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Essay Instructions: Module 1 Case Assignment: FIN301

Due to the increasingly complex nature of corporate finance, more and more corporations are tapping their chief financial officer to become their chief executive officer. The CFO brings substantial financial expertise to the position of CEO. However, there may be other reasons why the CFO is not necessarily the best person to become the CEO.

Please note that the CFO must have an external orientation: After all, the company is owned by its shareholders and if the company is to operate so as to raise the value of the shares it must consider not only the internal structure of the organization, its products, competitors etc., but it must consider the interaction between what the company 'does', and the way the 'market' evaluates its performance. It is the combination of the two that plays a role in affecting the market price of the shares and shareholders' value. The individuals who must have an eye on this are usually the CEO and the CFO.

Please read the articles below, which are both available in Proquest. You need to be logged onto Proquest in order to access the links. If the links don't work you can look up the articles in Proquest using "publication search".

How a CFO can graduate to CEO

Corporate Finance; London; Jun 1999; Janine Brewis; from library portal via coursenet.


Abstract:
Positions of power within corporates are highly sought after, and today's chief financial officers and finance directors are increasingly becoming aware that they now have a realistic opportunity of becoming CEO. Part of the reason for the trend towards recruiting CFOs who can behave as strategic partners is that the investor community looks much more critically at the business performance and management strengths and weaknesses of corporates. This strategic positioning gives them an opportunity to buff up their image, and make themselves seen as a more credible candidate to take over the CEO role.

Do CFOs Really Make Good CEOs

Institutional Investor; New York; Aug 1989; Picker, Ida; from library portal via coursenet.

Abstract:
With the proliferation of corporate takeovers, leveraged buyouts, and restructuring in the US, it would seem that chief financial officers (CFO) hold the keys to executive wisdom. Recruiters report a growing trend of grooming CFOs for chief executive officer (CEO) positions, with some estimating that nearly 25% of top corporate leaders are former CFOs. Analysts, academics, and headhunters agree that the ideal CEO communicates well, is adept at managing managers, understands the company's product and operations, and provides a consistent vision. A recent survey by Management Practices Quarterly reveals that, of 83 new CEOs appointed in 1988, more than 18% came from operations-production backgrounds, some 23% had technical training, while only 14.4% had a financial background. D. Wayne Calloway, who became CEO of PepsiCo in May 1986, was formerly the company's CFO and is probably the best example of the valuable experience CFOs can bring to the CEO position.

Assignment Expectations:

Read the two articles above, look for newer articles on the subject by browsing the web and then write a two-page paper answering the following question:

Do you think finance departments are the best place to train future CEOs? Provide two actual examples of CFOs of publicly-traded companies who became CEOs of publicly-traded companies within the past 5 years. Do these individuals have the CPA and/or CFA designations?

Include a discussion of both the pros and cons of hiring a CFO to be CEO. Try to cite at least three articles in your paper in support of your arguments in favor of and against hiring a CFO to be a CEO. Remember to include a reference list and to refer to the articles you use in the body of your paper.

Essay Instructions: I am doing a group project for a Management Information Systems class in college. For the project we are to choose a company, interview and research the company, and make recommendation for a new management Information systems.

For our project we chose Subway and one of the section in the report is Finance and Accounting. I would like you to write three pages on this one section. Attached is the outline which shows where this section fits in with the rest of the report. Also, I have attached the two interviews conducted at two separate locations (Gardiner and Presque Isle Maine). Ideally, all your information would come from these Subway locations but feel free to use other sources. Basically, I just need a run down of how their Finance department functions and what Information Systems they use to make it run more efficiently.

Thanks

Essay Instructions:
Please download the instructions also, when you write the assignments can you separate the Effect of Finance on an Organization?s Security Program and Security Program Payback
for me please.


The Effect of Finance on an Organization?s Security Program

Based on your reading of the ?Defense in Depth: How Financial Executives Can Boost IT Security? article for the study assignment in this unit, discuss the following questions. Is an organization?s finance department critical to the success of an information security program? How can the actions of the finance department affect the success or failure of an information security program? How can the finance department cause the organization to be out of compliance with state and federal regulations? As a chief information officer, you must understand and be aware of the financial decisions made for your own information security projects.

Reference
Spontak, S. (2006). DEFENSE IN DEPTH: How financial executives can boost IT security. Financial Executive, 22(10), 51-53. Retrieved from http://search.proquest.com/docview/208879615?accountid=27965



Security Program Payback

Before sponsoring an information security program, senior executives should know if there will be a return on the investment. Can we really determine and measure information security investments?
Discuss several of the myths and realities presented in your study article for this unit, ?Return on Information Investments: Myths vs. Realities.? Do you agree or disagree with the position that we cannot accurately gauge an organization?s investment in security programs?

Reference
Gordon, L. A., & Loeb, M. P. (2002). Return on information security investments: Myths vs. realities. Strategic Finance, 84(5), 26-31. Retrieved from http://search.proquest.com/docview/229758856?accountid=27965


Readings
? Read Gordon?s 2002 article, ?Return on Information Investments: Myths vs. Realities,? from Strategic Finance, volume 84, issue 5, page 26. The authors review current thinking on return on investments in information system security, and whether or not return on investment (ROI) can be accurately measured for these programs.
? Read Spontak?s 2006 article, ?Defense in Depth: How Financial Executives Can Boost IT Security,? from Financial Executive, volume 22, issue 10, page 51. This article describes how decisions by financial executives at corporations can help IT security investments.

