Showing 982–990 of 1959 results
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Glentech Manufacturing is considering the purchases of an automated parts…
$7.00Glentech Manufacturing is considering the purchases of an automated parts handler for theassembly and test area of its Phoenix, Arizona, plant. The handler will costs $250,000 topurchase plus $10,000 for installation and employee training. If the company undertakes theinvestment, it will automate a part of the semiconductor test area and reduce operatingcosts by $70,000 per year for the next 10 years. However, five years into the investment’slife, Glentech will have to spend an additional $100,000 to update and refurbish the handler.The investment in the handler will be depreciated using straight-line depreciation over 10-years, and the refurbishing costs willbe depreciated over the remaining five-year life of thehandler (also using straight-line depreciation). In 10 years, the handler is expected to beworth $5,000 although its book value will be zero. Glentech’s tax rate is 30%, and itsopportunity cost of capital is 12%.
- a)Is the project good for Glentech? Why or why not?
- b)What can we tell about the project from the NPV profile?
- c)If the project were partially financed by borrowing, how would this affect the investment cash flows? How would borrowing a portion of the investment outlay affect the value of the investment to the firm?
- d)The project calls for two investments: one immediately and one at the end of Year 5. How much would Glentech earn on its investment, and how should we account for the additional investment outlay in our calculations?
- e)What are the considerations that make this investment somewhat risky, and how would you investigate the potential risks of this investment?
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Jimmy Johnson Marginal Costs: buying a new Jeep SUV
$10.00Jimmy Johnson Marginal Costs: buying a new Jeep SUV
Marginal costs Jimmy Johnson is interested in buying a new Jeep SUV. There are two options available, a V-6 model and a V-8 model. Whichever model he chooses, he plans to drive it for a period of 5 years and then sell it. Assume that the trade-in value of the two vehicles at the end of the 5-year ownership period will be identical.
There are definite differences between the two models, and Jimmy needs to make a financial comparison. The manufacturer’s suggested retail price (MSRP) of the V-6 and V-8 are $30,260 and $44,320, respectively. Jimmy believes the difference of $14,060 to be the marginal cost difference between the two vehicles. However, there is much more data available, and you suggest to Jimmy that his analysis may be too simple and will lead him to a poor financial decision. Assume that the prevailing discount rate for both vehicles is 5.5% annually. Other pertinent information on this purchase is shown in the following table:
V-6 V-8 MSRP $30,260 $44,320 Engine (liters) 3.7 5.7 Cylinders 6 8 Depreciation over 5 years $17,337 $25,531 Finance charges* over entire 5-year period $5,171 $7,573 Insurance over 5 years $7,546 $8,081 Taxes and fees over 5 years $2,179 $2,937 Maintenance/repairs over 5 years $5,600 $5,600 Average miles per gallon 19 14 Ownership period in years 5 5 Miles driven per year over 5 years 15,000 15,000 Cost per gallon of gas over 5-year ownership $3.15 $3.15 a. Calculate the total “true” cost for each vehicle over the 5-year ownership period.
b. Calculate the total fuel cost for each vehicle over the 5-year ownership period.
c. What is the marginal fuel cost from purchasing the larger V-8 SUV?
d. What is the marginal cost of purchasing the larger and more expensive V-8 SUV?
e. What is the total marginal cost associated with purchasing the V-8 SUV? How does this figure compare with the $14,060 that Jimmy calculated?
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The Fall of Enron
$20.00Ethical Dilemma and Enron’s Collapse
This questions must be answered in details
Explain what justified mr ebbers to take out the loans from his company? How this example was considered as a conflict of interest was the compensation scheme in the best interest of share holders interests ? explain the justification of board of directors to approve these loans to mr ebbers and other members. What are the consequences of these compensation schemes on the board of directors CEO’s and shareholders? What alternative and solution you would suggest to solve this ethical dilemma?
The Fall of Enron
The collapse of energy giant Enron in 2001 showed how catastrophic the agency problem can be. The company’s officers and board of directors, including Chairman Kenneth Lay, CEO Jeffrey Skilling and CFO Andy Fastow, were selling their Enron stock at higher prices due to false accounting reports that made the stock seem more valuable than it truly was. After the scandal was uncovered, thousands of stockholders lost millions of dollars as Enron share values plummeted.
