Numbers speak louder than words, and your role as a financial analyst is to provide informed justification for an organization to undertake (or forgo) a potential
investment. Creating value for the pleasure of the investors requires prudent research and diligent financial analysis to align the organization’s strategic vision
with the investment’s proposed outcomes.
Prompt: In Milestone One, you will select one of the three companies and one of the two scenarios to be the focus of your final project throughout the duration
of this course. Take time to start thinking about the information pertaining to the company that you will need to research in order to execute your modeling
framework. Refer to the Milestone One Rubric for specific elements to consider as you select your organization.
You will then construct a 250- to 350-word synopsis that analyzes the scenario you chose. You will upload your selections and synopsis to your instructor via a
ORDER FOR THIS PAPER
Next, review the two case study scenarios below and choose one hypothetical for the company you chose above.
1. Seeking global success is not a new concept to Fortune 500 companies, and it fuels the argument that all company activities should serve to maximize
the wealth of its shareholders. Penetrating new markets is a path to potentially large-scale opportunities and increased return on investment (ROI).
Evaluating the feasibility of securing a global presence or expanding locally (in other words, shoring up their domestic presence) is the key capital
investment trade-off decision facing the organization. As the chief financial officer (CFO), determine the critical elements that will influence your decision
using actual company data as guided by the factors outlined in the Final Project Guidelines and Rubric document.
2. Acquiring the competition is often an option for penetrating untapped markets, increasing market share, and realizing elevated stock performance. As the
CFO, you have identified a clear opportunity to become the dominant leader in retail pharmaceutical sales through the acquisition of your principal
competitor. The key capital investment trade-off decision facing the organization is whether your organization should acquire the competitor or expand
by building new stores throughout the continental United States. What factors will influence your decision?
Finally, construct a 250- to 350-word synopsis that analyzes the scenario and addresses the following critical elements:
I. Analysis of Scenario
A. Analyze the financial structure of the firm you have chosen in order to determine the appropriate inputs that should go into the model, paying
close attention to those that are used in the calculations of the weighted average cost of capital (WACC). Describe why each variable you select is
an important driver in this scenario.
B. Present and analyze the current U.S. interest rate environment with a particular focus on the shape and levels of the treasury yield curve.
Discuss what the current shape and levels can tell us about the current economic environment. Describe the connection between the interest
rate environment and the risk-free rate.
C. Analyze the future outlook for the overall economy and future market conditions to determine possible changes that could impact the
company’s cost of equity and cost of debt. Discuss how the outlook you have identified will impact future calculations of the WACC for your
D. Discuss the importance that variables such as future economic and market conditions play in utilizing financial models that effectively achieve