Essay Instructions: Read the two articles below, look for newer articles on the subject by browsing the web and then write a two-page paper answering the following question:

Do you think finance departments are the best place to train future CEOs?

Include a discussion of both the pros and cons of hiring a CFO to be CEO. Try to cite at least three articles in your paper in support of your arguments in favor of and against hiring a CFO to be a CEO. Remember to include a reference list and to refer to the articles you use in the body of your paper.

Please read the articles below, which are both available in Proquest.

Brewis, J., (1999), How a CFO can graduate to CEO, Corporate Finance; London.


Picker, I., (1989), Do CFOs Really Make Good CEOs, Institutional Investor; New York.


Part II: Concepts of present value and application to certainty cash flow

Note: It is recommended that you use a spreadsheet such as Excel in order to solve the following problems. See example for the computations using Excel spreadsheet here.

1. Suppose you have two bank accounts, one called Account A and another Account B. Account A will be worth $5,700.00 in one year. Account B will be worth $8,900.00 in two years. Both accounts earn 3.6% interest. What is the present value of each of these accounts? What is the present value of the two accounts together?

2. Suppose you just inherited an platinum mine. This platinum mine is believed to have three years worth of platinum deposit. The net income this oil filed is projected to bring you each year for the next three years:

Year 1: $46,000,000

Year 2: $74,000,000

Year 3: $67,000,000

Compute the present value of this stream of income at a discount rate of 5%. You are to arrive at the present value for a whole stream of income, i.e. the total value of receiving all three payments. This is actually the value of the platinum mine.

You compute this by computing the present value of each component of the cash flow (each year's proceeds) with regard to the time you receive the amount, and then add together the three present values in order to get the present value of the platinum mine. (See the example in the spreadsheet).

Now re-compute the present value of the income stream from the platinum mine, or the value of the platinum mine at a discount rate (or cost of capital of the company) of 12%. Re-compute it again using a discount rate of 10%, then at 8%, 6%, 4% and 2%. Compare the present values of the income stream under the different discount rates.

Show your calculations and write a short paragraph with conclusions from the computations.

3. The Net Present Value (NPV) criterion for investment decisions states that the organization should accept all investment projects whose NPV is positive. An alternative criterion is the Internal Rate of Return (IRR) criterion. The Internal Rate of Return (IRR) of a project is the discount rate at which the NPV of the project is exactly equal to zero. The internal rate of return can easily be computed using Excel spreadsheet: Insert the initial investment as a negative number in cell A1, and the net proceeds from the investment in cells B1, C1, D1 etc. Suppose there are 5 annual proceeds from the investment. Then you insert the five proceeds in cells B1, C1, D1, E1 and F1. In order to find the IRR of the investment you use a function that exists in Excel: Bring the cursor to cell G1, and type:

=irr(a1..f1,0.1) where a1..f1 is the range where you inserted the numbers, and 0.1 is a 'guess' that you must insert. (If you insert 0.0 that is also fine but you must insert a 'guess'.)

For example, if the initial investment is $1000, the annual proceeds are $200, $250, $300, $350 and $400 in 1, 2, 3, 4 and 5 years, then the spreadsheet will be as follows:

-1000 200 250 300 350 400 13.453% $101.24743

The number 13.435% is the IRR of the investment. The NPV at a discount rate of 0.10 (or 10%) is $101.24743.

The NPV is computed using the following function (in cell H1): 1.10*npv(0.10,A1..F1)

(a) Insert the numbers of the example in an Excel spreadsheet, insert the 'functions' and verify that you indeed obtain the same IRR of 13.453% and NPV at 10% of 101.24743. See again the example spreadsheet

(b) Suppose your company is considering the following investment proposal:

Invest now: -$17 million; 1 year from now the net cash inflow is $3.4 million; 2 years from now the net cash inflow is $3.4 million; 3 years from now the net cash inflow is $3.7 million; 4 years from now the company gets a net cash inflow of $9.7 million.

Compute and report the Internal Rate of Return (IRR) of the project (accurate to 2 digits after the decimal point) and the NPV at a discount rate of 8% (0.08). The discount rate of 8% in this case is also called "The Cost of Capital of the organization".

Suppose your company's cost of capital is indeed 8%. Would you recommend that the organization should undertake the project based on the IRR criterion? Based on the NPV criterion? Explain.

(c) Compute and report also on the NPV of the same investment for alternative costs of capital (discount rates) of 0% (0.00), 4% (0.04), 8% (0.08), 12% (0.12) and 16% (0.16). You may plot a diagram where on the horizontal axis you mark the discount rate or the cost of capital, and on the vertical axis the Net Present value of the proposed investment. What trend do you observe in the NPV as a function of the cost of capital of the firm?

The ENTIRE report should be four to five pages in length. Be sure to include a reference list.