The aim of this assignment is as follows:
- & Understand the basic ethics behind agency problem in business.
- &; Use what you have learnt so far on the course to this project
WHAT YOU HAVE TO DO:
You should submit a 1000 words case study report on Principle agent problem in business companies.
You must follow Qatar University’s formatting guidelines and include references. The report will be graded on the detailed criteria outlined on page three of this document. The recommended layout of your report is given in the following bullet points.
- &; Cover page (your names, date & number of words)
- & Executive summary (A high level summary of the project)
- & Table of contents
- & Introduction (background of chosen banks, firm or institution)
- &; What the chosen company is doing regarding your chosen topic.
- & Analysis and evaluation.
- & Recommendations
- & Conclusion (summarize all the above)
- & References
- &; Your project should be no more than 1000 words (executive summary and any references and appendices do not count towards the word limit).
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Over lunch, you and Mary meet to discuss next steps with the expansion project.
$20.00Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas.
Over lunch, you and Mary meet to discuss next steps with the expansion project.
“Do we have everything we need on sales and costs?” you ask. ”It must be time to compute the net present value (NPV) and internal rate of return (IRR) of the Apix expansion project.”
“We have the data from James and Luke regarding projected sales and costs, respectively, for the food packaging project,” says Mary. “It is feasible to project that we will receive a tax break from this implementation. I have information from our audit firm that indicates that future depreciation methods for taxes will be straight-line; however, the corporate rates will be reduced to 35% as we assumed in our weighted average cost of capital (WACC) calculation.”
“That sounds good,” you say.
“Right,” says Mary. “You can use the WACC of 1% listed in the Excel file posted for the computation of the NPV and comparison for IRR.”
“I’ve got the information I need from Luke and James,” you say. “Does this look right to you? Here’s what they gave me,” you say, as you hand a sheet of paper to Mary.“Let’s look at this now while we’re together,” she says.
The information you hand to Mary shows the following:
- Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year
- Project and equipment life: 5 years
- Sales: $25 million per year for five years
- Assume gross margin of 60% (exclusive of depreciation)
- Depreciation: Straight-line for tax purposes
- Selling, general, and administrative expenses: 10% of sales
- Tax rate: 35%
You continue your conversation.
“It looks good,” says Mary. “Use this information from Luke and James to compute the cash flows for the project.”
“No problem,” you say.
“Then, compute NPV and IRR of the project using the Excel spreadsheet I sent earlier today,” says Mary. “Use the IRR financial function for the computation of IRR.”
“Okay,” you say. “I’ll submit my Excel file showing the computation of cash flows, NPV, and IRR by the end of week so you can look at it over the weekend.”
“Thanks,” says Mary.
Complete the above worksheet for this assignment.
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Capital Budgeting Analysis: Gordon Hall
$7.00Capital Budgeting Analysis
You are required to work the following problem, using a discounted cash flow (NPV) analysis. You should model your answer on the text approach in Chapter 8.
“Gordon Hall is considering replacing an old machine with a new one from Li Ho. The old machine (bought 5 years ago from Tom Lee) cost $340,000, while the new one will cost $280,000, fully financed by a 5 year 9% per annum interest only loan.
“The new machine will be depreciated prime cost to $50,000 over its 5 year life. Gordon estimates that it will be worth $40,000 (salvage value) after 5 years. The old machine is being depreciated at prime cost to zero over its original expected life of 10 years. However, George can sell the old machine today for $86,000.
“The new machine will save Gordon $70,000 a year in cooling costs. Other costs are that, one year ago, a feasibility study on the new machine conducted for Gordon by an external firm of consultants, cost Gordon $20,000. With the new machine, Gordon will also lose $10,000 of sales of another product to Tom Lee.
“With the new machine, a one-off amount of cleaning supplies (current assets) at a cost of $9,000 will be required, and Henry estimates that accounts receivable (also current assets) will increase by $14,000. Both of these increases in working capital will be recouped at the end of the new machine’s life in five years time.
