what is the federal reserve responsibilities on its domestic scale vs international scale

Facebook is considering two proposals to overhaul its network infrastructure. They have received two bids. The first bid from Huawei will require a $ 20 million upfront investment and will generate $ 20 million in savings for Facebook each year for the next 3 years. The second bid from Cisco requires a $ 81 million upfront investment and will generate $ 60 million in savings each year for the next 3 years.

a. What is the IRR for Facebook associated with each​ bid?

b. If the cost of capital for each investment is 12 %​, what is the net present value ​(NPV​) for Facebook of each​ bid? Suppose Cisco modifies its bid by offering a lease contract instead. Under the terms of the​ lease, Facebook will pay $ 24 million​ upfront, and $ 35 million per year for the next 3 years. Facebook​'s savings will be the same as with​ Cisco's original bid.

c. Including its​ savings, what are Facebook​'s net cash flow under the lease​ contract? What is the IRR of the Cisco bid​ now?

d. Is this new bid a better deal for Facebook than​ Cisco's original​ bid? Explain.

PLEASE MAKE SURE ANSWERS ARE CLEAR!!!

Calculate the Weighted Average Cost of Capital (WACC) for the following capital structure:

• 4,000 bonds with par value of $2,000 and market value of $1,800. The coupon of 10% with a tax rate of 50%.

• 400,000 common shares with par value of $70 per share and market value of $76 per share. The cost of common shares is 24%.

• 20,000 preferred shares with par value of $200 per share and market value of $200 per share. The dividend per share equal to $24.

Lean Conductors Ltd is a mid-sized Public limited company engaged in the manufacture and sale of electrical cables. As a public limited company the organization was performing reasonably well, earning steady profits and declaring a stable dividend of 12-15%.

The CEO was feeling the urge to expand the business and taste the growth of business operations and profits. He started addressing various options and shortlisted 2 options namely manufacture of LED bulbs and solar panels.

He called the Gen Mgr. - Finance for a discussion in this regard to probe the matter further. He also went on to share his dream of making the company a larger one and his belief in people like the GM who needs to stay and grow with the organization.

The GM felt excited at this prospect and started making a project report. He decided in his own mind the solar panel project with a larger profit margin looked to be a better one than LED bulbs which was dealer intensive and lesser in terms of unit margin.

Feeling the need to expand rapidly on the investment of the company and make it bigger and become a CFO in the bargain, he chose the solar panel project which was more capital intensive. An assumption about a capital structure and cost congruent to the existing structure was assumed and the projected financials were prepared.

The board of directors representing the majority of shareholders believing in the recommendations of the report adopted it for implementation. The project faced various hurdles in its implementation such delay in signing collaboration agreements, inflated cost due to poor supply of money in the market, downturn of the economy and so on. The project cost started spiraling up and to fund the expansion the funds of the existing business line were inducted into the new project since no further borrowing could be made. The company slipped into the red and reached a stage of bankruptcy without the new project even taking off.   

Questions:

1. Trace the conflict between the management and the shareholders in this case study.
2. Is the act of the GM Finance an error or sin?
3. Where do you think the CEO went wrong?
4. What according to you is the approach the CEO should have taken?

Derek’s company has existing assets that generate Earnings Per Share EPS of $5. If Derek does not invest except to maintain existing assets, EPS is expected to remain constant at $5 a year. However, starting next year, Derek an opportunity to invest $3 per share a year in developing a new technology. Each investment is expected to generate a 20% return (assume that this return is not compounded, so each year the return is 3 x .2). The technology will be fully developed by the end of the fith year. What will be the stock price and PE ratio assuming that investors require a 12%? [Hint: use the dividend discount model]

how to make money online

A young graduate is trying to decide whether to lease or buy a car for the next three years. The cash flows for each choice are shown below. (We will ignore gas, insurance, and tag fees.)

YEAR 0 1 2 3

LEASE -$4,500.00 -$3,500.00 -$3,500.00 -$3,500.00

PURCHASE -$35,141.00 0 0 $24,304.00

The graduate has a personal discount rate of 7.00%. At what discount rate would the graduate be indifferent between the two choices?

