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For this milestone, submit a draft of the Macroeconomic Items section of the final project, along with your supporting explanations. Base your calculations on the data provided in
this case study
. Be sure to substantiate your claims.
also included are the previous milestones for this paper
Workbook for this is already completed just need the Word Paper to follow it according to milestone 4 rubric. Please use peer revue references also
1
Time Value of Money
| Milestone One: Time Value of Money (please fill in shaded YELLOW cells, row 6D – 6H) | Explanations: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| I | 8% | FCF (Free Cash Flow) is the net change in cash generated by the operations of a business during a reporting period, minus cash outlays for working capital, capital expenditures, and dividends during the same period. FCF is a strong indicator of the ability of an entity to remain in business. | N | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| F | CF1 | F | CF2 | F | CF3 | F | CF4 | F | CF5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amounts* | 1 | 0 | 928 | 845 | 739 | 658 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pv* | (931.48) | ($795.61) | ($670.79) | ($543.19) | ($447.82) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Pv* | (3388.89) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| *In millions | Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pv= | FV | PV |
2 Stock and Bond Valuation
| Milestone Two: Stock Valuation and Bond Issuance (please fill in the shaded YELLOW cells) | ||||||||||||||
| Cash Dividend – distribution of the corporate income. They are not expenses and do not appear on Income Statement. Note: Part of Statement of | Cash Flows | |||||||||||||
| PART I: STOCK VALUATION | ||||||||||||||
| Dividend from Financial Statements: | ||||||||||||||
| Year | Cash Div/share ($) | Dividend Yield | Stockholder’s Equity (in millions) | Stock Price | Dividend Yield – annual cash dividend per share of common stock divided by the market price of a share of the common stock (Dividend yield = Annual Dividend/Current Stock Price). Note: Current Stock Price is not part of the Financial Statements – calculated using the formula for Dividend Yield |
|||||||||
| 2012 | 1.16 | 3.28% | 17,898 | 35.32 | ||||||||||
| 2013 | 1.56 | 6.44% | 17,777 | 24.23 | ||||||||||
| 2014 | 1.88 | 4.79% | 12,522 | 39.26 | ||||||||||
| 1. Stock Valuation – The new dividend yield if the company increased its dividend per share by 1.75 | ||||||||||||||
| Cash Div/Share ($) | Stockholder’s Equity = Assets – Liabilities. Equity represents the ownership of a corporation. Owners are called stockholders because they hold stocks or shares of the company. The goal of every corporate manager is to generate shareholder value. | |||||||||||||
| 2.91 | 8.24% | |||||||||||||
| 3.31 | 13.66% | |||||||||||||
| 3.63 | 9.25% | |||||||||||||
| 2. The dividend yield if the firm doubled it’s outstanding shares | Return on Equity – for this part we will modify and use return on investment instead. Using the formula: Dividend (+1.75)/+[(new price-old price)/old price] Note – for this part, you will need extra price from 2011 |
|||||||||||||
| Stockholder’s Equity (in millions) -doubled | ||||||||||||||
| 0.58 | 1.64% | 35,796 | ||||||||||||
| 0.78 | 3.22% | 35,554 | ||||||||||||
| 0.94 | 2.39% | 25,044 | ||||||||||||
| Bonds are a long-term debt for corporations. In buying a bond, the bond-owner lends money to the corporation. The borrower promises to pay specified interest rate during the loan’s lifetime and at the maturity, payback the entire principle. In case of bankruptcy, bondholders have priority over stockholders for any payment distributions. Bonds = Debt……………Bondholders = Lenders Stock=Equity…………….Stockholders = Owners |
||||||||||||||
| 3. The rate of return on equity (i.e., the cost of stock) based on the new dividend yield you calculated above | ||||||||||||||
| Cash Div/Share ($) +1.75 | Return on Investment | |||||||||||||
| 3.00% | ||||||||||||||
| 4.25% | ||||||||||||||
| Calculation: Please note that for bond calculations, only one bond is used and we assume February 1, 2015 is the origination date. The value on financial statements will be considered PV (Present value). Maturity date is assumed for February 2036 and payment schedule adjusted to February 1 and August 1. The following Senior-Note was used from page 44: 5.875% Senior Notes; due December 16, 2036; interest payable semi-annually on June 16 and December 16 PV ( | Present Value | |||||||||||||
| PART II: BOND ISSUANCE | ||||||||||||||
| Curent Bonds from Financial Statements | ||||||||||||||
| ($2,963) | ||||||||||||||
| Periods | 40 | Semi-annual payment: 2036-2016 = 20 years *2 = 40 periods | ||||||||||||
| 2.9375 | Interest paid semi-annually: 5.875%/2 = 2.9375% | |||||||||||||
| Payments | PMT | This bond does not make regular PMT except for interest | ||||||||||||
| Future Value | $9,433.58 | CALCULATING FV (please see help on the right hand side) | ||||||||||||
| 1. The new value of the bond if overall rates in the market increased by 5% | ||||||||||||||
| 5.4375 | Please adjust interest | 5.875%+5% = 10.875%/2 = 5.4375% | ||||||||||||
| FV (Future Value Calculation) – using Excel Formula | ||||||||||||||
