Beta is a capital asset pricing model used in measuring the vitality or systematic risks of a security portfolio. This strategy is done concerning the prevailing marketing condition and equity marketing value. It’s used to estimate assets using the coefficient and the regression analysis of the stock return against the marketing return value. Nevertheless, private companies cannot be able to determine the stock beta since they lack the marketing data. The beta strategy can be directly applied as a management tool. It has been integrated as a business tool that enables the manager to increase efficiency and smart prioritizing effectively (Michael, 2019). Mega corporations have an advantageous ability that will allow rising of the fund through stock selling and investment. Lying of these strategies enable managers to make an amicable decision that affects investments and other high returns of the company. Importantly managers can identify risk, returns, and opportunities and threats that may affect the working portfolio of the company. Managers use this approach to secure and safeguard norms that enhance the company’s growth and development, especially in the financial sector (Cam Merritt, 2017).
My three beta companies include the ihop, BurgerKing, and Mcdonald’s. These companies are at the same level of proving the serves of the members of the public. In contrast to my project, the three companies have a better index in the stock price and dependent variables. This gives businesses a competitive advantage over my project. Portfolio management has enabled the company to steel factors of production that have demonetized their interest. On the other hand, my project company has tenure of having a rate on return in the free rate premium of investment (Peter, 2020).
Question 1
Internal rate of return is a metric used in capital accounting; it’s typically applied when carrying down a process of scrutiny, which helps in identifying potential investment, opportunities, and profitability of a business or corporate organization. It has a discounted ratio that makes the net current value of all the net cash flow from an actual scheme equal to zero. The price of return in the market is a crucial consideration that pinpoints high profiles in the market in efforts to determine accurate, reliable, and present value of the cash flow. Alternatively, the gross current rate approach is a discounted flow method and budgeting techniques that foresee future evaluation, investment, and cash circulation. The net present value analysis and eliminates time elements when comparing all forms of available and alternative investments. Ideally, the two approaches are used in evaluating capital expenditures. Taking the two methods into account of contrast, internal rates focused more on surpluses, and discounted rates whole net present is enshrined on average domestic rates of return. In my own opinion, the internal rate of return is a better approach. It has a high performance on the revenue value; for instance, fixed interest in bank rates assures investors of security when trading (Steven, 2018).
Question 2
Various reasons influence firms to indulge in public limelight and offer services. Nevertheless, the primary objective of a company is to maximize profit and the revenue collection of the shareholders or the entrepreneur. This objective is ethical and should be practiced with the line of duty. Ideally, rules and regulations enhance the values, integrity, and character of working personnel, which improves working relationships and increases the profit margin (Lohmann, 2019).
Question 3
Companies that have enhanced strict adherence to ethics have added advantages of realizing various benefits. Regulations and guidelines enable companies to secure a full scope of the market. It also increases the revenue share by providing a conducive working environment for all employees. It enhances planning and production techniques, which give them a competitive advantage and a lower cost of capital (Campbell, 2019).
References:
Campbell, P. (2019, August 16). Discount rate formula: Calculating the discount rate [WACC & APV]. Retrieved from https://www.profitwell.com/blog/discount-rate-formula
Lohmann, J. (2019). IRR | Internal rate of return | Definition & example. Retrieved from https://investinganswers.com/dictionary/i/internal-rate-return-irr
Steven Bragg. (2018, May 9). The difference between NPV and IRR — AccountingTools. Retrieved from https://www.accountingtools.com/articles/the-difference-between-npv-and-irr.html
Cam Merritt. (2017, November 20). Beta definition. Retrieved from https://www.investopedia.com/terms/b/beta.asp
Michael Koren. (2019). How to choose the right beta testing tools and features. Retrieved from https://www.centercode.com/blog/2019/02/how-to-choose-the-right-beta-testing-tools
Peter westfall. (2020). What does beta mean regarding a corporation? Retrieved from https://smallbusiness.chron.com/beta-mean-regarding-corporation-63065.html