In the Week 8 Discussion, you focused on an organization with which you are familiar with and identified some of the organization’s short-term financing needs. In the Week 9 Discussion, you turned your focus to long-term financing needs for the organization. This week, you will continue to focus on the long-term financing needs and will summarize the organization’s risk profile considering the capital investment project you identified for the organization in Week 9.
To prepare for this Discussion:
Refer to the organization of your Weeks 8 and 9 Discussions. Specifically, refer to the capital investment you identified in Week 9 and keep in mind the questions you identified and your proposal of whether the investment was valuable.
Based on those questions and your previous analysis of the investment’s value, consider now the risks associated with investing in the project compared to the potential returns. Refer to Panel b of Figure 8.1 on page 276 of the Brigham and Houston text (2022) as you formulate your post.
Post a synthesis of the risk profile of your selected organization considering the projected returns related to the identified capital investment project. In your synthesis, include the following:
Identify three to five risks of engaging in the capital investment project for your selected organization in the Week 9 Discussion. Based on what you identified, propose this project’s level of risk.
Based on your understanding of the organization, explain how willing or capable you believe the organization is to take on and manage these risks. (Note: You are free to utilize your creativity to provide details that may be unavailable to you. The point of this exercise is to think through the risks and benefits of potential financial decisions.)
Summarize the trade-off between the risks and possible returns of going forward with this capital investment project. Based on your summary, would you recommend that the organization move forward with this project?
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