| $24,634.04 | Step 1) Select Formulas | |||||||||||||
| Step 2) Click on Financial | ||||||||||||||
| Step 3) Select FV – you will see the formula below | ||||||||||||||
| 2. The new value of the bond if overall rates in the market decreased by 5% | Step 4) Enter the following: | |||||||||||||
| Rate – enter as decimal, no % sign. Example: 4% as 0.04 | ||||||||||||||
| Nper – number of period. Enter a whole number. Example 50 | ||||||||||||||
| Pmt – payment. Our example does not assume regular payments disbursing principal | ||||||||||||||
| 0.4375 | 5.875%-5% = 0.875%/2 = 0.4375% | Pv – Present value. Enter as negative. Example $1,000 should be -1000 | ||||||||||||
| Type – leave blank | ||||||||||||||
| $3,528.32 | ||||||||||||||
| 3. The value of the bond if overall rates in the market stayed exactly the same | ||||||||||||||
| – identical to CURRENT BOND VALUE from Financial Statements |
3
Capital Budgeting
Data
| Milestone Three: Capital Budgeting Data (please fill in the shaded YELLOW cells) | ||||||||||||
| WACC | Capital Budgeting Example Set-up | ACCEPT | ||||||||||
| Initial investment $65,000,000 | REJECT | |||||||||||
| Straight-line Depreciation of 20% | ||||||||||||
| Initial Outlay | Income Tax @35% | |||||||||||
| ($65,000,000) | WACC of 8% approximately. (HD WACC was about 8.83%) | |||||||||||
| Cash Flows (Sales) | $50,000,000 | $45,000,000 | $65,500,000 | $55,000,000 | $25,000,000 | Cash Flow (which in this case are Sales Revenues) are as follows: | ||||||
| – | Operating Costs | $38,500,000 | CF1: $50,000,000 | |||||||||
| – Depreciation Rate of 20% | ( | 13,000,000 | CF2: $45,000,000 | |||||||||
| Operating Income (EBIT) | 24,500,000 | 19,500,000 | 40,000,000 | 29,500,000 | (500,000) | CF3: $65,500,000 | ||||||
| – Income Tax (Rate 35%) | 8,575,000 | 6,825,000 | 14,000,000 | 10,325,000 | (175,000) | CF4: $55,000,00 | ||||||
| After-Tax EBIT | 15,925,000 | 12,675,000 | 26,000,000 | 19,175,000 | (325,000) | CF5: $25,000,000 | ||||||
| + Depreciation | ||||||||||||
| 28,925,000 | 25,675,000 | 39,000,000 | 32,175,000 | CF1: $25,500,000 | ||||||||
| CF2: $25,500,000 | ||||||||||||
| Select from drop downs below: | CF3: $25,500,000 | |||||||||||
| NPV | ($21,453,688.38) | CF4: $25,500,000 | ||||||||||
| CF5: $25,500,000 | ||||||||||||
| IRR | 34% | |||||||||||
| WACC- why do we use WACC rate for new projects? If the project doesn’t earn more percent than WACC, the corporation should abandon the project and invest money elsewhere. | ||||||||||||
| Initial Investment – always negative. Corporation has to invest money (“lose” it till they recover it via sales) in order to gain future benefit. |
4
Interest Rate
Implications
| Milestone Four: | Interest Rate Implication | Explanation: | ||||||||||||
| We will use Milestone 1 and Time Value of Money for Milesotne 4 analysis | ||||||||||||||
| 1. Original Scenario from Milestone 1 – Time Value of Money using 8% | ||||||||||||||
| Two cases will be analyzed: | ||||||||||||||
| 8.00% | Lower Interest Rate at 5% | |||||||||||||
| Higher Interest Rate at 15% | FCF1 | FCF2 | FCF3 | FCF4 | FCF5 | |||||||||
| 113 | 111 | 108 | 101 | 97 | ||||||||||
| (104.63) | (95.16) | (85.73) | (74.24) | (66.02) | ||||||||||
| (425.78) | ||||||||||||||
| 2. Change in interest rate and its implications – Lower Interest Rate (5%) | ||||||||||||||
| 5.00% | ||||||||||||||
| (107.62) | (100.68) | (93.29) | (83.09) | (76.00) | ||||||||||
| (460.69) | ||||||||||||||
| 3. Change in interest rate and its implications – Higher Interest Rate (15%) | ||||||||||||||
| 15.00% | ||||||||||||||
| (98.26) | (83.93) | (71.01) | (57.75) | (48.23) | ||||||||||
| (359.18) |
SUMMARY
| SUMMARY TAB | Note: This process could take up to 20 seconds | ||||||||||
| TAB 1 | 1. Time Value of Money | TAB 3 | |||||||||
| 1006 | |||||||||||
| FALSE | |||||||||||
| TAB 2 | PART I – Stock Valuation | $9,785,570.71 | |||||||||
| 50% | |||||||||||
| TRUE | TAB 4 | ||||||||||
| PART II – Bond Issuance | |||||||||||
| Current Bond Value | |||||||||||
| $9,433.28 | |||||||||||
| New Value +5% | |||||||||||
| New Value – 5% | |||||||||||
RUN Summary
CLEAR DATA
FIN 550 Final Project Guidelines and Rubric
Overview
The final project for this course is the creation of a financial analysis report.
Financial analysis involves examining historical data to gain information about the current and future financial health of a company. Financial analysis can be
applied in a wide variety of situations to give business managers the information they need to make critical decisions. The ability to understand financial data is
essential for any business manager.
For this summative assessment, you will provide a financial analysis report for Home Depot Inc. based on the data in the case study provided (see link in prompt).
You will be asked to take the topics that you have covered throughout the course and display your mathematical and conceptual mastery of them. You will
conduct background calculations and provide managerial analysis for the following topics: time value of money, stock valuation, bond valuation, and capital
budgeting.
The project is divided into four milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final
submissions. These milestones will be submitted in Modules Two, Four, Six, and Seven. The final submission will be in Module Nine.
