Course Project Combine all the research and data you have completed for the Course Project assignments from Weeks 1–4. Do not just copy and paste previous assignments. Rather, analyze and present your

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Course Project

Combine all the research and data you have completed for the Course Project assignments from Weeks 1–4. Do not just copy and paste previous assignments. Rather, analyze and present your findings in a comprehensive final report.

Tasks:

  • Summarize the course project to this point including key topics from Weeks 1 through 4.

Then, using different sites and organizations than in Week 3:

  • Analyze three online trading sites, and determine the requirements for trading, including the price per trade.
  • Evaluate the amortization schedule you completed.  What role does the amortization schedule play in your organization?
  • Evaluate three companies (look for investor information) that offer DIPs or DRIPs. Why is the relevant?
  • Evaluate US Treasuries, Municipal Bonds, and Corporate Bonds.  Why is this relevant to an organization?

Submission Details:

  • Submit a 5-6 page Microsoft Word document, using APA style.

Course Project Combine all the research and data you have completed for the Course Project assignments from Weeks 1–4. Do not just copy and paste previous assignments. Rather, analyze and present your
Running Head: ANALYSIS OF NIKE 1 Analysis of Nike Jessica Arroyo South University 4-1-2021 Introduction Nike is a global leader in the field of manufacturing of sports attire and sporting shoes. The company has received global acclaim due to quality, durability and affordability of its products. Due to the search for cheap labor, the company has faced negative press due to allegations of child labor in some of its operations outside of the United States. Moreover, in its supply chain, the company has faced concerns on oppressing of suppliers. Nonetheless, the company has weathered these challenges to continue performing its duties as a going concern. Leadership, which is a major contributing factor to the success of a company, Nike has over the time changed its leadership to be incongruence with its goals and objectives (Mainwaring 2011). In the company’s production and leadership models, the company adopted actions that has led to the massive growth in the company’s capabilities. Corporate Social responsibility is a contemporary issue in many firms globally. Nike has developed a culture of CSR where it relates more with the society and its environs. Nike’s CSR has a unique way of protecting the environment through control of its supply chain leading a great marketing strategy (Mainwaring, 2011). Over the years, Nike has spent millions of dollars supporting the society and its immediate employees. In the company’s operations CSR is imperative to its growth hence having in place a CSR policy and strategy framework (Soares, E. T. P, 2016). However, despite the CSR policy being in place, the company has a quite bad history in its corporate behavior with issues of cheap labor. Competition has grown globally in the production of sporting apparels. However, due to the leadership and the continuous improvement in Nike’s products, has given the company a competitive age over the competitors. Moreover, with adoption of technology, the company has invested heavily on online marketing strategies. Additionally, the company has reduced the mortar stores it has to online business where clients can request products online. Moreover, the sponsorship of Olympics and other games has given Nike a mileage of its products with almost all sports people having a product from the company. Taste, choice and preference is a changing unseen variable that affects many businesses around the globe. Nike has flexibility in its operations where it listens to its customers and producers such products that meet the customer expectations (Kramer, 2019). Also, as the global trend for sports change and more games are internationalized, Nike has ensured that it has products that match the demand and also the world expectations. For instance, despite the different countries in the world, sporting equipment are universal and hence a major boost to Nike. EVA ANALYSIS EVA = NOPAT – (invested capital *WACC) ;NOPAT =Net operating profit after deduction/ payment of taxes ; Invested Capital = debt+ capital leases + shareholder’s equity ;WACC = Weighted average