Essay Problem: Capital Investment
For the purpose of this problem, a project is defined as any endeavor that had a capital outlay. Pick a project you have recently completed or one you would like to complete soon. This could be a project in your home, place of work, or even church or other organization with which you are familiar. Respond to the prompts below.
a) Introduce your project with a reflection on the importance of selecting the right projects in which to invest capital. Do we always select those projects that have the highest return on investment (ROI)?
b) Describe the relationship between risk and return and how you would measure for both in your project. What other factors play into capital budgeting decisions?
c) Explain how you would calculate the weighted average cost of capital (WACC) and its components for your project.
The response should include a reference list. Using double-space, Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.