# Two discussion Question – One Homework Scenario – One Stock Journal

International Problem Course

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Discussion 1

“International Law” Please respond to the following:

International Law differs from other areas of law in that it contains no defined area or governing body. Instead, it refers to several different types of laws, rules, and customs. These elements, in turn, affect the legal interactions among different nations, their governments, and the businesses and organizations within these nations.

• Explain why the United States does not recognize all of the efforts, tribunals, courts, and declarations of international law. Cite an example.
• Give your opinion: Do you trust that international law is impartial? Why or why not?

Discussion Question 2

“Course Wrap-up” Please respond to the following:

• Describe briefly what you have learned in this course.

Explain how this course has affected your outlook or perspective on world events

Introduction to Finance Course

Complete the following homework scenario:

• Required:
Compare the results of the three (3) methods by quality of information for decision making. Using what you have learned about the three (3) methods, identify the best project by the criteria of long term increase in value. (You do not need to do further research.) Convey your understanding of the Time Value of Money principles used or not used in the three (3) methods. Review the video titled “NPV, IRR, MIRR for Mac and PC Excel” (located at https://www.youtube.com/watch?v=C7CryVgFbBc and previously listed in Week 4) to help you understand the foundational concepts:

Scenario Information:
Assume that two gas stations are for sale with the following cash flows; CF1 is the Cash Flow in the first year, and CF2 is the Cash Flow in the second year. This is the time line and data used in calculating the Payback Period, Net Present Value, and Internal Rate of Return. The calculations are done for you. Your task is to select the best project and explain your decision. The methods are presented and the decision each indicates is given below.

• Three (3) Capital Budgeting Methods are presented:

• Payback Period: Gas Station A is paid back in 2 years; CF1 in year 1, and CF2 in year 2. Gas Station B is paid back in one (1) year. According to the payback period, when given the choice between two mutually exclusive projects, the investment paid back in the shortest time is selected.
• Net Present Value: Consider the gas station example above under the NPV method, and a discount rate of 10%:
NPVgas station A = \$100,000/(1+.10)2 – \$50,000 = \$32,644
NPVgas station B = \$50,000/(1+.10) + \$25,000/(1+.10)2 – \$50,000 = \$16,115
• Internal Rate of Return: Assuming 10% is the cost of funds; the IRR for Station A is 41.421%.; for Station B, 36.602.
• Gas Station B should be selected, as the investment is returned in 1 period rather than 2 periods required for Gas Station A.
• Under the NPV criteria, however, the decision favors gas station A, as it has the higher net present value. NPV is a measure of the value of the investment.
• The IRR method favors Gas Station A. as it has a higher return, exceeding the cost of funds (10%) by the highest return.
 Investment Sales Price CF1 CF2 Gas Station A \$50,000 \$0 \$100,000 Gas Station B \$50,000 \$50,000 \$25,000

Summary of the Three (3) Methods:

STOCK JOURNAL

Click the link above for more information and then click Create Journal Entry at the top-left of the next screen to submit your journal entry.

• Record the current price of the stock for each company you selected in Week 3’s Stock Journal. You may use any price during this week (e.g., day one price, the opening, the low, the high, the close, or any price you find when you check it during the day). Using a MS Excel spreadsheet or MS Word document, put your Week 8 and Week 10 stock prices side-by-side, to show the comparison.
• Determine the total value of your investment.
• Provide your final opinion / assessment of your investments. Did you make money or lose money? Discuss your results and, based on hindsight, describe what you would do differently.
• Discuss what you learned from this assignment. Do you believe this assignment will help you in the future in any way?