(Summarize your thoughts to the below post)

Until you've actually been there and done that, you don't really know for sure what to expect. This concept is pretty much applicable to anything in life, whether your talking about having your first child or taking a multinational company into a new market. Experience can mean everything to how things flow or don't and that is before anything uncontrollable is mixed in.

As for the multinational companies trying to break into emerging markets, the need for regional experts and a firm understanding of the business culture can often be overlooked and underestimated. Elections, politics, weather related catastrophes and economic uncertainties are best managed with local management. They have experienced the "political uncertainty," and experienced a majority of the risks associated with doing business in that particular country. Who knows, the manager or consultant you hire might just be the son of a high ranking politician, maybe even the Vice President of the country. Given the often liquid state of political appointments it can be very difficult to hedge against political risk, there is just to much uncertainty. Utilizing managers who have lived and worked in the host country will help multinational companies navigate the uncertainties and should be a first consideration when trying to manage the hidden risks of emerging markets.

why is it dangerous to rely only upon income statements to evaluate financial performance of companies? what other statements should evaluate?

Respond to the primary arguments of Lynne Twist's book "The Soul of Money." In particular identify the "Three Toxic Myths" she describes. PIck one of the myths and explain your response to her claim. Do you agree? Disagree? in Either case, explain why.

Percy Footwear acquired all the voting stock of Simali Inc. at the beginning of 2016. The acquisition cost was $400,000, and Simali’s book value at that time consisted of $25,000 in capital stock and $75,000 in retained earnings. Revaluation information for Simali’s identifiable net assets is as follows:

• Plant assets with a 20-year remaining life, straight-line, were overvalued by $80,000
• Inventory (sold in 2016) was overvalued by $20,000
• Previously unrecorded indefinite life developed technology was valued at $150,000; impairment to the beginning of 2020 was $10,000, and there is no impairment for 2020.
• Goodwill was not impaired as of the beginning of 2020; impairment in 2020 was $25,000.

It is now the end of 2020 (five years after the acquisition). Simali’s retained earnings at the beginning of 2020 is $125,000, and it reports net income of $45,000 for 2020. It declares no dividends. Percy uses the complete equity method to report its investment in Simali on its own books. Simali sells merchandise to Percy on a regular basis, at a markup of 20 percent on cost. Total sales made to Percy in 2020 were $200,000. Percy’s beginning inventory balance has $12,000 in merchandise purchased from Simali. Percy’s ending inventory balance has $18,000 in merchandise purchased from Simali.

Required

a.         Calculate equity in net income for 2020, reported on Percy’s books.

b.         Calculate the December 31, 2020 balance for investment in Simali, reported on Percy’s books.

c.          Calculate the original balance for goodwill, reported for this acquisition.

1.

Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $333,520 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,760,000. The cost of the machine will decline by $110,000 per year until it reaches $1,320,000, where it will remain. The required return is 16%.

What is the NPV if the company purchases the machine today? (Round answer to 2 decimal places. Do not round intermediate calculations)

Topic: Capital Budgeting Project

2.

Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $330,381 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,760,000. The cost of the machine will decline by $110,000 per year until it reaches $1,320,000, where it will remain. The required return is 13%.

What is the NPV if the company decides to wait 2 years to purchases the machine? (Round answer to 2 decimal places. Do not round intermediate calculations)

Topic: Real Option to Delay

We are evaluating a project that costs $842,318, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 56,424 units per year. Price per unit is $37, variable cost per unit is $18, and fixed costs are $423,844 per year. The tax rate is 35%, and we require a return of 22% on this project.

In percentage terms, what is the sensitivity of NPV to changes in the units sold projection? (Round answer to 2 decimal places. Do not round intermediate calculations)

Topic: Sensitivity Analysis

We are evaluating a project that costs $836,559, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 62,175 units per year. Price per unit is $35, variable cost per unit is $19, and fixed costs are $418,916 per year. The tax rate is 35%, and we require a return of 22% on this project.

In percentage terms, what is the sensitivity of OCF to changes in the variable cost per unit projection? (Round answer to 2 decimal places. Do not round intermediate calculations)

Topic: Sensitivity Analysis