning programs (Cradler et. l 2002) such as ‘cogmed working memory training’ (a memory training used for individuals with short term memory difficulties) that can be accessed through the mobile. Individuals are also not limited to working on a farm if they live in regional parts of the world as there is university and high schools based online and accessible through mobiles. However there are consequences of having to much easily accessible information. People become too dependent on often superficial information and don’t research as thoroughly. Skills, such as spelling are often diminished as Microsoft Word corrects spelling mistakes and even helps with grammar. Less effort is required in modern day society where it can be argued people are fed information. It has also become easy to plagiarize (Snooks and Co, 2002) and copy other peoples work and pass it off as your own but also easily to be found out. References Arminen, I, 2007, ‘Review Essay, Mobile Communication Society? ’, Mobile Communication Society? , v. 53, no. 1 University of Tampere viewed 19 March 2010 http://asj. sagepub. com Cogmed, 1999 Karolinska Institute, viewed 6 April 2010, http://www. cogmed. com/ Cupples, J ; Thompson, L, 2010, ‘Heterotextuality and Digital Foreplay’, Feminist Media Studies, v. 10, no. 1, pp. 1-17, Ebscohost viewed 19 March 2010 http://www. informaworld. com/smpp/content~db=all~content=a919196107 Geser, H, 2004, ‘Towards a Sociological Theory of the Mobile Phone’, ‘Sociology in Switzerland: Sociology of the Mobile Phone’, Google Scholar viewed 16 March 2010 http://socio. ch/mobile/t_geser1. pdf Horstmanshof, L, ; Power, MR, 2005, ‘Mobile phones, SMS, and relationships’, Humanities ; Social Sciences papers, v. 32, no. 1, pp. 33-52, Bond University viewed 16 March 2010 http://epublications. bond. edu. au/hss_pubs/75/ Snooks and Co 2002, Style manual for authors, editors and printers, 6th edn, John Wiley ; Sons, Milton, Qld. Published 2010 How to cite What Role Do Mobile Phones Play in Society?, Papers

