A Dollar Saved is a Dollar Burned
The last day of the training was the first of a two part training session about our customers, business segments, and the importance of capial and strategic planning. This training ends in late June when we all give several group presentations on a series of time-consuming take-away projects where senior executives at the company will listen to our presentations and grill us with questions.
There were several presentations yesterday from top level executives. The CFO of the company was there for several hours to ensure that he met each of the 25 people attending the training and give a presentation to the group.
My favorite presenter was the Treasurer of the company. He is an actuary who reminds me more of a 'Mad Professor' or zany high school science teacher. Picture a guy with a bushy mustache, unkept hair, a button down shirt that is way too big, and wrinkled khakis. He was speaking to us about financial values. To illustrate how important it is to consider your cost of capital when making investments, he provided two hypothetical investment opportunities. One project would increase your earnings by 5% per year and earn your investors a 15% return. A second project would increase your earnings by 10% per year, but earn your investors only a 12% return. Although irrelevant to the problem, the internal cost of capital is 13%. Which project do you choose?
For the section of the room that chose option A, the MadProfessor took out $1, handed it to the nearest person, and said that everyone who chose this option can share the $1. Woo hoo! 80% of the group won 5% of a $1 bill!
For the rest of the room, the MadProfessor took out another $1 bill. By failing to recognize that return trumps earnings, that more is better, and selecting a project that did not meet our cost of capital, the MadProfessor criticized us for eroding customer capital. He said we were essentially burning money. Then, HE LIT A $1 BILL ON FIRE and held it up until it almost completed burned away! I must admit, it's the first time in my life I have ever seen someone actually burn a $1 bill. It was hilarious.
The message, you ask? Burning money attracts the attention of large groups. The end.
There were several presentations yesterday from top level executives. The CFO of the company was there for several hours to ensure that he met each of the 25 people attending the training and give a presentation to the group.
My favorite presenter was the Treasurer of the company. He is an actuary who reminds me more of a 'Mad Professor' or zany high school science teacher. Picture a guy with a bushy mustache, unkept hair, a button down shirt that is way too big, and wrinkled khakis. He was speaking to us about financial values. To illustrate how important it is to consider your cost of capital when making investments, he provided two hypothetical investment opportunities. One project would increase your earnings by 5% per year and earn your investors a 15% return. A second project would increase your earnings by 10% per year, but earn your investors only a 12% return. Although irrelevant to the problem, the internal cost of capital is 13%. Which project do you choose?
For the section of the room that chose option A, the MadProfessor took out $1, handed it to the nearest person, and said that everyone who chose this option can share the $1. Woo hoo! 80% of the group won 5% of a $1 bill!
For the rest of the room, the MadProfessor took out another $1 bill. By failing to recognize that return trumps earnings, that more is better, and selecting a project that did not meet our cost of capital, the MadProfessor criticized us for eroding customer capital. He said we were essentially burning money. Then, HE LIT A $1 BILL ON FIRE and held it up until it almost completed burned away! I must admit, it's the first time in my life I have ever seen someone actually burn a $1 bill. It was hilarious.
The message, you ask? Burning money attracts the attention of large groups. The end.
posted by GaryGinew at 7:44 PM
1 Comments:
heh. maybe the reason why you've never seen it before is because defacing money is illegal.
there was a REBEL among you!
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