INTG 202 Lecture Notes - Lecture 10: Value Proposition, Economic Surplus, Artificial Scarcity
Document Summary
What is strategy: all entrepreneurs start with a hypothesis, make money through x way, requires money, 2 types of financing: the investor (eg. angel investors) and the bankers, both require a pitch to be persuade. Prime rate: the benchmark interest rate that brings change to high quality/valued clients. Entrepreneurs care about capital cost risk of ownership more than debt received debt (collateral) right to seize n asset investors or venture capitalist want to receive more than bankers: 25-30: all loans, and satisfy the venture capital. Roic: the return on invested capital > wacc: the weighted average cost. Economic profits (excess returns) exist when: revenues = costs (including cost of capital) > 0, roic > wacc. What affects cost capital: risk of future returns, risk increases required returns, retained earnings: the money kept in the business, can be invested when relying on the business itself instead of external influencers. Firm decision rights over bundle of resources.