Town Inc is considering investing in a project with the following expected cash flows: -111, 12, 26, 33. If Town Inc expected cost of capital is 0.18, what is the expected NPV of the project?

The United States has run persistent trade deficits since the late 1970s, while Germany has had trade surpluses since the 1990s. Is either position inherently good or bad? Explain.

Research the 1990s case of Nick Leeson and Barings Bank. How is this an example of the principal-agent problem? Be specific, identifying both the agent and the principal. How could Barings Bank have prevented such a disaster?

Are the markets efficient? If the markets were completely efficient, how would you explain the dot-com bubble of the late 1990s and the subsequent bear market? Compare and contrast this episode with the current housing market.

U.S. productivity growth accelerated in the second half of the 1990s. How do you account for this speedup? Why is it still impossible to know if this speedup is the start of a long-term trend or simply a transitory change?

A town is deciding between alternatives on additional hospitals funding. There are four options which come with corresponding tax increases: H (highest level funding), M (medium level), L (low level) and N (no additional funding).

There are three groups of voters in the town. The rst group is Elderly people who need hospital services most, the second group is Young people who need hospital services the least but also don't want the low quality hospitals for the future. The third group is Rich people who prefer to use medical care in other towns with better quality or to nance only high quality hospitals in home town. The preferences of three groups are summarized in the Table 3.

Table 3: Preferences

        Old Young Rich

1st      H       L    N

2nd      M     M H

3rd        L     N L

4th        N     H         M

(a) What is the outcome of the pairwise majority voting in this town?

(b) Do the results of the majority voting satisfy transitivity? Is there an overall winner?

(c) Are preferences of the voters single-picked?

(d) Now suppose that instead of the rich group we have middle aged group with preferences speci ed in Table 4. Answer questions (d) - (f) under these new preferences.

6

Table 4: Preferences (2)

        Old Young Middle

1st   H L          M

2nd M       M         H

3rd   L    N          L

4th    N       H    N

What is the outcome of the pairwise majority? Is there an overall winner? (e) Who is the median voter in this case?
(f) Does the result of the median voter theorem hold in this case?

The town of Drygulch has been flooding once per year for the last thirty years. Folks have pretty much accepted the damages it causes. You have analyzed the flood periodicity and monetary impact to the town and know that with an upgrade to the storm drain system there would be a yearly savings depending on the flow rate (in kilogallons per minute, kgpm) of a new drainage system. The town expects a 10% MARR on any public works project. All of the drainage systems in the table below will have thirty years of useful life but the materials used can be recycled at the end of their life, remarkably giving the town back the same amount of funds that were originally needed for whatever system was chosen.

You remember that Dr. Jones, your engineering economics professor at MSU, used Equation 6-3:

                                                       EUAC = (P-S)(A/F,i,n) + Pi

of the textbook to show that when P = S, then EUAC = Pi è i = A/P, and so any incremental would be

                                                       DEUAC = DPDi è Di = DEUAC/DP è Di = DA/DP.

Complete the table below to decide which system should be selected

Case 3: Pleasant Town Chili

Sam Johnson, the kitchen manager for Pleasant Town Chili, is very concerned. The new owner is starting to use variance analysis to evaluate his performance, and the first report is looking dire. Sam is confused, since he thought the month went well. Cold weather had pushed sales higher than expected, and he adjusted the recipe to include a bit less meat to offset the rising cost of ground beef. Sam has asked you to help figure out why the report looks so bleak.

Pleasant Town Chili is a small restaurant in the local mall’s food court. Its main product is a serving of chili. The only direct material in this process is the meat—beans and other shelf-stable ingredients are included in the variable overhead which is allocated based on direct labor hours. The February budget, based on standard costs, was:

• Sales 2,500 chili servings

• Direct materials: $1,250 (1/4 pound @ $2.00 per pound, times 2,500 servings)

• Direct labor: 3,237.50 (0.14 DLH per bowl @ $9.25 per DLH, times 2,500 servings)

• Variable overhead: $507.50 (VOH allocated at $1.45 per DLH, times 350 DLH budgeted)

Actual February performance of the Riverside Mall restaurant was:

• Sales 2,800 servings

• 588 lbs of meat, at a cost of $1,310.00

• 395 DLH, for a direct labor cost of $3,685.35

• Variable overhead expenses of $551.50

In early March, Sam received the following financial performance report:

Sam needs your help to understand this variance analysis – he’s counting on getting a raise next year, which will be unlikely if his performance is as bad as this report indicates.