Saturday, May 2, 2020

Discussion on the Application of DSS-Free-Samples for Students

Question: Discuss about the application of the DSS. Answer: Introduction The following assignment analyzes the application of the DSS which is decision making system and the cloud computing application in the industry and the chosen company is the commonwealth which is an Australian multinational bank which operates in New Zealand, Fiji, Asia, United States and United Kingdom. The commonwealth gives various financial services like loans, investment and insurance. It is regarded as the largest Australian bank which is listed in the securities exchange of the Australia. It was founded in the year 1911, the year 2016 the bank has amounted the revenues twenty five billion dollars, the profit earned by the bank in the year 2016 was over ten billion. It employees more than forty six thousand employees with total assets over 930 billion dollars. The assignment focuses on how the ban are utilizing the feature application of the cloud computing DSS which has been explained with the help of figures and statics. The cloud services used by the commonwealth are from I BM and HP and the bank efficiently using the application to cut its operational costs in the bank. Discussion DSS The Decision Support system (DSS) is the software which is programmed to study and analyze the business data which can help the businessmen to make decisions in easy way. Its application is more in making decisions.[1] The Decision support system can be used for the comparative study of the sales of the company at different intervals. It predicts the revenues of the company on the basis of the sales of the product. It is also used to study the effect of the new decision on the basis of the past decisions which was made by the company[2]. The usage of the DSS in financial sectors such as banks is crucial, there are huge amount of the data in form of the customer and its bank information. The DSS is mainly used to improve the e-banking facility of the commonwealth bank. Figure 1: The working structure of the DSS (Source: Nasri, Wadie, and Charfeddine, 2012, pp. 14) To improve the e-banking facility for customers, commonwealth bank hold timely strategic meeting[3]. The best tool to make this meeting successful is the usage of DSS. Figure 2: How financial institution utilizes DSS (Source: Fang, Chao, and Marle, 2012, pp. 644) With increasing population moving towards the e banking facility the DSS is the powerful tool for decision making. For instance Ditch DSS software which is a web based service designed by for storing and analyzing the property market of a country[4]. It stores and analyzed the commercial properties information like taxation, owner name and the size of the property which provide a full scale assessment to the banks with their queries related to the bank. The DSS software was also very useful in the retail bank which uses the application of the DSS to manage the queries of the customer and also helped to reduce the operational costs. Cloud computing in the banking sectors The cloud computing in the banking sectors has transformed the operation of the IT industry but bank like commonwealth bank and other financial sectors are still hesitant to use the cloud services due to lack of security and rising data breaches in the cloud data[5]. The banks data are very valuable and confidential and the breach in their system can lead to huge loss of money. Nowadays banks are also using IT products to extend their business online like the online payment and e-banking[6]. In order to carry out these operation cloud application are helpful in various ways. Using cloud application will enable them for efficient client service as the data are stored in cloud it will enable them for faster access of the services of the banking[7]. The online payment and various transactions will be faster and efficient. Thus the cloud service is flexible according to the customer needs. Figure 3: The changes in the operation in the banking industry using cloud application (Source: Prasad et al. 2014, pp. 356) Using cloud service will reduce the extra operational cost of the bank as the management of the bank data requires no additional cost[8]. The bank can also utilize the softwares which are necessary for operation free of cost as cloud contains all the software in it[9]. Thus additional cost of storing data and usage of the software is saved using the cloud service. The commonwealth bank of Australia has reported that the usage of the cloud in their business has reduced the cost and the time invested in standing up a news server has reduces from thousand dollar and the eight weeks to 25 cents and the eight minutes[10]. Cloud computing models 2011 2012 2013 2014 2015 2016 BaaS 19% 18.75% 18% 18% 17.5% 17.4% SsaS 28% 21% 20% 18% 17.7% 17.8% PaaS 50% 33% 30% 28% 26% 21% IaaS 49% 47% 49.4% 48% 37% 32% Management and Secondary 35% 40% 38% 30% 22% 20% Figure 4: Graph depicting the usage of various models of cloud computing software (Source: Created by author) Conclusion From the above report it can be concluded that the DSS which is the Decision Support system (DSS) is the software which is programmed to study and analyze the business data which can help the businessmen to make decisions in easy way. Its application is more in making decisions. The banking has huge application in the DSS as the huge and complex data can be used to predict the revenue of the company and it help them to make better decisions. The figure in the assignment shows the working of the DSS and in the second figure shows how the financial organizations use the application of the DSS. The cloud computing system has huge application in the IT industry but banks are also utilizing the application of the cloud computing as it saves the operational cost of buying software or storing data. The figure 3 shows that the difference between the operation by not using the cloud computing applications and with using cloud application. The graph shows the various software of the cloud whic h has been in demand in the market for five years it shows that there is a high demand of the cloud software in the market. Common wealth is also using the cloud services of IBM and HP companies to simplify its business operation. References Chang, Victor, Robert John Walters, and Gary Wills. "Financial Clouds and modelling offered by Cloud Computing Adoption Framework." (2014). Chang, Victor, Robert John Walters, and Gary Wills. "The development that leads to the Cloud Computing Business Framework." International Journal of Information Management 33, no. 3 (2013): 524-538. Fang, Chao, and Franck Marle. "A simulation-based risk network model for decision support in project risk management." Decision Support Systems 52, no. 3 (2012): 635-644. Jadeja, Yashpalsinh, and Kirit Modi. "Cloud computing-concepts, architecture and challenges." In Computing, Electronics and Electrical Technologies (ICCEET), 2012 International Conference on, pp. 877-880. IEEE, 2012. Nasri, Wadie, and Lanouar Charfeddine. "Factors affecting the adoption of Internet banking in Tunisia: An integration theory of acceptance model and theory of planned behavior." The Journal of High Technology Management Research 23, no. 1 (2012): 1-14. Prasad, Acklesh, Peter Green, and Jon Heales. "On governance structures for the cloud computing services and assessing their effectiveness." International Journal of Accounting Information Systems 15, no. 4 (2014): 335-356. Sauter, Vicki L. Decision support systems for business intelligence. John Wiley Sons, 2014. Schlagwein, Daniel, Alan Thorogood, and Leslie P. Willcocks. "How Commonwealth Bank of Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model." MIS Quarterly Executive 13, no. 4 (2014). Shibl, Rania, Meredith Lawley, and Justin Debuse. "Factors influencing decision support system acceptance." Decision Support Systems 54, no. 2 (2013): 953-961. Zissis, Dimitrios, and Dimitrios Lekkas. "Addressing cloud computing security issues." Future Generation computer systems 28, no. 3 (2012): 583-592 Shibl, Rania, Meredith Lawley, and Justin Debuse. "Factors influencing decision support system acceptance."Decision Support Systems54, no. 2 (2013): 953-961. Nasri, Wadie, and Lanouar Charfeddine. "Factors affecting the adoption of Internet banking in Tunisia: An integration theory of acceptance model and theory of planned behavior."The Journal of High Technology Management Research23, no. 1 (2012): 1-14. Sauter, Vicki L.Decision support systems for business intelligence. John Wiley Sons, 2014. Fang, Chao, and Franck Marle. "A simulation-based risk network model for decision support in project risk management."Decision Support Systems52, no. 3 (2012): 635-644. Zissis, Dimitrios, and Dimitrios Lekkas. "Addressing cloud computing security issues."Future Generation computer systems28, no. 3 (2012): 583-592. Chang, Victor, Robert John Walters, and Gary Wills. "Financial Clouds and modelling offered by Cloud Computing Adoption Framework." (2014). Jadeja, Yashpalsinh, and Kirit Modi. "Cloud computing-concepts, architecture and challenges." InComputing, Electronics and Electrical Technologies (ICCEET), 2012 International Conference on, pp. 877-880. IEEE, 2012. Prasad, Acklesh, Peter Green, and Jon Heales. "On governance structures for the cloud computing services and assessing their effectiveness."International Journal of Accounting Information Systems15, no. 4 (2014): 335-356. Chang, Victor, Robert John Walters, and Gary Wills. "The development that leads to the Cloud Computing Business Framework."International Journal of Information Management33, no. 3 (2013): 524-538 Schlagwein, Daniel, Alan Thorogood, and Leslie P. Willcocks. "How Commonwealth Bank of Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model."MIS Quarterly Executive13, no. 4 (2014)