Beta and capital budgeting

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Reference no: EM133115431

Beta and Capital Budgeting

Part 1: Beta

Yahoo Finance

1. Search for the beta of ADT inc.

2. In addition, find the beta of 3 different companies within the same industry as ADT inc.

3. Explain to your classmates what beta means and how it can be used for managerial and/or investment decision

4. Why do you think the beta of ADT inc and those of the 3 companies you found are different from each other? Provide as much information as you can and be specific.

Part 2: Capital Budgeting

Before you respond to Part 2 review the following information on Capital Budgeting Techniques

To avoid damaging its market value, each company must use the correct discount rate to evaluate its projects. Review and discuss the following:

• Compare and contrast the internal rate of return approach to the net present value approach. Which is better? Support your answer with well-reasoned arguments and examples.

• Is the ultimate goal of most companies--maximizing the wealth of the owners for whom the firm is being operated--ethical? Why or why not?

• Why might ethical companies benefit from a lower cost of capital than less ethical companies?

Reference no: EM133115431

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