Browse Our Directory
Showing 10–18 of 4929 resultsSorted by latest
-
50% retained earnings and 50% bonds a good approach
$5.00- Imagine you are the manager of operations for a manufacturing company. Your vice president wants to expand production by building a new facility, and she would like you to develop a business case for the project. Assume that your company’s weighted average cost of capital is 13%, the after-tax cost of debt is 7%, preferred stock is 10.5%, and common equity is 15%. As you work on the business case, you surmise that this is a fairly risky project because of a recent slowing in product sales. In fact, when using the 13% weighted average cost of capital, you discover that the project is estimated to return about 10%, which is quite a bit less than the company’s weighted average cost of capital. Your vice president suggests that the project could be financed from a mix of retained earnings (50%) and bonds (50%). She reasons that retained earnings do not cost the company anything because it is cash you already have and the after-tax cost of debt is only 7%. That would lower your weighted average cost of capital to 3.5% and make your 10% projected return look great
- Is your vice president’s suggestion to use a mix of 50% retained earnings and 50% bonds a good approach for this expansion? Explain why or why not. (1 paragraph)
WMBA 6070 SF004 part 1
$15.00- Time Value of Money: Review the examples of Time Value of Money (TVM) problems in Chapter 5 of the text. (Fundamentals of Financial Management, 13th Edition)
- Using your own industry as the context, create and solve four of your own original TVM problems: (1) lump-sum present value, (2) lump-sum future value, (3) present value of an annuity, and (4) future value of an annuity. Your scenarios may be fictitious, but they should make sense in the real-life context of your industry.
- Write a 1-paragraph summary for each of your scenarios that explains the “real-life” context of these four problems as well your interpretations of each of the calculations. (4 paragraphs total)
- Bond Valuation: Do problem 7-6, Part a, on page 251. (Fundamentals of Financial Management, 13th Edition)
- Bond Pricing Interpretation: Explain what you see from the pricing calculations. How do the two bonds differ? (1 paragraph)
- Yield-to-Maturity and Yield-to-Call: Do problem 7-19, Parts a-c, on pages 252–53. (Fundamentals of Financial Management, 13th Edition)
- Constant Growth and Non-constant Growth Valuation: Do problems 9-2 and 9-4, Parts a–c, on page 324. (Fundamentals of Financial Management, 13th Edition)
Chapter 6 Solutions
$15.00PROBLEM 11-1
NPV Project K costs $52,125, its expected cash inflows are $12,000 per year for 8 years, and its WACC is 12%. What is the project’s NPV?
PROBLEM 11-2
IRR Refer to Problem 11-1. What is the project’s IRR?
CF0 = -52,125
CF1-8 = 12,000
PROBLEM 11-3
MIRR Refer to Problem 11-1. What is the project’s MIRR?
PV Cost = 52,125
n = 8 years
i = 12%
PMT = 12000
PROBLEM 11-4
PAYBACK PERIOD Refer to Problem 11-1. What is the project’s payback?
Year CF Cumulative CF PROBLEM 11-5
DISCOUNTED PAYBACK Refer to Problem 11-1. What is the project’s discounted payback?
PROBLEM 11-6
NPV Your division is considering two projects with the following cash flows (in millions):
Project A ProjectB
Year 0 -25 -20
Year 1 5 10
Year 2 10 9
Year 3 17 6
PROBLEM 11-7
CAPITAL BUDGETING CRITERIA A firm with a 14% WACC is evaluating two projects for this year’s capital budget. After-tax cash flows, including depreciation, are as follows:
Project A ProjectB
Year 0 -6000 -18000
Year 1 2000 5600
Year2 2000 5600
Year 3 2000 5600
Year 4 2000 5600
Year 5 2000 5600
Problem11-8
CAPITAL BUDGETING CRITERIA: ETHICAL CONSIDERATIONS A mining company is con-sidering a new project. Because the mine has received a permit, the project would be legal; but it would cause significant harm to a nearby river. The firm could spend an additional $10 million at Year 0 to mitigate the environmental problem, but it would not be required to do so. Developing the mine (without mitigation) would cost $60 million, and the expected cash inflows would be $20 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $21 million. The risk-adjusted WACC is 12%.