cost of capital is 6.55% WACC E / (E + D) Cost of Equity D / (E + D) Cost of Debt (1 – Tax Rate) 0.9622 6.77% 0.0378 1.0792% (1 – 14.065%) 6.55% (Nike, 2020). NOPAT calculation US$ in millions 12 months ended: May 31, 2020 Net income 2,539 Deferred income tax expense (benefit) (380) Increase (decrease) in allowance for uncollectible accounts receivable 184 Increase (decrease) in equity equivalents (196) Interest expense 151 Interest expense, operating lease liability 81 Adjusted interest expense 232 Tax benefit of interest expense (49) Adjusted interest expense, after taxes 183 Interest income (62) Investment income, before taxes (62) Tax expense (benefit) of investment income 13 Investment income, after taxes (49) Net operating profit after taxes (NOPAT) 2,477 (Nike, 2020). Invested Capital Nike Inc. Invested capital calculation (financing approach) US$ in millions   May 31, 2020 Current portion of long-term debt 3 Notes payable 248 Long-term debt, excluding current portion 9,406 Operating lease liability 3,358 Total reported debt & leases 13,015 Shareholders’ equity 8,055 Net deferred tax (assets) liabilities (732) Allowance for uncollectible accounts receivable 214 Equity equivalents (518) Accumulated other comprehensive (income) loss, net of tax 56 Adjusted shareholders’ equity 7,593 Construction in process (1,086) Short-term investments (439) Invested capital 19,083 (Nike, 2020). EVA= 2,477 – 8.96% × 19,083 = 767 Free cash flow; =cash flows from operations + capital expenditure =2485 + (-1086) = 1399 Nike’s Return on Assets (ROA) = Net Income/ Average total assets Net income = ($3.428B) ROA= 11% Return on Equity (ROE) =Net Income ($3.428b)/ (Average Equity over period ($10.488b) =32.7% ROE is a financial ratio that measures a company’s financial performance whereas ROA measures the return on investment through profitability. From the financial analysis, Nike is projected to grow and the company is within safe margins. For instance, the REO at 32.7% is a good indication of wealth creation for the shareholders. Also, the company can meet its financial requirement to cater for day-to-day operations. Consequently, the firm requires a check on the growing debt. References Kramer, M. (2019). How Nike Will Keep Sales Surging As Global Economy Slows. Retrieved 10 September 2019, from https://www.investopedia.com/nike-s-digital-revival-may-pave-the-way-for-big-sale-growth-in-2019-4587432 Mainwaring, S. (2011). How Nike Redefines Leadership in a Global, Social Community. Retrieved 10 September 2019, from https://www.fastcompany.com/1715007/how-nike-redefines-leadership-global-social-community Nike. (2020). NIKE, Inc. – Investor Relations – Investors – News, Events and Reports. Retrieved 29 March 2021, from https://investors.nike.com/investors/news-events-and-reports/default.aspx Soares, E. T. P. (2016). Closing the ‘CSR gap’through a successful CSR strategy: insights from Nike Inc (Doctoral dissertation).
Course Project Combine all the research and data you have completed for the Course Project assignments from Weeks 1–4. Do not just copy and paste previous assignments. Rather, analyze and present your
Assignment South University 4-4-2021 Course Project The scenario is designed to help you determine and evaluate the payment amount of a car loan and a mortgage, based on the assumption that your household income is $36,000 per year or $3,000 per month. Based on your income, you may spend 28% of your monthly income on housing, and 10% on a car loan. You are to put a 3% down payment on the house and a 10% down payment on the car. Tasks: What is the maximum car payment and mortgage payment you can afford with the following conditions: your monthly household income, 10% for the car payment over 4 years, and 28% for the 15-year mortgage payments? Maximum Monthly Payment in Car Loan = $3,000 × 10% = $300 So, car loan 10% on the monthly income is $300. Maximum Monthly Payment in House Loan = $3,000 × 28% = $840 Housing loan consist 28% on your monthly income of $840. The total amount of Loan is 840+300 = 1140 Create a complete amortization schedule for the car, using the information above. We have to determine the amount of loan Annual income = $36,000 Monthly Income = $3,000. Maximum Car Loan they can afford at 10% interest rate for 48 months is calculated in excel. The car Loan would be 300*12(months) * 4(years) which is equivalent of $14,400. We will assume the interest rate of 10% as advised. Rate = 