Essay about Components Of The Managerial Finance World

703 Words Jun 25th, 2015 3 Pages
Through clear understanding of the Scriptures there are several concepts related to the managerial finance world. One of the main concepts is investment risk. In this faith integration section, the investment of risk plays in finance and how God communicates to individuals through Scriptures and teaching. It does not matter whether you are an investor, business executive, or a financial manager, God’s word should be the foundation to making wise, practical, and beneficial decisions.
Although investments can an essential part of a business, making investment decision involving risk can be inherent and inescapable. In order for a leader to raise the necessary resources for their corporation, he/she have to be risk-averse. In order to raise capital most companies would use the equity financing method. By using equity financing, a corporation is able to sell shares of their stock to build capital and promise to pay back the investors in the future with interest. Also a leader should consider factors such as weighted average cost of capital (WACC), tax rate, projected face value, equity return rate, and debt return rate, which can weigh heavily on his decisions. After careful considering all factors, if the future value of the project will yield a promising profit, it is management’s responsibility to proceed with the project. On the disadvantage side, if the WACC outweighs the value of the project, management is obligated to the shareholders not to take the risk. This…

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