PROBLEM 11-9
CAPITAL BUDGETING CRITERIA: ETHICAL CONSIDERATIONS An electric utility is consid-ering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it is badly needed. Because the firm has received a permit, the plant would be legal; but it would cause some air pollution. The company could spend an additional $40 million at Year 0 to mitigate the environmental problem, but it would not be required to do so. The plant without mitigation would cost $240 million, and the expected cash inflows would be $80 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $84 million. Unemployment in the area where the plant would be built is high, and the plant would provide about 350 good jobs. The risk-adjusted WACC is 17%.
Problem 11-10
CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS A firm with a WACC of 10% is considering the following mutually exclusive projects:
Years ProjectA ProjectB
0 -$400 -$600
1 $55 $300
2 $55 $300
3 $55 $50
4 $225 $50
5 $225 $49
Which project would you recommend? Explain.
4-23 DuPONT ANALYSIS SOLUTION
$15.00Taking the role of a financial analyst within the company, prepare an executive dashboard (performance report) on a large, publicly traded company of your choice (e.g., Cisco, Walmart, IBM, Apple, etc.) by computing and comparing its ratios against the 11 industry average ratios listed in Problem 4-23 on page 129 of the text.
It is imperative for you to understand the use of good academic writing (visit the Walden Writing Center), use of online library for academic resources (not internet sources), SEC.gov for financial filings (not annual reports from a company website), and most importantly, your job is to do vetting of anything companies claim on their websites. The use of Wikipedia, Investopedia, financial related websites, blogs, etc. is not appropriate for this competency.
- Use the provided Financial Ratio Excel Spreadsheet to show the computed financial ratios for your chosen company and industry averages. Prepare your performance report to show calculations for the 11 ratios listed on page 129, as well as a comparison of your computed ratios with industry averages. It is a good idea to be familiar with each industry’s classification! A good place to start is to look for the North American Industry Classification System (NAICS) and look for the industry of your chosen company through https://www.census.gov/eos/www/naics/. Please notice how it is a US Government website, not a “.com”. Then, visit the Walden University Library and access the IBIS World database in order to look for the appropriate industry standards: https://ezp.waldenulibrary.org/login?url=https://clients1.ibisworld.com. The comparisons, including a list of your computations in a table, should be added as an appendix to the memo described below and submitted as a separate Excel spreadsheet.
- Write a memo (approximately 2–3 pages) to your supervisor explaining your findings and your recommendations for where improvements are needed to increase financial health. Be sure to Include the following:
- Areas within the company that are both above and below industry standards
- An explanation of the limitations of using ratio analysis
- The qualitative factors that play a role in improving the company’s financial health
In the memo, suggest some specific ways in which the company can plan to improve below industry average ratio performance over time. Suggest annual targets over the next three years to catch up with or surpass industry averages. Explain why your recommendations should be effective.
4-23
DuPONT ANALYSIS A firm has been experiencing low profitability in recent years. Perform an analysis of the firm’s financial position using the DuPont equation. The firm has no lease payments but has a $2 million sinking fund payment on its debt. The most recent industry average ratios and the firm’s financial statements are as follows:
Industry Average Ratios Current ratio 2× Fixed assets turnover 6× Total debt/Total assets 30% Total assets turnover 3× Times interest earned 7× Profit margin 3% EBITDA coverage 9× Return on total assets 9% Inventory turnover 10× Return on common equity 12.86% Days sales outstandinga 24 days aCalculation is based on a 365-day year.
Balance Sheet as of December 31, 2012 (Millions of Dollars) Cash and equivalents $ 78 Accounts payable $ 45 Net receivables 66 Notes payable 45 Inventories 159 Other current liabilities 21 Total current assets $303 Total current liabilities $111 Long-term debt 24 Total liabilities $135 Gross fixed assets 225 Common stock 114 Less depreciation 78 Retained earnings 201 Net fixed assets $147 Total stockholders’ equity $315 Total assets $450 Total liabilities and equity $450 Income Statement for Year Ended December 31, 2012 (Millions of Dollars) Net sales $795.0 Cost of goods sold 660.0 Gross profit $135.0 Selling expenses 73.5 EBITDA $ 61.5 Depreciation expense 12.0 Earnings before interest and taxes (EBIT) $ 49.5 Interest expense 4.5 Earnings before taxes (EBT) $ 45.0 Taxes (40%) 18.0 Net income $ 27.0 - Calculate those ratios that you think would be useful in this analysis.