10% Period = 48 months Down payment = 10% of 14,400 = 1440. Pv of Loan = $11,828.45. Value of car they can afford is $11,828.45. Complete Amortization Schedule for The Car using Excel amortization calculator Loan amount 11,828.45 Annual interest rate 10.00% Loan period in years Start date of loan 2021-04-03 Monthly payment $300.00 Number of payments 48 Total interest $ 2,571.55 Total cost of loan $ 14,400.00 No. PaymentDate BeginningBalance Payment Principal Interest EndingBalance 2021-05-03 $11,828.45 $300.00 $201.43 $98.57 $11,627.02 2021-06-03 $11,627.02 $300.00 $203.11 $96.89 $11,423.91 2021-07-03 $11,423.91 $300.00 $204.80 $95.20 $11,219.11 2021-08-03 $11,219.11 $300.00 $206.51 $93.49 $11,012.60 2021-09-03 $11,012.60 $300.00 $208.23 $91.77 $10,804.37 2021-10-03 $10,804.37 $300.00 $209.96 $90.04 $10,594.41 2021-11-03 $10,594.41 $300.00 $211.71 $88.29 $10,382.70 2021-12-03 $10,382.70 $300.00 $213.48 $86.52 $10,169.22 2022-01-03 $10,169.22 $300.00 $215.26 $84.74 $9,953.96 10 2022-02-03 $9,953.96 $300.00 $217.05 $82.95 $9,736.91 11 2022-03-03 $9,736.91 $300.00 $218.86 $81.14 $9,518.05 12 2022-04-03 $9,518.05 $300.00 $220.68 $79.32 $9,297.37 13 2022-05-03 $9,297.37 $300.00 $222.52 $77.48 $9,074.85 14 2022-06-03 $9,074.85 $300.00 $224.38 $75.62 $8,850.47 15 2022-07-03 $8,850.47 $300.00 $226.25 $73.75 $8,624.23 16 2022-08-03 $8,624.23 $300.00 $228.13 $71.87 $8,396.09 17 2022-09-03 $8,396.09 $300.00 $230.03 $69.97 $8,166.06 18 2022-10-03 $8,166.06 $300.00 $231.95 $68.05 $7,934.11 19 2022-11-03 $7,934.11 $300.00 $233.88 $66.12 $7,700.23 20 2022-12-03 $7,700.23 $300.00 $235.83 $64.17 $7,464.40 21 2023-01-03 $7,464.40 $300.00 $237.80 $62.20 $7,226.60 22 2023-02-03 $7,226.60 $300.00 $239.78 $60.22 $6,986.82 23 2023-03-03 $6,986.82 $300.00 $241.78 $58.22 $6,745.05 24 2023-04-03 $6,745.05 $300.00 $243.79 $56.21 $6,501.26 25 2023-05-03 $6,501.26 $300.00 $245.82 $54.18 $6,255.43 26 2023-06-03 $6,255.43 $300.00 $247.87 $52.13 $6,007.56 27 2023-07-03 $6,007.56 $300.00 $249.94 $50.06 $5,757.63 28 2023-08-03 $5,757.63 $300.00 $252.02 $47.98 $5,505.61 29 2023-09-03 $5,505.61 $300.00 $254.12 $45.88 $5,251.49 30 2023-10-03 $5,251.49 $300.00 $256.24 $43.76 $4,995.25 31 2023-11-03 $4,995.25 $300.00 $258.37 $41.63 $4,736.87 32 2023-12-03 $4,736.87 $300.00 $260.53 $39.47 $4,476.35 33 2024-01-03 $4,476.35 $300.00 $262.70 $37.30 $4,213.65 34 2024-02-03 $4,213.65 $300.00 $264.89 $35.11 $3,948.77 35 2024-03-03 $3,948.77 $300.00 $267.09 $32.91 $3,681.67 36 2024-04-03 $3,681.67 $300.00 $269.32 $30.68 $3,412.35 37 2024-05-03 $3,412.35 $300.00 $271.56 $28.44 $3,140.79 38 2024-06-03 $3,140.79 $300.00 $273.83 $26.17 $2,866.96 39 2024-07-03 $2,866.96 $300.00 $276.11 $23.89 $2,590.85 40 2024-08-03 $2,590.85 $300.00 $278.41 $21.59 $2,312.44 41 2024-09-03 $2,312.44 $300.00 $280.73 $19.27 $2,031.71 42 2024-10-03 $2,031.71 $300.00 $283.07 $16.93 $1,748.65 43 2024-11-03 $1,748.65 $300.00 $285.43 $14.57 $1,463.22 44 2024-12-03 $1,463.22 $300.00 $287.81 $12.19 $1,175.41 45 2025-01-03 $1,175.41 $300.00 $290.20 $9.80 $885.21 46 2025-02-03 $885.21 $300.00 $292.62 $7.38 $592.58 47 2025-03-03 $592.58 $300.00 $295.06 $4.94 $297.52 48 2025-04-03 $297.52 $300.00 $297.52 $2.48 $0.00 Analyze the distributions of principal, interest and the balance over the life of the loan. Car Loan amount 11,828.45 Annual interest rate 10.00% Loan period in years Start date of loan 2021-04-03 Monthly payment $ 300.00 Number of payments 48 Total interest $ 2,571.55 Total cost of loan $ 14,400.00 This above table shows the distribution of the principal which is 11,828.45. the inters of the loan is 300 and the total interest paid is 2571.55. the loan is cleared within 48 months for car loan. House We have to know yearly Payment; 28% x $3000 per month x 1 years x 12 months = $10,800 as yearly payment. Mortgage: 28% x $3000 per month x 15 years x 12 months = $151,200 mortgage payment. The principle would be = $104,626.95 arrived using excel =-PV(5%,15,10080)
Course Project Combine all the research and data you have completed for the Course Project assignments from Weeks 1–4. Do not just copy and paste previous assignments. Rather, analyze and present your
