Long Term Financing Paper

Long-Term Financing
Learning team up A
Donald Blythe, Kim Brown, Athena Cartaya, Nicia Diaz
University of Phoenix
Introduction to finance and Accounting
MBA 503
October 6, 2008

Introduction
Team A has been asked to assist in providing long-term pecuniary advice to Company A, as they are considering expansion. Long-term financing lead enceinte deficit businesses funds for the period over 1 year. It contrasts to short term financing because short term financing provides funds for the period of 1 year or less. Businesses usually turn to lenders not only to expand their companies or to buy equipment, but excessively to finance operating capital to compensate out cash flow (unixl, 2008). Long-term financing ensures that the currency Company A invests today, will earn a profit. Team A will compare and contrast the capital summation pricing standard and the discounted cash flows model, evaluate the organization’s debt/ equity mix and dividend policy, describe the characteristics and the cost of various debt and equity instruments, and evaluate long-term financing alternatives (e.g., stocks, bonds, leases).




Compare and contrast the capital assets pricing model and the discounted cash flows model
The capital assets pricing model (CAPM) is used to picture a theoretically appropriate postulate rate of come about of an asset, if that asset is to be added to an already well-diversified portfolio, given over that assets non-diversifiable risk. The model takes into account the asset’s sensitivity to non-diversifiable risk, also known as systemic risk or marketplace risk, often represented by the quantity beta (B) in the financial industry, as well as the expected return of the market and the expected return of a theoretical risk-free asset (Wikipedia, 2008). In other words, the (CAPM) is used by organizations to determine their required return on an investment. The required return for green stock (or other investments) can be described by the following formula:
Kj = Rf + B(Km –...If you want to get a full essay, order it on our website: Ordercustompaper.com



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