In this assignment, you will demonstrate your mastery of the following course outcomes:
Predict the effects of the time value of money on potential investments for ensuring an effective portfolio balance between risk and return
Assess the stock valuation process as a viable financing and investment option for maximizing shareholder value
Assess the bond issuance process for its viability as a financing option for raising adequate capital
Forecast the feasibility of corporate investment opportunities by utilizing capital budgeting estimates for ensuring effective decision making
Analyze macroeconomic variables that impact corporate financial decision making for ensuring alignment with strategic objectives
Prompt
Using this case study, prepare a financial analysis report for Home Depot Inc. For your calculations, use the Final Project Student Workbook, which includes tabs
specific to each milestone. Be sure to include in your analysis the background calculations and managerial analysis for each of the following topics: time value of
money, stock and bond valuation, and capital budgeting. Also include a discussion of macroeconomic variables that might impact the company’s financial
decision making and strategic objectives. Note that while these elements may seem separate and unrelated, together they will present a well-rounded view of
the company’s finances with regard to the topics.
http://www.sec.gov/Archives/edgar/data/354950/000035495015000008/hd-212015x10xk.htm
http://snhu-media.snhu.edu/files/course_repository/graduate/fin/fin550/fin550_final_project_student_workbook.xlsx
Specifically, you must address the critical elements listed below. Most of the critical elements align with a particular course outcome (shown in brackets).
I. Time Value of Money
A. Calculate the following time value of money figures:
1. Calculate the present value of the company based on the given interest rate and expected revenues over time.
2. Suppose the risk of the company changes based on an internal event. Recalculate the present value of the company.
3. Suppose that a potential buyer has offered to buy this company in five years. Based on the present value you calculated above, what
would be a reasonable amount for which the company should be sold at that future time?
B. What are the implications of the change in present value based on risk? In other words, what does the change mean to the company, and how
would you, as a financial manager, interpret it? Be sure to justify your reasoning.
C. Based on the future value of the company that you calculated, and being mindful of the need to effectively balance portfolio risk with return,
what recommendation would you make about purchasing the company as an investment at that price? Be sure to substantiate your reasoning.
II. Stock Valuation
A. Based on the figures provided, calculate each of the following:
1. The new dividend yield if the company increased its dividend per share by 1.75
2. The dividend yield if the firm doubled its outstanding shares
3. The rate of return on equity (i.e., the cost of stock) based on the new dividend yield you calculated above
B. What effect would you expect each of the calculations you performed to have in terms of shareholder value? In other words, suppose the
company’s goal is to maximize shareholder value. How will each of the situations support or inhibit that goal? Be sure to justify your reasoning.
C. To what extent do you feel the company’s dividend policies support or hinder their strategies? For example, if the company is attempting to
grow, are they retaining and reinvesting their earnings rather than distributing them to investors through dividends? Be sure to substantiate your
claims.
III. Bond Issuance
A. Assuming this company already has bonds outstanding, calculate the following:
1. The new value of the bond if overall rates in the market increased by 5%
2. The new value of the bond if overall rates in the market decreased by 5%
3. The value of the bond if overall rates in the market stayed exactly the same
B. What effect would you expect each of the calculations you performed to have in terms of the company’s decision to raise capital in this
manner? In other words, for each situation, would you consider bond valuation to be a viable option for increasing capital? Be sure to justify
your reasoning.
C. To what extent do you feel the company’s bond issuance policies support or hinder their strategies? For example, if the company is attempting
to fund operating expenses, refinance old debt, or change its capital structure, are they issuing sufficient bonds to achieve these goals? Be sure
to substantiate your claims.
IV. Capital Budgeting Data
A. Suppose the company is considering a potential investment project to add to its portfolio. Calculate the following items:
1. The net present value (NPV) of the project
2. The internal rate of return (IRR) of the project
B. What are the implications of these calculations? In other words, based on each of the calculations, and being mindful of the need to balance
portfolio risk with return, would you recommend that the company pursue the investment? Why or why not? Be sure to substantiate your
claims.
C. What is the difference between NPV and IRR? Which one would you choose for evaluating a potential investment and why? Be sure to support
your reasoning with evidence.
V. Macroeconomic Items: The CEO of the company is convinced that financial analysis should hinge only on what is happening internally within the
company. Convince him otherwise based on the following:
A. Analyze the implications of interest rate changes on any of the calculations you performed. Be sure to substantiate your claims.
B. How might an issue (negative or positive) within the overall stock market impact the company’s stock valuation numbers, other financial
variables, or its overall portfolio management? Be sure your response is supported by evidence.
C. Analyze the impact of any external factor (i.e., external to the company) discussed throughout the course on the company’s financial position.
Be sure to justify your reasoning.
Milestones
Milestone One: Time Value of Money (Section I)
In Module Two, you will submit a draft of the Time Value of Money section of the final project, along with your supporting explanations. Submit your calculations
on the designated tab of the Final Project Student Workbook and your supporting explanations as a Microsoft Word document. This milestone will be graded
with the Milestone One Rubric.
Milestone Two: Stock Valuation and Bond Issuance (Sections II and III)
In Module Four, you will submit a draft of the Stock Valuation and Bond Issuance sections of the final project, along with your supporting explanations. Submit
your calculations on the designated tab of the Final Project Student Workbook and your supporting explanations as a Microsoft Word document. This milestone
will be graded with the Milestone Two Rubric.
Milestone Three: Capital Budgeting Data (Section IV)
In Module Six, you will submit a draft of the Capital Budgeting Data section of the final project, along with your supporting explanations. Submit your
calculations on the designated tab of the Final Project Student Workbook and your supporting explanations as a Microsoft Word document. This milestone will
be graded with the Milestone Three Rubric.
Milestone Four: Macroeconomic Items (Section V)
In Module Seven, you will submit a draft of the Macroeconomic Items section of the final project, along with your supporting explanations. Submit your
calculations on the designated tab of the Final Project Student Workbook and your supporting explanations as a Microsoft Word document. This milestone will
be graded with the Milestone Four Rubric.
Final Project Submission: Financial Analysis Report
In Module Nine, you will submit your financial analysis report along with your completed Final Project Student Workbook. It should be a complete, polished
artifact containing all of the critical elements of the final project. It should reflect the incorporation of feedback gained throughout the course. This submission
will be graded with the Final Project Rubric.