Running Head: ONLINE TRADING SITES 0 Online Trading Sites Jessica Arroyo South University Course Project Summary There are several concepts covered in the course which have enabled better understanding of the main concept. By analyzing Nike Inc., I better understand Economic Value Added (EVA) analysis. The analysis is basically used to measure the value a company generates from invested funds. The financial performance is measured by deducting the cost of capital from operating profit. Also covered in the course are mortgage and auto loans which are huge loans offered based on the credit score of a person. The lender also compares the monthly debt to income ration to assess whether one qualifies for the loans. The course also addresses stock purchases via online brokerage accounts. The brokerage accounts allows purchase and sale of stocks online. There are also companies that offer Direct Investment Plan (DIP) or Dividend Reinvestment Plan (DRIP) to encourage public investment without necessarily involving an online stock broker. Online Trading Sites When choosing an online trading site, it is necessary to consider various factors. It is important to compare different prices and trading requirements for different brokers before making a decision. The three sites to compare in this paper include; Charles Schwab, TD Ameritrade and E*TRADE. The trading sites offer great value for their portfolios. The sites are preferred for their offers on price and trading tools with TD Ameritrade standing out as the best online broker in 2014. According to the industry, investors are required to invest at least $2,000 as the margin prior to purchase of stock. Upon purchase of stocks, the account should not fall below the maintenance margin usually 25% of the total stock value in the account. Online brokers, however, have the ability to alter the maintenance margin based on the house requirements. Charles Schwab, an online broker provides comprehensive investment products and services for a sum of approximately 8.8 million customers. The customers have active brokerage accounts and the company looks forward to diversifying and hosting a variety of the accounts. The company provides debit cards to its customers which can be used at the company’s physical locations with no fees charged for transactions. Among the aspects that differentiate Schwab from other brokerage companies is that there are no platform fees or trade minimum. The price per trade is $8.95 with an account minimum of $1000 and no annual fees. Applications done on their website enrolls the customer to the company’s trading services. The customer is also able to access Schwab specialists, the trading community and StreetSmart trading platforms (Charles Schwab & Co. Inc., 2017). Schwab is considered to integrate banking and investing under one roof as either online or in-person services. Some of the drawbacks that may cause an investor to consider a competitor is lack of sophisticated trading platforms and lack of promotions. TD Ameritrade stands out among other online trading sites due to its customer service and support. The company provided powerful features such as trade and market scans, live streaming media and charting package for investors. Another tool offered on the trading platform is TradeArchitect that helps investors learn about the company and the options available. There are no trade minimums for the company and investors are not required to pay platform fees. The trade stock is $9.99 and the amount is paid despite the balance in the account or trade frequency. The price per trade is in addition to 75 cents per option contract with a minimum of $500 account balance (TD Ameritrade Inc., 2017). Unlike Schwab, the company offers promotions for instance, when a customer deposits $2000 he or she gets 2 months of trade free with an addition of $600 depending on the account funding. The company is known providing strong and secure trading platform although it may not be appealing to casual investors. The third trading company to consider is E*TRADE which has a house requirement of 25% of the total market value of the stocks. The company is not as flexible as Schwab and Ameritrade because the house requirement may be high for sticks that are in volatile and concentrated positions. In case the investor’s margin account goes below the 25% which is the minimum, the company requires the investor to top up the account by issuing a margin call. If by any chance the investor fails to top up the account or rather respond to the margin call in time, the company may liquidate the position or securities available in the investor’s account without his or her permission. For the first 149 stocks or option trades, the price per trade is $9.99for stocks above 500, the