Category Archives: Paid Content

Solution to Management Science Series #169: How to account for the bonds: NVIDIA 🧮

Refer to the NVidia’s 10-K for the fiscal year ended January 31, 2021. Find the information related to the bonds issued by the company.
Answer the following questions related to the bonds defined as “2.85% Notes Due 2030”

a. Were these notes initially recorded at par, at a discount, or at a premium?

b. What was the effective market rate at the time the notes were issued? Assume that it was not given. So, you are expected to calculate it! (Since current NBV of the bond is equal to the bond principal (probably because of the rounding), first calculate the NBV that should have been reported without the rounding, by using the effective interest rate given. Then, calculate the effective market rate from there!)

c. What will be the exact carrying value (net book value) of the notes at the end of 2025 (or January 31st, 2026)?

d. Assume further that as of December 31, 2025, the prevailing market rate for interest obligations similar to NVidia’s Notes due 2030 will be 7%. What would be the carrying value (net book value) of the notes at the end of 2025?

e. Now assume further that NVidia would redeem these notes from their holder at market value at the end of 2025. Which of the company’s financial statements would be affected, in what direction, and by how much? (Ignore taxes).

f. Assume that as of December 31, 2025, the prevailing market rate for interest obligations similar to NVidia’s Notes due 2030 will be 2%. What would be the carrying value (net book value) of the Notes at the end of 2025? If the company were to decide to retire these bonds, which accounts would be affected?

Where did Apple get its inspiration to build its own D2C stores or allegedly even its sleek design policy? What about their marketing mix strategy?

Where did Apple get its inspiration to build its own D2C stores or allegedly even its sleek design policy? What about their marketing mix strategy?

What was the chief end of business education and what is it now?

What was the chief end of business education and what is it now?
—
In June 1909, Edwin Gay, the first dean of the school, wrote to a friend:

I am constantly being told by business men that we cannot teach “business.”
I heartily agree with them; we do not try to teach business in the sense in which business men ordinarily understand their routine methods, or in the sense in which you speak of teaching young men to be “money makers” or “to get the better of their competitors.”

We believe that there is science in business and it is the task of studying and developing that science in which we are primarily interested.

It is our aim to give our young business men the breadth of horizon, as well as the equipment of information and grasp of principles which will enable them … to be better citizens and men of culture as well as broader men of business.

Taken from Philip Delves Broughton’s Ahead of the Curve

Solution to Management Science Series #167: Estimating the risk of Apple’s automotive venture

Estimating the risk of Apple’s automotive venture (will it ever happen?) 🧮

Apple is considering entering automotive industry. The analysts at Apple identified three pure plays: namely, Ford, General Motors, and Stellantis.

Determine the risk of this new project for Apple! Applicable tax rate is 35%! Use appropriate current yields on risk-free assets! Equity risk premium is estimated to be 7.4%. For all pure plays, proxy market is S&P 500.

Assume that Apple’s new project will be 100% equity-financed. Assess whether the value for the risk of this new project would make sense practically!

Solution to Management Science Series #166: Estimating Betas: Real-world example #4 🧮(Tesla)

Estimating Betas: Real-world example #4 🧮

Estimate the beta of Tesla stock.

First, observe the time period from 2019 to 2023.

Then observe the time period from 2014 to 2018, as well as from June 29, 2010 (the day TESLA went public) to 2013.

Proxy market is S&P 500. Time interval is monthly.
Compare the betas you estimated!

Identify the industry Tesla operates in. Relying on that identification, use the industry-wide betas shared publicly. Compare that estimate to those you calculated in the first step above.

What are the most important secrets many employers do not want their employees to know?

What are the most important secrets many employers do not want their employees to know? From salary information and promotions to strategic decisions and financials, many secrets will not be revealed to you. However, you should be on the lookout for these secrets for your own career and life.

Solution to Management Science Series #165: Estimating Betas: Real-world example #3 🧮(Walmart)

Estimating Betas: Real-world example #3 🧮

Calculate beta of the Walmart stock through regression analysis.

Time interval will be monthly and the time period to be observed will be last 5 years.

The proxy for the market portfolio will be S&P 500.

Deciphering Employment Reports of Universities and Business Schools: Understanding the tactics and developing smart strategies

Employment Outcomes of Professional Degrees đź“–
Transparency in a business school’s employment report is important (or for any professional school for that matter).
Of course, under pressure, some schools may choose to be less transparent to whitewash trends going badly.
Although in the short-term this may not affect the school much, in the long-term the quality of education and the students, as well as the reputation of the school if it has one, will erode dramatically.
Do you look at a school’s employment report before even applying?
How do you spot discrepancies in a business school’s employment report, though?