- Construct a DuPont equation and compare the company’s ratios to the industry average ratios.
- Do the balance sheet accounts or the income statement figures seem to be primarily responsible for the low profits?
- Which specific accounts seem to be most out of line relative to other firms in the industry?
- If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?
Starting and Naming Shania Business
$5.00Starting and Naming Shania Business
Shania Jackson is a mature Christian thinking of opening a Christian coffeehouse near Denver, Colorado. Her husband, Marvin, is open to making a contribution of capital to the business, but he has no interest in participating in its operation or management.
Shania’s sister, Kelsey, is a new Christian who has told Shania that she’s been looking for an excuse to get out of the house and would love to be a part of the business. Kelsey’s husband, a non-Christian, opposes his wife’s involvement and has told her that he expects her to remain a stay-at-home mom to their 2 children, ages 13 and 15.
Shania’s neighbor, Carlos, is a non-Christian who has also expressed an interest in participating in the business as a way to earn extra income. Carlos thinks the “Christian thing” has potential with all the big churches in the area, including a Mormon temple and a large Kingdom Hall of Jehovah’s Witnesses.
In researching the coffee business, Shania comes across a few franchise opportunities, some of which would require her to adopt the franchise name and trade dress, as well as others that would only require her to move into a turn-key facility and agree to purchase a certain volume of product every month for a period of at least 10 years. Both types of franchises offer training for her and any staff she might hire.
Shania has considered organizing her business as a sole proprietorship, a partnership of some sort, a corporation of some sort, an LLC, or even a joint venture. She is thinking of calling the business “The Gathering Place.”
Topic: Starting and Naming a Business
Before you complete the following steps, see the Discussion Board Forum 3 Case Study; the Discussion Board Forum – Thread and Discussion Board Forum – Replies Grading Rubrics; and the specific requirements of the posts, including length, scholarly sources, and citations.
Thread Prompt:
Complete the following steps:
- Advise Shania on which of the business forms under consideration best accomplishes her business goals. Thoroughly explain the reasons for your
- Advise Shania on whether her company should become a franchise or should open as an independent coffeehouse. Explain your
- Perform a corporate name search at this hyperlink or website to determine if the name Shania is considering is available for use in the State of Colorado. Also assess whether the name is available as a trademark. Even if the name is available, advise Shania on whether it is a good choice. Explain why or why not.
- Advise Shania on which of the interested persons she should include in her business, why, and in what role(s). If she chooses not to take in a particular party, what reasons should she give each person, if any? Your analysis must include biblical perspectives, such as biblical considerations of marriage and of business relationships with non-believers.
Your thread must also be at least 1,000 words and follow the guidelines outlined in the Student Expectations.
To successfully post your thread, you must both (1) upload a Microsoft Word copy of the thread to the provided SafeAssign assignment link and (2) copy the content of the thread and paste it into the Discussion Board Forum. Do not post attachments in the forum; they will not be accepted or graded.
Reply Prompt:
In preparing your replies, consider only the employee issues in question 4. Reply to the threads of 2 classmates who reached a different conclusion than you did. Identify the points of difference in your analyses and explain how your application of the relevant law to the facts of this situation led you to a different conclusion.
Then, assume that Shania opened her coffeehouse and became so successful that she has 20 employees and needs to promote 1 of them to be the night shift supervisor. The employee base is quite diverse; in fact, Shania believes she should promote a racial or ethnic minority employee to demonstrate how inclusive her business has become. Explore the legal, ethical, and biblical issues if Shania makes her promotion decision entirely on that basis. What are her options?
Each reply must be supported by 3 scholarly sources other than the textbook/course materials. Each reply must be properly cited in current APA format.
Balance business needs with the needs of customers
$5.00Balance business needs with the needs of customers
Topic: Intellectual Property
This discussion board is largely inspired by material found in your course textbook:
Kubasek, N. K., Browne, M. N., Barkacs, L., Herron, D., & Dhooge, L. (2016). Biblical worldview edition of dynamic business law. N. J. Kippenhan (Ed.). New York, NY: McGraw Hill Education.
