Global Financial Investment Analytical Essay by Nicky

Global Financial Investment
A analytic paper on the risks and benefits of financial investments in global enterprises.
# 149599 | 2,045 words | 10 sources | APA | 2011 | US
Published on Dec 25, 2011 in Business (International) , Economics (International) , Business (General)


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Description:

This paper analysis the process and circumstances behind a global investment by large companies. Using different examples of single investors, and cooperative investments by multiple corporations from different companies, the writer analyzes the cost and benefit factors of such investments. Looking at the basics of finance, the paper discusses the cost of capital versus the rate of return, while also looking at the structure of capital in the investment and how to calculate or produce the determinants of profitability. The conclusion to the analysis is that when economic agents team up across geographic lines, they stand a greater chance of success in today's liberalized global economy.

Outline:
Introduction
Cost of Capital and Rate of Return
Net Present Value and the Discrete Probability Distribution
Recommendation to Investment
Determinants of Profit
Structure of Capitals
Exchange Rate Risk
Conclusions

From the Paper:

"In a most simplistic formulation, the cost of capital represents "the opportunity cost of an investment; that is, the rate of return that a company would otherwise be able to earn at the same risk level as the investment that has been selected" (Investor Words, 2009). In calculating the value of the cost of capital, investors add up the cost of debt and the cost of equity. In the case of the Wilson Company, the cost of capital exceeds the value of $4 million.
"The second concept of this section, that of the rate of return, refers to "the gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost. Gains on investments are considered to be any income received from the security plus realized capital gains" (Investopedia, 2009). In this particular context, it refers to the money that the $12 million investment will generate. The simplest way of calculating the rate of return is that of dividing the subtraction of the initial investment from the final result by the investment. Otherwise put: Rate of Return = [(Return - Capital) / Capital] x 100 (Think Quest Library)
"In order to achieve this however, it is necessary to identify the expected results of the joint venture. It is estimated to generate profits of 60, 80 and 100 million respectively, throughout the first three years of operations."

Sample of Sources Used:

  • Fabozzi, F.J., Peterson, P.P., 2003, Financial Management and Analysis, 2nd Edition, John Wiley and Sons, ISBN: 0471234842
  • Hull, J.C., 2003, Options, Futures and Other Derivatives, Prentice Hall, ISBN 0130091448
  • Roworth, G., 2005, The 7 Keys to Business Success, Buzzle, http://www.buzzle.com/editorials/4-25-2005-69063.asp last accessed on May 18, 2009
  • Walesh, S.G., 2003, Managing and Leading: 52 Lessons Learned for Engineers, ASCE Publications, ISBN 0784406758
  • 2009, Investor Words, http://www.investorwords.com last accessed on May 18, 2009

Cite this Analytical Essay:

APA Format

Global Financial Investment (2011, December 25) Retrieved October 16, 2019, from https://www.academon.com/analytical-essay/global-financial-investment-149599/

MLA Format

"Global Financial Investment" 25 December 2011. Web. 16 October. 2019. <https://www.academon.com/analytical-essay/global-financial-investment-149599/>

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