Instruction

Suppose that you are a financial manager at a large international company. Your CEO (Chief Executive Officer) wants to ask you a few questions related to corporate finance. Please see theCEOs email to you.

CEOs email:

- (Please answer my questions in simple terms (as simple as possible). Please note that I did NOT take any finance course at university.)

- I have been thinking about what capital budgeting techniques to use for our investment selection criteria. Please explain why IRR (Internal Rate of Return) is not the best capital budgeting technique.

- In relation to the estimation of cost of equity, please compare the dividend growth model and security market line approaches.

Answer the CEOs questions in a formal email. The format must be used.

the format should be like this:

Course:

Section:

Student Name:

Student ID:

Subject: RE: About IRR and the estimation of cost of equity Dear CEO,

........the answer for the CEO questions........

Kind Regards,

[Your Name]