Thread Prompt:
Review the Case Opener at the beginning of Chapter 8: Technology Companies at War. The following links will also give you updates on this long, complex litigation: https://www.wsj.com/articles/apple-wins-539-million-jury-award-from-samsung-in-iphone-patent-battle-1527207256
Samsung and Apple continue to fight to protect their rights to their intellectual property. Similarly, any company will fight to protect the real, personal, or intellectual property on which its business, revenues, and reputation are based. These same property issues are at stake in the pharmaceutical and biomedical industries where patents on medicines, medical devices, cutting-edge genomic therapies, etc. form much of a company’s livelihood.
For this discussion board, respond to the 3 questions in the Business Ethics Flashpoint 8.1 in your text. Your response must explain how you balance the interests at stake, including:
- How should a for-profit corporation balance its business needs with the needs of its customers?
- Lives depend on products created by some companies. Do these companies have a greater responsibility to work towards benefitting the consumer more than themselves?
- Look at the issue from a Biblical worldview. How would you respond if you were running such a company?
Your thread must explain how you balance the interests at stake including:
- Creator v. Consumer in the creation and management of intellectual property
- Profit and return on investment for company owners/shareholders
- Continuing existence of the company
- Protecting intellectual property of the company
- Needs of patients, practitioners, and society
- Biblical support and guidance for your positions
- Any other legal and ethical concepts you believe may be relevant
How Volkswagen Diesel Scandal Would Have Been Prevented
$5.00How Volkswagen Diesel Scandal Would Have Been Prevented
Rarely does one individual’s decision or action create an ethical crisis entirely by itself. More often, someone’s unethical or illegal idea is adopted by other members of the company, and the problem grows within the organization until it erupts in headlines, bad publicity, and sometimes criminal penalties. After the fact, the questions always arise: How did that happen? Did not anyone know it was going on? Why did not someone stop it?
Recently, Volkswagen found itself in just such a position, when it was discovered that the software in the company’s diesel vehicles had been programmed to provide false data to regulators regarding the level of emissions produced by the cars.
In his article “Volkswagen: Where Were the Lawyers?” Lippe (2015) questions the role that several groups within the company played in the scandal, most notably the company’s lawyers and engineers. See http://www.abajournal.com/legalrebels/article/volkswagen_where_were_the_lawyers/.
Review this situation from legal, spiritual, and ethical perspectives. Fully explain the following:
- As an employee or a manager in either the legal office or the engineering department, how would you have prevented this incident?
- As the CEO of the diesel division of Volkswagen, how would you have responded when the situation became public? How would this response prevent future incidents?
Lippe, P. (2015, October 13). Volkswagen: Where were the lawyers? ABA Journal. Retrieved from http://www.abajournal.com/legalrebels/article/volkswagen_where_were_the_lawyers/
Your thread must also bea at least 1,000 words and follow the guidelines outlined in the Student Expectations.
To successfully post your thread, you must both (1) upload a Microsoft Word copy of the thread to the provided SafeAssign assignment link and (2) copy the content of the thread and paste it into the Discussion Board Forum. Do not post attachments in the forum; they will not be accepted or graded.
Reply Prompt:
Reply to the threads of 2 classmates who offer views different than yours. Identify the points of difference in your analysis and explain how your application of the relevant law to the facts of this situation led you to a different conclusion.
Each reply must be supported by 3 scholarly sources other than the textbook/course materials. Each source must be properly cited in current APA format.
Submit your thread by 11:59 p.m. (ET) on Friday of Module/Week 2, and submit your replies by 11:59 p.m. (ET) on Friday of Module/Week 3.
Chapter 30 Key Question Answers
$10.00Chapter 30 Key Question Answers
30-2 (Key Question) Assume that a hypothetical economy with an MPC of .8 is experiencing severe recession. By how much would government spending have to increase to shift the aggregate demand curve rightward by $25 billion? How large a tax cut would be needed to achieve this same increase in aggregate demand? Why the difference? Determine one possible combination of government spending increases and tax decreases that would accomplish this same goal.
