"Organized around the understanding and application of maximizing the value of the firm for its shareholders. The areas of financial engineering, institutional characteristics and valuation models, time value of money concepts, cash flow analysis, options in capital investments, and the use of new financial instruments and strategies are explored."

--Siena Heights University

I was a little bit apprehensive about this class. I love the topic, it has always interested me, however, it has been three-plus decades since I have done anything close to this in a scholarly way.  I took the pre-class test on accounting and statistics and did not do well at all, so my stress level increased.  Once we started moving along in the course my confidence grew as I started to remember things, and even when I did not remember some things, I was able to understand them. Taking this class has allowed me to add some good quantitative skills to my repertoire. I really appreciated some of the information that we were given. I liked the weighted average cost of capital section a great deal, I also really liked the linear regression part of the course, and the time value of money section of the class.

         The weighted average cost of capital section was extremely interesting. The fact that the beta of a stock is used in helping to determine the cost of capital was very intriguing (Dahlquist & Knight, 2022). My experience with the beta of a stock is on the investing side. It was interesting to see how that factored into the cost of issuing stock. I felt the WACC really got interesting on the debt side.  Previously, I thought it was straightforward that if you issue bonds that pay 8% it costs 8%. However, that is not the complete story as the tax shield takes effect by lowering the net cost of borrowing. When debt instruments are used it allows for the reduction of taxes by subtracting the interest expense from profits. It was interesting to me to see that factored into capital decisions.

         Linear regression modeling is not something I have had much experience doing. It was great working with the examples given and understanding what positive and negative correlations would look like on a scatter diagram.  I like to think that I am good with numbers, so some of the mathematically related information was appealing to me, especially the correlation coefficient numbers which help to determine how strong the correlation is between the independent and dependent variables. It is always nice when the parameters are tight when it comes to analyzing results. The correlation coefficient is about as tight as it gets with the totality of its range encompassed between -1 and 1 (Dahlquist & Knight, 2022).  I also loved the fact that the slope was an easy way to understand the magnitude that the independent variable was influencing the dependent variable. It made it easy in the example given to see how each dollar of advertising resulted in a corresponding amount of revenue.

         The time-value of money section really hit home with me as I am always mapping out future values of my retirement using different variables such as how much longer before I can retire and what different rates of return do to these numbers.  I have always done it long-hand as I have the current value of my investments but am adding to them monthly.  So, I would, using a calculator, enter whatever rate of return I was using and multiply that by the number of years for which I was looking forward. I did not even think of just multiplying my current value by 1 plus the rate of return to the power of the number of years (Dahlquist & Knight, 2022).  This makes it so much simpler and faster.  I would also do a similar task with my monthly investments, but because of the tedious nature of that endeavor, I would just use annual numbers for my investments along with annual rates of return.  We were shown financial calculators in this class which makes all that much easier and faster. I do not know if it will help increase my retirement, but it helps to run different scenarios so that I might make better decisions going forward.

         Overall, I am very happy to have taken this class as I have learned a great deal. This was a topic that I enjoy even though I was apprehensive when the class started. I realize that although I have a great deal to learn about these subjects, I can understand, at least the beginnings of the basics. The weighted average cost of capital, linear regressions, and the time value of money were all very interesting topics.  I may spend some time using some of the video channels used in the class to dig deeper into some of these topics in my spare time, I know that I saw some interesting titles for other similar videos, while watching the videos for class.

References

          Dahlquist, J. R., & Knight, R. (2022). Principles of Finance.