price is $7.99 with an addition of 75 cents per options contract (E*TRADE Financial Services, 2017). The company does not charge annual fees and requires an account minimum of $500. The company also offers promotions for instance, customers get 2 months of free trade and up to $500 upon making an initial investment of $10,000. The promotions is appropriate for investors who wish to set up funds with a low frequency of trading in the subsequent years. Among the feature offered on the trading platform include full time service, real time data and free research which are premium features. For customers willing ramp up their trade by making at least 10 trades in a month, E*TRADE is the place to sign up for. The company is known for all round minimum fees. Companies Offering DIPs or DRIPs A Direct Investment Plan or Dividend Reinvestment Plan refers to plans offered to individual investors to encourage public investment without having to use a stock broker. Examples of companies offering these plans include; Allstate Corp., Wells Fargo & Company and Capital One Financial Corp. Allstate Corp. have no minimum number of shares to enroll. However, there is an option to make a direct purchase of $500 or start an auto purchase of $10 for 5 consecutive months. The corporation has no reinvestment commission but customers are required to pay a dividend reinvestment fee of 5% per $3 share for reinvestment (Drip Investing, 2021). Reinvestment can also be done partially. The maximum and minimum annual purchase is $150,000 and $25 respectively. Wells Fargo & Company has a minimum requirement of one share for enrolment which is offered as a direct purchase. The initial purchase can either be a onetime purchase of $250 or $25 auto renew purchases for 10 months. The reinvestment commission is $1 and the dividend yield is 4%. The maximum purchase in a month is $10,000 and $25 is the minimum (Drip Investing, 2021). For cash purchases, it is possible to add on shares from the company to the existing shares with reinvestment. For additional purchase or reinvestment there is a 4% fee for $4 share. Capital One Financial Corp. has a minimum stock of $47.92 for enrollment. Unlike the other two, Capital One Financial do not offer direct purchase option. The dividend yield is 3.1% (Drip Investing, 2021). The reinvestment commission is $1 and the maximum purchase allowance is $10,000 per month. References Charles Schwab & Co. Inc. (2017) Bring Your Trading Inspiration to Schwab| Retrieved 12 March 2021, from http://activetrader.schwab.com/trading-services/get-started/# DRIP Investing – Direct Investment Plans & Dividend Reinvestment DRIPs | Invest Directly in Wells Fargo & Company. (2021). Retrieved 12 April 2021, from https://www.directinvesting.com/company_prospectus.cfm?c_id=61 DRIP Investing – Direct Investment Plans & Dividend Reinvestment DRIPs | Invest Directly in Allstate Corp. (2021). Retrieved 12 April 2021, from https://www.directinvesting.com/company_prospectus.cfm?c_id=675&s=drp DRIP Investing – Direct Investment Plans & Dividend Reinvestment DRIPs | Invest Directly in Capital One Financial Corp. (2021). Retrieved 12 April 2021, from https://www.directinvesting.com/company_prospectus.cfm?c_id=916 E*TRADE Financial Services (2017) Margin Trading at E*TRADE Increase Your Buying Power| Retrieved 12 March 2021, from https://us.etrade.com/active-trading/margin-trading TD Ameritrade Inc. (2017) Manage Your Options Strategy With a Leader in Options Trading| Retrieved 12 March 2021, from https://www.tdameritrade.com/investmentproducts/options-trading.page
Course Project Combine all the research and data you have completed for the Course Project assignments from Weeks 1–4. Do not just copy and paste previous assignments. Rather, analyze and present your
6 Government Securities Jessica Arroyo South University FIN 2030 4/18/2021 Government Securities Pure Expectations Theory The pure expectations theory presents that future rates are exclusively represented by forward rates. Simply, the framework asserts that the term structure indicates the future expectations of the market based on short-term rates. As an illustration, a rising term structure slope represents rising interest rates in the short term. The theory examines the long rates of interest and presents that the rate arises from the expected short-term rates of interest’s average (Azar, 2018). In other words, the expectations theory associates the long-term rate