Business Finance
BA 620 CU Managerial Finances Beta and Capital Budgeting Discussion

BA 620

Cumberland University


Question Description

I’m studying for my Management class and need an explanation.

Beta and Capital Budgeting

Part 1: Beta

Visit the following web site or other websites:

Yahoo Finance

1. Search for the beta of your company (Pepsi-co)

2. In addition, find the beta of 3 different companies within the same industry as your company (Pepsi-co).

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

4. Why do you think the beta of your company (Pepsi-co) 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 of discussion 6 review the following information on Capital Budgeting Techniques

Capital Budgeting Decision Methods


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?

No Plagiarism APA formate please.

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Final Answer

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Running head: DISCUSSION


Institutional Affiliation



The yearly data utilized in calculating the Beta are gathered from a time period of 5 years. The
frequency we have is monthly.
The first thing we need to calculate is the actual return on a given security and then get the value
of the market return. The Beta for my chosen company is calculated as below:
The Return = The Current Adjacent close less the Previous Adjacent Close - 1
The Previous Adj Close

= Covariance

In this case, covariance is the measure of the return of ...

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