Deliverables
Milestone Deliverable Module Due Grading
One Time Value of Money (Section I) Two Graded separately; Milestone One Rubric
Two Stock Valuation and Bond Issuance (Sections II and
III)
Four Graded separately; Milestone Two Rubric
Three Capital Budgeting Data (Section IV) Six Graded separately; Milestone Three Rubric
Four Macroeconomic Items (Section V) Seven Graded separately; Milestone Four Rubric
Final Project Submission: Financial Analysis Report Nine Graded separately; Final Project Rubric
Final Project Rubric
Guidelines for Submission: Your financial analysis report should be 7 to 12 pages, not including a title page and references page. It should use 12-point Times
New Roman font, double spacing, and one-inch margins. All citations and references should be formatted according to APA style. Also submit your completed
Final Project Student Workbook.
Critical Elements Exemplary Proficient Needs Improvement Not Evident Value
Time Value of Money:
Figures
[FIN-550-01]
Accurately calculates requested
figures (100%)
Calculates figures, but with gaps
in accuracy or detail (70%)
Does not calculate figures (0%)
6.33
Time Value of Money:
Implications
[FIN-550-01]
Meets “Proficient” criteria and
demonstrates keen insight into
the interrelationship between risk
and present value (100%)
Analyzes implications of change in
present value based on risk,
justifying reasoning (90%)
Analyzes implications of change in
present value based on risk, but
response or reasoning is cursory
or illogical (70%)
Does not analyze implications of
change in present value based on
risk (0%)
6.33
Time Value of Money:
Future Value
[FIN-550-01]
Meets “Proficient” criteria and
demonstrates keen insight into
using time value of money for
recommending investments
(100%)
Makes recommendation about
purchasing company at future
price, substantiating claims (90%)
Makes recommendation about
purchasing company at future
price, but response or
substantiation is cursory or
illogical (70%)
Does not make recommendation
about purchasing company at
future price (0%)
6.33
Stock Valuation:
Calculations
[FIN-550-02]
Accurately calculates requested
figures (100%)
Calculates figures, but with gaps
in accuracy or detail (70%)
Does not calculate figures (0%) 6.33
Stock Valuation:
Shareholder Value
[FIN-550-02]
Meets “Proficient” criteria and
demonstrates keen insight into
the effects of changing financial
variables on shareholder value
(100%)
Analyzes the effects of each
calculation on shareholder value,
justifying reasoning (90%)
Analyzes the effects of each
calculation on shareholder value,
but response or reasoning is
cursory or illogical (70%)
Does not analyze the effects of
each calculation on shareholder
value (0%)
6.33
Stock Valuation:
Dividend Policies
[FIN-550-02]
Meets “Proficient” criteria and
demonstrates keen insight into
the relationship between
dividend policies and strategies
for increasing shareholder value
(100%)
Assesses the extent to which
dividend policies support or
hinder company strategies,
justifying reasoning (90%)
Assesses the extent to which
dividend policies support or
hinder company strategies, but
response or reasoning is cursory
or illogical (70%)
Does not assess the extent to
which dividend policies support or
hinder company strategies (0%)
6.33
Bond Issuance: Bonds
[FIN-550-03]
Accurately calculates requested
figures (100%)
Calculates figures, but with gaps
in accuracy or detail (70%)
Does not calculate figures (0%) 6.33
Bond Issuance: Raising
Capital
[FIN-550-03]
Meets “Proficient” criteria and
demonstrates keen insight into
the effects of changing market
conditions on decisions to raise
capital (100%)
Analyzes the effects of each
calculation on the company’s
decision to raise capital, justifying
reasoning (90%)
Analyzes the effects of each
calculation on the company’s
decision to raise capital, but
response or reasoning is cursory
or illogical (70%)
Does not analyze the effects of
each calculation on the company’s
decision to raise capital (0%)
6.33
Bond Issuance: Bond
Issuance Policies
[FIN-550-03]
Meets “Proficient” criteria and
demonstrates keen insight into
the relationship between bond
issuance policies and strategies
for raising capital (100%)
Assesses the extent to which
bond issuance policies support or
hinder company strategies,
justifying reasoning (90%)
Assesses the extent to which
bond issuance policies support or
hinder company strategies, but
response or reasoning is cursory
or illogical (70%)
Does not assess the extent to
which bond issuance policies
support or hinder company
strategies (0%)
6.33
Capital Budgeting Data:
Potential Investment
[FIN-550-04]
Accurately calculates requested
figures (100%)
Calculates figures, but with gaps
in accuracy or detail (70%)
Does not calculate figures (0%) 6.33
Capital Budgeting Data:
Pursuing the
Investment
[FIN-550-04]
Meets “Proficient” criteria and
demonstrates keen insight into
using NPV and IRR to judge
potential investment
opportunities (100%)
Analyzes the implications of each
calculation on the
recommendation to pursue the
investment, substantiating claims
(90%)
Analyzes the implications of each
calculation on the
recommendation to pursue the
investment, but response or
substantiation is cursory or
illogical (70%)
Does not analyze the implications
of each calculation on the
recommendation to pursue the
investment (0%)
6.33
Capital Budgeting Data:
Difference
[FIN-550-04]
Meets “Proficient” criteria and
demonstrates keen insight into
using NPV and IRR to judge
potential investment
opportunities (100%)
Accurately characterizes the
difference between NPV and IRR
and explains which would be
chosen for evaluating a potential
investment and why, supporting
reasoning with evidence (90%)
Characterizes the difference
between NPV and IRR and
explains which would be chosen
for evaluating a potential
investment and why, but response
is cursory or inaccurate or
evidence is not supportive (70%)
Does not characterize the
difference between NPV and IRR
and does not explain which would
be chosen for evaluating a
potential investment and why
(0%)
6.33
Macroeconomic Items:
Implications
[FIN-550-05]
Meets “Proficient” criteria and
demonstrates keen insight into
the relationship between interest
rate changes and financial
variables in a company (100%)
Analyzes implications of interest
rate changes, substantiating
claims (90%)
Analyzes implications of interest
rate changes, but response or
substantiation is cursory or
illogical (70%)
Does not analyze implications of
interest rate changes (0%)
6.33
Macroeconomic Items:
Stock Market
[FIN-550-05]
Meets “Proficient” criteria and
demonstrates keen insight into
the relationship between stock
market fluctuations and financial
variables in a company (100%)
Assesses the impact of an issue
within the overall stock market on
the company’s stock valuation
numbers or any other financial