“Gordon’s cost of capital is 9%. The tax rate is 30%. Tax is paid in the year in which earnings are received.”
REQUIRED.
(a) Calculate the net present value of the proposed change, that is, the net benefit or net loss in present value terms of the proposed changeover.
(b) Should Henry purchase the new machine? State clearly why.”
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THE GOLDMAN SACHS GROUP, INC
$7.00Finance Investment Banking Industry Analysis
The purpose of this assignment is to analyze an investment banking company.
Goldman Sachs has been a benchmark for the investment banking industry. How has the company performed since the recession ended in 2010? Analyze the company’s financial results in 2011-14.
The analysis is to include a review of recent income statements and balance sheets. Ratio analysis should also be included. Company financial statements, company ratios, and industry ratios can be found at CSIMarket.com.
Annual statements can be found at:
http://www.sec.gov/cgi-bin/browse-edgar?CIK=gs&Find=Search&owner=exclude&action=getcompany
Search for 10-K. These are the annual statements filed by public companies.
Use the Fundamentals and Financials sections in CSIMarket along with other sections as needed. Information on sources of the revenues and comparisons to competitors is also available.
The assignment is to be 1-3 pages, typed and single spaced. Grammar, spelling, and punctuation will be graded along with the content of the assignment.
The assignments are to be sent in a plain, simple, easy-to-read Word and Excel file if needed. Include your name at the top of each document. Follow the Instructions for Assignments requirements and Reference Format.
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Your friend, Liz, loves to shop at Target and is now interested in investing in the company.
$5.00Your friend, Liz, loves to shop at Target and is now interested in investing in the company. Tom, another friend, has told her that Target’s debt structure is risky with obligations of nearly 74% of total assets. Liz sees that debt on the balance sheet is 65% of total assets and is confused by Tom’s comment. Write an explanation to Liz discussing the debt structure of Target and why Tom thinks Target is risky. Be sure to explain clearly what information appears on financial statements, as well as what information does not appear directly on the financial statements. Use the information below in your discussion.
At fiscal year-end February 2, 2008, Target Corporation had the following assets and liabilities on its balance sheet (in millions):
Current liabilities $11,782 Long-term debt 15,126 Other liabilities 2,345 Total assets 44,560 Target reported the following information on leases in the notes to the financial statements:
Total rent expense was $165 million in 2007, $158 million in 2006, and $154 million in 2005, including percentage rent expense of $5 million in 2007, 2006, and 2005. Most long-term leases include one or more options to renew, with renewal terms that can extend the lease term to more than 50 years. Certain leases also include options to purchase the leased property.
Future minimum lease payments required under non-cancellable lease agreements existing at February 2, 2008, were:Future Minimum Lease Payments (in Millions) Operating Leases Capital Leases 2008 $ 239 $ 12 2009 187 16 2010 173 16 2011 129 16 2010 123 17 After 2010 2, 843 155 Total future minimum lease payments $3694 (a) $232 Less: Interest (b) (105) Present value of minimum capital lease payments $127 (c) a) Total contractual lease payments include $1,721 million related to options to extend lease terms that are reasonably assured of being exercised, and also include $98 million of legally binding minimum lease payments for stores that will open in 2008 or later.
(b) Calculated using the interest rate at inception of each lease.
(c) Includes current portion of $4 million. -
Purple Haze Machine Shop is considering a four-year project to improve its production efficiency
$1.00Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $470,000 is estimated to result in $190,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $80,000. The press also requires an initial investment in spare parts inventory of $20,000, along with an additional $2,500 in inventory for each succeeding year of the project. If the shop’s tax rate is 35% and its discount rate is 9 percent, should the company buy and install the machine press?
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Lang Industrial systems company (LISC) is trying to decide between two different conveyor belt systems
$1.00Lang Industrial systems company (LISC) is trying to decide between two different conveyor belt systems. System A costs $240,000, has a four-year life, and requires $75,000 in pretax annual operating costs. System B costs $340,000, has a six-year life, and requires $69,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Whichever project is chosen, it will not be replaced when it wears out. If tax rate 34% and the discount rate is 8%, which project should the firm choose?