of interest with a certain risk premium based on the average of the short term. The theory is considered a fixed-income theory and significantly uses the interest rate term structure to explain future rates. When it comes to the yield curve, the curve depends on the present rates (short-term) and the interest rate expected after some time. Pure Expectations Theory Explanation For investors, their expectations regarding the expectation’s theory depend on what is being evaluated. In most cases, the speculators assess the yield curve based on the interest theory via the pure expectation’s theory. For instance, the current annual interest rate added to the expected annual rate of interest make up a two-year rate of interest. This maturity presents the differences which the theory explores and expounds on regarding the securities and yields (Azar, 2018). In this sense, the theory presents that the investors usually have no maturity preference when it comes to yields and the periods of maturity applied, in this case, weigh equally. The pure expectations theory is a core framework for investors in dealing with government securities. US Treasury Yield Curve The rate of interest yield presents a sloping upward curve, which is an important aspect for investors. When the curve slopes forward, it is interpreted as a situation where the investors consider a future rise of the interest rate of the US treasury yield. Based on the pure expectation’s theory, the yield curve indicates an expected future rise, which investors rely on to make decisions concerning their investment activities. However, when the investors expect a future increase in the interest rate, there is usually an upward sloping from the treasury yield. The curve explains the absence of premiums for the maturity of the yields. Municipal and Corporate Bonds The approach also applies when investors are dealing with corporate and municipal bonds. However, the municipal bonds display certain similarities with treasury bill rates in terms of the curve. The municipal bonds present an upward slope based on the pure expectations theory, indicating that the economic interest rate will rise as expected. On the other hand, corporate bonds have an equal interest rate with the treasury bills added to the risk premium involved. Furthermore, the risk premium relies on the issuer’s risks and the default risk that comes with the corporate bond. Therefore, corporate bond yields follow the same path as treasury yields. Yields and Maturities Since the curve associated with the risk is sloping upwards, there is an increase in maturity, leading to a security yield increase. Applying the pure expectations theory, in this case, indicates that the rate of interest will go up (Murphy, 2020). Treasury bills are expected to be the most secure because they usually come with no default risk. From the table below, it is evident that the US T-bills are decreasing in terms of yield. The fact the treasury bills come with no default peril makes it a core and benchmark factor in dealing with securities. For this reason, T-bills are the most significant of the securities. Secondly, for municipal bonds, when the time period is extended, the municipal bond’s yield also increases. On the other hand, corporate yields might be higher when pitted against municipal bonds because there is a rise in the expected risk. Table 1 Example Securities Time Period/Yields US Treasury Bill 3 months 6 months 12 months 2 years 5 years 1.93% 1.90% 1.82% 1.74% 1.66% Municipal Bond 1 year 2 years 5 years 10 years 30 years 1.18% 1.18% 1.19% 1.45% 2.14% Preferred Security and Justification When dealing with T-bills, municipal bonds, and corporate bonds, the risks and returns are usually considered proportional. For this reason, opting for a portfolio will rely on a wide range of aspects. For example, the risk-taking ability of an investor is what determines their option depending on what they want. For a portfolio, I would choose corporate securities and treasuries for the short term. The securities provide higher returns and interest rate yield as time passes, making them a valuable choice. References Azar, S. A. (2018). The Pure Expectations Theory and Quarterly Interest Rate Premiums. https://doi.org/10.5430/afr.v7n1p161 Murphy, C. (2020). Expectations Theory. Retrieved 18 April 2021 from https://www.investopedia.com/terms/e/expectationstheory.asp

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