variable, supporting response
with evidence (90%)
Assesses the impact of an issue
within the overall stock market on
the company’s stock valuation
numbers or any other financial
variable, but response is cursory,
illogical, or weakly supported
(70%)
Does not assess the impact of an
issue within the overall stock
market on the company’s stock
valuation numbers or any other
financial variable (0%)
6.33
Macroeconomic Items:
External Factor
[FIN-550-05]
Meets “Proficient” criteria and
demonstrates keen insight into
the relationship between external
factors and a company’s financial
position (100%)
Analyzes the impact of a factor
external to the company on the
company’s financial position,
justifying reasoning (90%)
Analyzes the impact of a factor
external to the company on the
company’s financial position, but
response is cursory, illogical, or
weakly supported (70%)
Does not analyze the impact of a
factor external to the company on
the company’s financial position
(0%)
6.33
Articulation of
Response
Submission is free of errors
related to citations, grammar,
spelling, syntax, and organization
and is presented in a professional
and easy to read format (100%)
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
(90%)
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact readability
and articulation of main ideas
(70%)
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas (0%)
5.05
Earned Total 100%
FIN 550 Milestone Four Guidelines and Rubric
Overview: For the final project, you will use this case study to prepare a financial analysis report for Home Depot Inc. You will include in your analysis the
background calculations and managerial analysis for each of the following topics: time value of money, stock and bond valuation, and capital budgeting. You will
also discuss macroeconomic variables that might impact the company’s financial decision making and strategic objectives. These topics will be covered over four
milestones to be submitted throughout the course before you submit the final project. Note that while these elements may seem separate and unrelated,
together they will present a well-rounded view of the company’s finances with regard to the topics.
In Milestone Four, you will submit a draft of the Macroeconomic Items section of the final project, along with your supporting explanations.
Prompt: Provide an explanation of the impact of external factors on the financial position of Home Depot. Use the designated tab in the Final Project Student
Workbook to demonstrate the implications of interest rate changes on at least one of the calculations you performed in one of the earlier milestones.
Specifically, the following critical elements must be addressed:
V. Macroeconomic Items: The CEO of the company is convinced that financial analysis should hinge only on what is happening internally within the
company. Convince him otherwise based on the following:
A. Analyze the implications of interest rate changes on any of the calculations you performed. Be sure to substantiate your claims.
B. How might an issue (negative or positive) within the overall stock market impact the company’s stock valuation numbers, other financial
variables, or its overall portfolio management? Be sure your response is supported by evidence.
C. Analyze the impact of any external factor (i.e., external to the company) discussed throughout the course on the company’s financial position. Be
sure to justify your reasoning.
Guidelines for Submission: Your paper must be submitted as a 2- to 3-page Microsoft Word document, not including your calculations, which should be
completed in the Final Project Student Workbook. Use double spacing, 12-point Times New Roman font, and one-inch margins. Sources should be cited according
to APA style.
http://www.sec.gov/Archives/edgar/data/354950/000035495015000008/hd-212015x10xk.htm
http://snhu-media.snhu.edu/files/course_repository/graduate/fin/fin550/fin550_final_project_student_workbook.xlsx
http://snhu-media.snhu.edu/files/course_repository/graduate/fin/fin550/fin550_final_project_student_workbook.xlsx
Rubric
Critical Elements Proficient (100%) Needs Improvement (80%) Not Evident (0%) Value
Macroeconomic Items:
Implications of Changes
Analyzes implications of interest rate
changes, substantiating claims
Analyzes implications of interest rate
changes, but response or substantiation
is cursory or illogical
Does not analyze implications of interest
rate changes
30
Macroeconomic Items: Stock
Market
Assesses the impact of an issue within
the overall stock market on the
company’s stock valuation numbers or
any other financial variable, supporting
response with evidence
Assesses the impact of an issue within
the overall stock market on the
company’s stock valuation numbers or
any other financial variable, but response
is cursory, illogical, or weakly supported
Does not assess the impact of an issue
within the overall stock market on the
company’s stock valuation numbers or any
other financial variable
30
Macroeconomic Items:
External Factor
Analyzes the impact of a factor external
to the company on the company’s
financial position, justifying reasoning
Analyzes the impact of a factor external
to the company on the company’s
financial position, but response is
cursory, illogical, or weakly supported
Does not analyze the impact of a factor
external to the company on the company’s
financial position
30
Articulation of Response Submission has no major errors related
to citations, grammar, spelling, syntax, or
organization
Submission has major errors related to
citations, grammar, spelling, syntax, or
organization that negatively impact
readability and articulation of main ideas
Submission has critical errors related to
citations, grammar, spelling, syntax, or
organization that prevent understanding of
ideas
10
Earned Total 100%
Running Head:
TIME VALUE OF MONEY ANALYSIS & CAPITAL BUDGETING CASE STUDY
1
TIME VALUE OF MONEY ANALYSIS & CAPITAL BUDGETING CASE STUDY 4
TIME VALUE OF MONEY ANALYSIS & CAPITAL BUDGETING CASE STUDY
Robert Shulzinsky
Southern New Hampshire University
12/1/2017
Q1. Time value of money refers to the notion that money in the future is not worth than money in the present (CPF Board, 2015). This fact is supported by the idea that money to be earned in the future will have higher risk than money earned in the present. Furthermore, money that is earned in the present can be invested in the present and earn more income than in the future. This is the core principle of investment in corporate finance where any amount of money is worth in the present than in the future.
Using the free cash flow, the business needs to invest the cash into projects and assets that will yield greater returns as opposed to leaving the same idle. This leads to the need for evaluating capital investment using capital budgeting methods.