30-3 (Key Question) What are government’s fiscal policy options for ending severe demand-pull inflation? Which of these fiscal policy options do you think might be favored by a person who wants to preserve the size of government? A person who thinks the public sector is too large? How does the ‘ratchet effect’ affect anti-inflationary policy.
30-6 (Key Question) Define the “standardized budget,” explain its significance, and state why it may differ from the “actual budget.” Suppose the full-employment, noninflationary level of real output is GDP3 (not GDP2) in the economy depicted in Figure 30.3. If the economy is operating at GDP2 instead of GDP3, what is the status of its standardized budget? The status of its current fiscal policy? What change in fiscal policy would you recommend? How would you accomplish that in terms of the G and T lines in the figure?
30‑8 (Key Question) Briefly state and evaluate the problem of time lags in enacting and applying fiscal policy. Explain the notion of a political business cycle. How might expectations of a near-term policy reversal weaken fiscal policy based on changes in tax rates? What is the crowding‑out effect and why might it be relevant to fiscal policy? In view of your answers, explain the following statement: “Although fiscal policy clearly is useful in combating the extremes of severe recession and demand-pull inflation, it is impossible to use fiscal policy to fine-tune the economy to the full-employment, noninflationary level of real GDP and keep the economy there indefinitely.”
30-10 (Key Question) How do economists distinguish between the absolute and relative sizes of the public debt? Why is the distinction important? Distinguish between refinancing the debt and retiring the debt. How does an internally held public debt differ from an externally held public debt? Contrast the effects of retiring an internally held debt and retiring an externally held debt.
30-13 (Key Question) Trace the cause-and-effect chain through which financing and refinancing of the public debt might affect real interest rates, private investment, the stock of capital, and economic growth. How might investment in public capital and complementarities between public and private capital alter the outcome of the cause-effect chain?
Solutions to Econ Chapter 24 Key Questions
$5.00Solutions to Econ Chapter 24 Key Questions
24-3 (Key Question) Why do economists include only final goods in measuring GDP for a particular year? Why don’t they include the value of stocks and bonds sold? Why don’t they include the value of used furniture bought and sold?
24-8 (Key Question) Below is a list of domestic output and national income figures for a given year. All figures are in billions. The questions that follow ask you to determine the major national income measures by both the expenditure and income methods. The results you obtain with the different methods should be the same.
Personal consumption expenditures Net foreign factor income
Transfer payments
Rents
Statistical discrepancy
Consumption of fixed capital (depreciation)
Social security contributions
Interest
Proprietors’ income
Net exports
Dividends
Compensation of employees
Taxes on production and imports
Undistributed corporate profits
Personal taxes
Corporate income taxes
Corporate profits
Government purchases
Net private domestic investment
Personal saving
$245 4
12
14
8
27
20
13
33
11
16
223
18
21
26
19
56
72
33
20
- Using the above data, determine GDP by both the expenditure and the income approaches. Then determine NDP.
- Now determine NI: first, by making the required additions and subtractions from GDP; and second, by adding up the types of income and taxes that make up NI.
- Adjust NI (from part b) as required to obtain PI.
- Adjust PI (from part c) as required to obtain DI.
24‑11 (Key Question) Suppose that in 1984 the total output in a single-good economy was 7,000 buckets of chicken. Also suppose that in 1984 each bucket of chicken was priced at $10. Finally, assume that in 2000 the price per bucket of chicken was $16 and that 22,000 buckets were purchased. Determine the GDP price index for 1984, using 2000 as the base year. By what percentage did the price level, as measured by this index, rise between 1984 and 2000? Use the two methods listed in Table 24.6 to determine real GDP for 1984 and 2000.
24-12 (Key Question) The following table shows nominal GDP and an appropriate price index for a group of selected years. Compute real GDP. Indicate in each calculation whether you are inflating or deflating the nominal GDP data.
Year
Nominal GDP, Billions
Price index (2000 = 100)
Real GDP, Billions
1964 1974
1984
1994
2004
$663.6 1500.0
3933.2
7072.2
11734.3
22.13 34.73
67.66
90.26
109.10
$ ______ $ ______
$ ______
$ ______
$ ______