REQUIRED:

Would it be appropriate for the new owner to evaluate Sam’s performance based on this variance report? Why or why not?

Write a business report based on the following:

A new business, Globex Corporation has been created as the result of merging two large regional business, Riverina Precision Farming, and B T & Sons Farming Equipment. Globex Corp is primarily located in the Riverina Region of NSW and has three locations, Albury, Griffith and Wagga Wagga. Within Globex there are two arms to the business (Precision Farming & Farming Equipment), each of which is represented at each location.

The Globex Farming Equipment head office is located in Wagga Wagga, while the Globex Precision Farming head office is located in Griffith. Parts and Services for both arms as well as administration support are coordinated from the Albury office.

Globex Corporation strives to supply agricultural solutions that achieve the following objectives:

• Fulfill unmet market needs
• Exceed the standards for quality, effectiveness and value of its competitors
• Delivered on time
• Supported with expert technical service and advice
• Environmentally responsible and beneficial

Senior management has finalised on the following decisions:

1. Globex will retain all existing staff, stock and infrastructure from the merged businesses. B T & Sons aging systems are to be merged into the Riverina Precision Farming systems.

2. Globex have decided to invest in the development of an Online Sales Management System (OSMS), replacing all manual processes, allowing clients to order and pay for equipment online.

3. You are required to provide any two suitable business processes or solutions that could be employed to enhance this model. You should substantiate this process or solution with relevant references to literature.

4. Suggest how social media could play a role in promoting the OSMS to customers - giving suitable approaches from literature.

Write a business report outlining the above case, stating assumptions you make at the beginning of your report. Provide critique into the management decisions substantiating with reference to literature. In your report, make the difference between Information Systems (IS) and Information Technology (IT) issues and how it will affect customer choice, continued patronage, brand loyalty, and so on.

Suggest how to attract new customers (from competitors) and any other new business opportunities that may arise with such a set up. All these should be substantiated with references to IS and IT literature.

Write a business report based on the following:

A new business, Globex Corporation has been created as the result of merging two large regional business, Riverina Precision Farming, and B T & Sons Farming Equipment. Globex Corp is primarily located in the Riverina Region of NSW and has three locations, Albury, Griffith and Wagga Wagga. Within Globex there are two arms to the business (Precision Farming & Farming Equipment), each of which is represented at each location.

The Globex Farming Equipment head office is located in Wagga Wagga, while the Globex Precision Farming head office is located in Griffith. Parts and Services for both arms as well as administration support are coordinated from the Albury office.

Globex Corporation strives to supply agricultural solutions that achieve the following objectives:

• Fulfill unmet market needs
• Exceed the standards for quality, effectiveness and value of its competitors
• Delivered on time
• Supported with expert technical service and advice
• Environmentally responsible and beneficial

Senior management has finalised on the following decisions:

1. Globex will retain all existing staff, stock and infrastructure from the merged businesses. B T & Sons aging systems are to be merged into the Riverina Precision Farming systems.

2. Globex have decided to invest in the development of an Online Sales Management System (OSMS), replacing all manual processes, allowing clients to order and pay for equipment online.

3. (intentionally left blank)
4. (intentionally left blank)

[Points 3 and 4 will be given to you by your lecturer 7 days before date due. This is to allow everyone to work in this timeframe and to prevent unauthorised assistance with your work.]

Write a business report outlining the above case, stating assumptions you make at the beginning of your report. Provide critique into the management decisions substantiating with reference to literature. In your report, make the difference between Information Systems (IS) and Information Technology (IT) issues and how it will affect customer choice, continued patronage, brand loyalty, and so on.

Suggest how to attract new customers (from competitors) and any other new business opportunities that may arise with such a set up. All these should be substantiated with references to IS and IT literature.