Capital budgeting methods will use time value of money to determine the present value and future value of investment using discounting of money. This will be determined through the use of the interest rate which will discount the future value of the cash flows and asset to give the present value. As it is the case, milestone 1 discounts the free cash flow from page 43 on capital lease payments. The time value of money in the case is used to calculate the value of the company which is discounted in the present value to determine a suitable amount that the company can be bought in the present and in the future. This helps the company to arrive at an amount which is guided and sound in terms of judgment used in arriving at the sell price.
Q2. The time value of money is affected by the interest rate. As it is the case in determining the present value, the higher the interest rate, the lower the present value whereas it is vice versa for the future value which increases by increase in the interest rate (Fabozzi, 2014). The best example is in the case of stock and bond valuation where the market interest rate increase by 5% leads to a higher future value of the stocks which is given by the value as 24,624 against the reduction of market interest by 5% given by 16,428. It is also worth noting that the future value of a bond increases by the value of the interest rate whereas the period also affects it by increasing the risk premium. This means that a bond that has a longer period will have a higher bond value as compared to the bond which has a shorter bond period.
With the introduction of risk, a higher interest is the equivalent premium (risk premium) which is added in order to account for increased risk. With increased premium, the future value of a bond increases since risk is factored in to increase the value of the bond value. With the reduction of interest, the bond value also decreases. The implication as a company manager is the need to reduce the time period issued to bonds as well as the interest rate since the company will be forced to pay higher cash flows to the bond holders.
Q3. My advice on purchasing the company will be to purchase the company since the Net present value is positive as well as the discounted cash flows from the companies in the future is positive.
References
CFP Board Financial Planning Competency Handbook (US Edition). (2015) (p. 98).
Fabozzi, F. (2014). Duration, convexity, and other bond risk measures (p. 5). New Hope, Pa.: Frank J. Fabozzi Associates.
[Type text] [Type text] [Type text]
1
Case Study: Stock Valuation and Bond Issuance
Robert Shulzinsky
Southern New Hampshire University
December 16, 2017
The worked stock valuation
A. From the figures provided compute;
1. The new
dividend
yield if the company increased its dividend per share by 1.75
Dividends yield is given by the formula =
The above formula or equation based on the dividend yield is normally used for calculation of the percentage return on stock in respect to dividends accrued over the period. Generally, the total return on a stock is termed as the accrued overall dividends and appreciation of a stock in the specifications. Moreover, dividends paid for a company is found on the statement on retained earnings, hence is used to compute dividends per share.
Dividends Yield Formula
The formula is used by investors who opt to focus on increasing or declining rate of the dividend yield. On wide angle, an organization or a firm that is spending less in dividends in regard to its price probably having problems or retaining most of a percentage on net income for its development. When inspecting stock, it is good to consider the whole company and its net income being retained since reinvesting on net income would lead to appreciation of the stock value and the general growth.
This formula is of greater interest on investors who depends mainly on dividends from their normal savings and investment. Furthermore, lower yield on dividends does not mean little dividends since the price may substantially be increased. As illustrated before, a sequence of declining yield on dividends may only warrant inspection but not immediate decline of the proposed investment.
The dividend Yield is calculated as= =
2. The dividend yield if the firm doubled its
outstanding
shares
The dividend on stock and corresponding
stock split
generally increase the number of outstanding shares while others remains constant, the price of stock decreases. Hence, the price of the stock
dilute
s further on stock dividend /stock split.
Furthermore, stock split comprises of a decision by the organization or firm
board of directors
aimed at increasing the shares that may be outstanding facilitated by giving more shares to the general
shareholder
s’. in a 2-for-1 stock split, each shareholder owning a stock is given an extra share. For example, if a firm had 10m shares pending before split, it tends to be holding 20m outstanding shares after (2-for-1 split).
The price of stock is influenced directly by a stock split. Immediately after split, the price of stock is reduced since the actual number of outstanding shares goes higher. In the above 2-for-1 split example the actual price would be halved. Hence, despite the change on the outstanding shares and stock number,
market capitalization
pertains i.e. never change.
When or if the company doubled its outstanding shares, the price of stock will thus be halved, which will be $39.47.
Now dividend Yield will be= =
3. The rate of return on equity (i.e., the cost of stock) based on the new dividend yield you calculated above
The return on equity ratio or ROE is an interest or profit ratio that evaluates the ability of a company to increase profit returns from shareholders investments within the firm. On another case, the return on equity ratio reflects total profit on each dollar on individual stockholders’ equity earned or generated.
Generally, return on 1 implies that each dollar of normal stockholders’ equity earns 1 dollar on the total net income. It is an important measure for investors since they opt to see how effective a fill would use their cash capital to increase net income generation. It is also an indicator on the effective management it employs the use of equity financing policy and terms to finance operations to enhance company growth.
Return on equity ratio = = .
B. What effect would you expect each of the calculations you performed to have in terms of shareholder value? In other words, suppose the company’s goal is to maximize shareholder value. How will each of the situations support or inhibit that goal? Be sure to justify your reasoning.
Dividends influences the price in stock on the following discussed three major ways. Basically, when a certain dividend is paid for, the accrued value is subtracted from the specific firm’s or organization retained earnings. These earnings are termed as the total profit accrued or received by a company after accumulating consecutively over time which has not been placed to other alternative uses. In simple words, the total amount of money a firm has in account which can be used to pay dividends and fund companies projects.
When big firms and companies tend to display dividend histories, they seem more effective and efficient for investors. Thus, many investors come in to utilize the advantage the benefit of stock ownership, definitely the price of stock naturally shift upwards, hence increasing the belief that the stock is firm in the market. In case a company releases a higher-than-normal dividend, general public tends to break in and soar.
