FORD MOTOR COMPANY

Ford Motor Company



Ford Motor Company

Overview

Ford Motor Company was established in 1903 and it is a Michigan based company. The Ford Motor company is famous for its quality in vehicles and the part of the vehicles as well. The company has 65 plants and approximately more than 172,000 employees working for the Ford Motor Company across the globe. Ford Motor Company is one of the major players in the automobile industry of the world. It distributes and manufactures the vehicles and the parts of the vehicles in six continents. The company is involved in two kinds of operations, automobile sector and the financial services sector. The automobile sector sales and distributes cars, trucks and parts of the vehicles under the name of Ford and Lincoln. It also provides the after sales products and services to the customers like it provides the maintenance service, accidental repair, accessories of the vehicle and services of the vehicle under the Ford and Lincoln services. The company has further classified the services like custom accessories, motor craft brand name and extended services. The other operation of the Ford Company is the financial services which caters the automobile product's financing. It provides financing to the customers which cover the installments of the both used and new vehicles. The company has made the segments in the financial sector like the financial sector. The financial sector do the direct financing by provide vehicles on leasing to the direct customers, car rental companies and to the government bodies as well , the company also made a segment of wholesale financing which provides financing to the dealers and offers the insurance services as well.

The risk free asset is basically the assets in the balance sheet which is known as marketable securities. Mostly companies have marketable securities to maintain the liquidity requirements. The risk free assets are those securities which are invested in the government T-bills (government T-bills are considered as risk free assets). The risk free rate of the U.S T-bills is 0.17 for 52 weeks bank discount (www.treasury.gov).

The required rate of return on the investment is the minimum acceptable return at a certain risk. The choice of required rate of return varies from investor to investor. It depends on the acceptance of risk, how much risk an investor can bear because as we know that “the higher the risk the higher the return”. The investors must consider the risk free rate, inflation rate, tenure of investment, liquidity requirement of the investors and the risk acceptance of the investors. For instance an investor wants a high required rate of return he has to take high risk. The required rate of return also depend on the time period of the investment, if the investor is investing his money for a long tenure then he will ask for the high return. As the risk free return for 52 weeks is 0.17 so for this project investment the required rate of return should be ...