However, when a firm that analogically pay dividend issues a lower-than-normal dividend, it may end up to be perceived as a sign of failure or collapse on the company during hard times. Honestly it could be, the company’s profits generated are being misused or used for other un necessary purposes, but in real market’s reflection on the situation is always stronger and influential than the reality. For such companies, they work hard to pay consecutive dividends for the sake of avoiding spooking business investors who feel the investment as darkly, scamming and foreboding.
Dividend Declaration and Distribution
When a dividend is to be distributed, issuing firm first declare the amount in it plus the date it will be paid. Further, announces the last date where the free shares can be bought to receive dividend, namely the
ex-dividend date
. The date is conducted in two business days in respect to the date in the record, i.e. date on which the company reviews the list of its genuine and trusted shareholders.
The dividend declaration naturally promotes investors to increase on stock purchases. Since investors are aware and sure to receive a dividend if they buy more stock prior to ex-dividend date, they would fully be willing to pay all premiums required earlier. This poses price increment on stock in within the days leading to the ex-dividend date. Moreover, the increment almost equal to amount of the dividend. However, the actual price variation is based on market activities and is not influenced by the governing entities.
During the specified ex-dividend date, exchange decreases the price of the stock to the amount of the dividend to compensate for the fact that new business investors may not eligible to receive dividends hence unwilling to pay premiums. More also, when the market is certainly optimistic about the stock leading to ex-dividend date, price shifts upwards and creates thus may be greater than normal dividend value, leading to a net increase in respect of the automatic decrement. Incase dividend is not large; the decrement may shift unnoticed because of back and forth in the normal trading. It is established that many investors buy shares just slightly before the ex-dividend date and sell again slightly after the date of record. This tactic fetches more money.
C. To what extent do you feel the company’s dividend policies support or hinder their strategies? For example, if the company is attempting to grow, are they retaining and reinvesting their earnings rather than distributing them to investors through dividends? Be sure to substantiate your claims.
As to whether a dividend paid to individual shareholders influences the issuing firm’s retained earnings, it primary depends entirely on type of dividend accrued. Cash dividends have a straight impact on retained earnings and the general issuance of stock on the dividends is quite complicated.
If a firm or organization wish to issue dividends to shareholders and don’t have extra cash on hold, it may opt to use a stock dividend. Any company may also adopt this alternative as a way of reducing the value of existing shares, pulling down the
price (P/E) ratio
and other financial factors. Similarly called bonus shares, a dividend on stock alters the firm balance sheet in many ways depending on the issuance size.
When the shares outstanding figures increases by less than 20 to 25%, dividend is referred to as small. If a small dividend is suddenly declared, retained earning value on the account is debited by specific product on the current price of the market per share, outstanding number of shares and percentage dividend on stock. This systematic equation yields the bonus value for specified shares in dollars. In above case, when company ABC has 1.5m shares outstanding and selling at $50 per share, thus it may or announces a 10% stock dividend, then retained earnings account is then debited by the calculations as1,500,000 * 10% * $50, / $7.5 million.
If this was paid in cash dividend, it would be terminating the desired or above calculation. But since it has not paid any cash / value of the above business remains constant, the figure is reassigned direct from retained earning account through paid-in capital final to common stock accounts after issuance of available bonus shares. Moreover, common stock account (credit) = product of the total new shares issued * by the
par value
per share. The R is then credited as paid-in capital (reminder).
If shares on above example have a par value of 1 cent, then amount credited to common stock =1,500,000 * 10% * $0.01, simply= $1,500. The R= $7,498,500 is credited to the paid-in capital account (R-reminder). The overall worth of the company pertains or remains constant, but only assets allocation is altered.
If stock dividend raises up the number of shares outstanding in more than 20 to 25%, it is referred as a large dividend hence the accounting varies slightly. In above case, only par value of the current shares is debited direct from the retained earning account more also reassigned to common stock account after the dividend has been distributed. When a company ABC instead releases a 50% dividend, the total amount debited from retained earning account should now be =1,500,000 * 50% * $0.01, simply= $7,500. This because only the par value in the bonus shares was taken into the account.
When small stock dividend poses a greater
impact on the retained earning account
, the overall credit worth of the company normally remains constant or un altered by stock dividends for any available size.
3. Bond Issuance
A. By assuming this company already has bonds outstanding, calculate the following:
1. The new value of the bond if overall rates in the market increased by 5%
Assuming this company already has bonds outstanding
· The Par value=$1,000
· The Maturity date = 5 years
· The Market interest rate = 8%
· The Annual coupon payment = $80
Present value of a bond = Present Value of the Coupon Payments (
an annuity
) + The Present Value of the Par Value (i.e. Time value of money) = INT = $319.42+$ 680.58=$1000.003
Assuming the interest rate increase from 8% to 13%.
New bond value = Present Value of the Coupon Payments (an annuity) Present Value of the Par Value (time value # money) given by formula = INT = $281.38+$ 542.76=$824.14
2. The new value of the bond if overall rates in the market decreased by 5%
Assume the interest rate decrease from 8% to 3%.
New bond value = Present Value of the Coupon Payments (an annuity) + Present Value of Par Value (time value # money) = INT = $366.38+$ 862.61=$1228.99
3. The value of the bond if overall rates in the market stayed exactly the same
The bond value will remain constant if the overall rates in the market maintain exactly the same/ constant.
Present bond value = Present Value of the Coupon Payments (an annuity) + Present Value of Par Value (time value # money) = INT = $319.42+$ 680.58=$1000.003
B. What effect would you expect each of the calculations you performed to have in terms of the company’s decision to raise capital in this manner? In other words, for each situation, would you consider bond valuation to be a viable option for increasing capital? Be sure to justify your reasoning.
The fundamental principle behind bond investing is the fact that interest rates in market and prices of bonds move in opposite orientations. Incase market interest rates increases, prices on fixed-rate bonds drops down. This process generally referred to as interest rate risk. Based on this phenomenon, bond valuation seizes from being viable option for continuous increase in capital. Contrary to this where market interest rates drop down, the bond prices tend to rise. Hence, interest rate risk unique and similar to all bonds more also to treasury bonds.
A bond’s maturity and coupon rate generally affect how much its price will change as a result of changes in market interest rates. If two bonds offer different coupon rates while all of their other characteristics (e.g., maturity and credit quality) are the same, the bond with the lower coupon rate generally will experience a greater decrease in value as market interest rates rise. Bonds offering lower coupon rates generally will have higher interest rate risk than similar bonds that offer higher coupon rates.
When interest rates in the market falls, the bond value increase has the bond’s fixed interest payments becomes greater compared to amounts available in current bonds issued at new interest rates in the market.
References:
1.
https://www.sec.gov/investor/alerts/ib_interestraterisk
2.
http://www.financeformulas.net/Dividend_Yield.html
3.
http://www.investopedia.com/ask/answers/113.asp
4.
5.
http://www.investopedia.com/articles/investing/091015/how-dividends-affect-stock-prices.asp
FIN 550 Homework Guidelines and Rubric
This course uses homework problems to demonstrate competence and allow for practice with calculations unique to finance. Complete all your calculations in
the Homework Student Workbook. Then summarize your findings and discuss the implications of the findings for the business or potential business transaction.
Follow the instructions for each question in Modules Three and Five and complete the assigned work.
Guidelines for Submission: Each homework assignment must be submitted as a 1-page Microsoft Word document with double spacing, 12-point Times New
Roman font, and one-inch margins. Any sources should be cited according to APA style. In addition, your Homework Student Workbook must be submitted to
demonstrate all calculations.
Critical Elements Proficient (100%) Needs Improvement (70%) Not Evident (0%) Value
Accuracy of
Calculations
Includes detailed calculations, including
demonstration of each step taken to
accurately complete the problem
Includes calculations that are inaccurate
and/or does not include all of the steps
needed
Includes calculations that are inaccurate
and does not provide an explanation of
calculations
45
Analysis: Implications Includes an explanation of the
implications of the findings for the
business and/or potential business
transaction
Explains the implications of the findings,
but there are inaccuracies or explanation
is insufficient
Does not include an explanation of the
findings
45
Articulation of
Response
Submission has no major errors related to
citations, grammar, spelling, syntax, or
organization
Submission has major errors related to
citations, grammar, spelling, syntax, or
organization that negatively impact
readability and articulation of main ideas
Submission has critical errors related to
citations, grammar, spelling, syntax, or
organization that prevent understanding
of ideas
10
Earned Total 100%
http://snhu-media.snhu.edu/files/course_repository/graduate/fin/fin550/fin550_homework_student_workbook.xlsx
1
2
Admission, Discharge, Transfer System
Deanna Buchanan
SNHU
Based on the two recommended technology systems, the organization should choose the Admission Discharge and Transfer (ADT) system based on its numerous features and advantages. The ADT system is a crucial component in health care information systems and is commonly used to track patients starting from when they get into a health care facility to the time they are discharged or taken to another health care facility. This information stores different forms of data; including patients’ contact information, names, age, and medical record numbers. Implementing the ADT system in the organization will help keep crucial information and make it more accessible for health care professionals, besides making it easily transferable to other health care facilities, thus improving the quality and speed of providing health care services to patients.
Choosing the ADT system would be the best option because it has been attributed to various benefits, including improving patient care, collecting more reliable information, and interoperability. These systems usually create a workflow that enhances the collection of crucial information upon admission of the patient and then stores the data in a well-organized manner. The ADT system is designed to assist in improving the quality of patient information by ensuring that it is always updated while increasing reliability by providing context, for instance, historical records and notes where possible (Bartley & Daiker, 2022). This system can play a crucial role in improving patient care because it collects and organizes data in one easy-to-use database. This helps health care professionals to improve the use of patient history, which generally improves the quality and timeliness of patient care. For instance, if a patient has a history of a specific health condition or illness, the medical practitioners will receive notifications immediately after the patient is admitted to the health care facility. Due to this, medical professionals can easily determine whether the disease is relevant to the current concerns and take necessary action. Additionally, the ADT system has a high level of interoperability. The medical center can set up an ADT interface between various hospitals and huge medical systems in order to notify a patient’s care team of admission, discharge, or transfer to a hospital. This will allow the health care providers outside the medical center to be well-informed on what took place during the patient’s visit.
During the implementation of the ADT system in the medical center, there are various ethical considerations that must be observed. Every health care facility has to uphold various technological principles, including accountability, data protection, and privacy (Shahid et al., 2022). The health care facility must ensure that patient-sensitive data is safeguarded to prevent malicious attacks. Most patients also prefer privacy; hence, the management must ensure that patient information is not shared with unauthorized persons. Moreover, the organization could invest its financial resources more effectively into the ADT system centered on certain factors. Based on the provided information, the medical center can effectively invest in the technology system because the cost of the interface, software, implementation, training, and yearly maintenance costs is relatively lower than that of the other recommended system.
There are different ways the organization could effectively monitor the use of the ADT system. One of the ways would be by deploying monitoring devices. These monitoring devices can be placed strategically in the technology system to collect essential information and place them at ad hoc locations to track different types of transactions of interest to the organization. Some of the monitoring devices that can be used include intrusion prevention systems, audit record monitoring, malicious code protection software, scanning tools, and network monitoring software. Moreover, the organization could effectively invest its time into the implementation of the ADT system by training and educating the staff members on how to use this technology system. Training the staff will provide significant insights on how the system is used and minimize mistakes which will, in turn, improve the organization’s operations and improve patient care.
References
Bartley, J., & Daiker, M. L. (2022). Technology Environment. In The CAHIMS Review Guide (pp. 23-42). Productivity Press.
Shahid, J., Ahmad, R., Kiani, A. K., Ahmad, T., Saeed, S., & Almuhaideb, A. M. (2022). Data protection and privacy of the internet of healthcare things (IoHTs). Applied Sciences, 12(4), 1927.
