Booyah is a publicly traded company that sells both computer hardware and services. It has no debt outstanding or cash. In the most recent year, the company reported the following information about its two businesses:
Business Revenues (in $ millions) Enterprise Value/Sales Unlevered Beta
Computer hardware $800 0.7 1.22
Computer services $500 1.9 0.7
The company also provides the breakdown of revenues geographically:
|
Country |
Riskfree rate In local currency |
Equity Risk Premium |
Marginal tax rate |
Total Revenues (in $ millions) |
||
|
United States |
4.00% |
6.00% |
40.00% |
$ 650 |
||
|
China |
5.00% |
8.00% |
25.00% |
$ 650 |
||
A) Estimate the cost of equity in US dollars for Booyah
B) Now assume that Booyah wants to sell just its hardware business in the United States at fair value (based on the EV/Sales ratio for the sector) in the United States, borrow an additional $280 million in the US and invest the total amount in computer services in China. Estimate the cost of equity in US $ for Booyah after the transaction.
In: Finance
1. Various governments have recently been considering putting limitations on top corporate executive pay and/or taxing corporate executive bonuses very highly (for example, at a 70 percent tax rate)What are the implications of this on the market for top executive talent?
2. The United States is virtually the only country that permits employment - at -will. This means that other countries employees may terminate for cause only. What kind of implications might this have on companies operating in the United States and abroad?
3. President Barack Obama recently issued an executive order granting nearly five million undocumented immigrants work authorizations. What effects do you think this will have on the workplace in the United States? What global effects might this have?
4. The recent global economic downturn has caused many companies to cut back r consider cutting back their training and development budgets. What might the implications of such actions be, both in the short term and the long term?
In: Economics
Should U.S. Imports of Prescription Drugs from Canada Be Widened"
1. Should the United States legalize the importation of lower-cost pharmaceuticals? If so, should this apply to individual consumers, pharmacies, or other entities?
2. If the United States were to permit the importation of lower-cost pharmaceuticals from abroad, should this importation apply to all foreign countries or a limited number? if a limited number, which should they be and why?
3. If the United States were to permit the importation of lower-cost pharmaceuticals from abroad, should this apply to all pharmaceuticals or just to some? If just to some, what criteria should be used?
4. If pharmacies were allowed to import less costly drugs from abroad, should regulations be put into effect to pass on some/all cost savings to consumers? If so, what should they be?
4. If pharmacies were allowed to import less costly drugs from abroad, should regulations be put into effect to pass on some/all cost savings to consumers? If so, what should they be?
In: Operations Management
In: Finance
It is a general belief that in the United States there is a strong relationship between education and smoking: well-educated people are less likely to smoke. Does a similar relationship hold in France? To find out, researchers recorded the level of education and status of a random sample 459 French men aged 20 to 60. The two-way table below displays the data.
|
Smoking Status |
||||
|
Education |
Nonsmoker |
Former |
Moderate |
Heavy |
|
Primary school Secondary school University |
56 37 53 |
54 43 28 |
41 27 36 |
36 32 16 |
a. State the test you plan to use and determine whether the
conditions for test are satisfied.
b. State the hypotheses for this test.
c. At alpha = 0.05, determine whether there is a significant relationship between smoking status and educational level.
In: Statistics and Probability
The United States is one of the nations in the world with the highest number of Economists. They are even some Economic Nobel laureates in the country. Why do you think the country goes through recessions from time to time when we have many Economists? Why did they not prevent the recession of 2007 – 2012 in the first place? Make sure to include some references at the end of the answer. Thank you.
In: Economics
Write a position statement on Minimum Wages in the United States.
The answer should include the following sections: (1) your topic introduction, (2) your position on the topic, (3) economic arguments against your position, (4) economic arguments for your position, (5) a brief concluding paragraph, and (6) at least three sources which are used in this writing.
In: Economics
This is the introduction to the Think Tank Opioid Epidemic. The United States is in the grips of a health care crisis. Beginning in the 1990s pharmaceutical companies increased the number of prescription painkillers on the market, including new lines of pain killers that were advertised as being non-habit forming, not addictive.
Doctors began to prescribe more painkillers for injury treatment but also for a new and growing medical practice of pain management. It turned out that a number of the painkillers prescribed including Oxycontin were addictive for many people. The result was that many have become addicted to prescription painkillers, some because
they abused prescriptions but many who simply followed doctors' orders in taking what turned out to be a highly addictive substance. There have been lawsuits brought against some of the pharmaceutical companies that make these addictive painkillers. But does that solve all the problems?
Were the right people sued? In other words, who's really responsible for the crisis and how can people get themoney needed to deal with the fallout now? Begin by identifying the parties involved. Start with the private transaction, which is not the lawsuit against the pharmaceutical company.
It's the business transaction at the base of everything. Identify the private benefits and costs. Then think about the public parties, everyone impacted by the opioid crisis, and identify the public benefits and costs. The final step is devising a legal solution that will fix the alignment between private
and public. The first part of your Think Tank project will involve the earlier steps where you identify. The second part will involve the last step, devising a legal solution, and explaining it with an economic model. Keep these things in mind as you begin reading the articles.
Think Tank Project Part 1
Who are the private parties/actors? Think about who is involved in the initial business transaction. This is probably different from the activity that is the focus of the legal issue.
What are the benefits for each private actor/party? What are the costs to each?
Who are the public parties/actors? Think about who is harmed and who benefits by the initial transaction that is not a party to that initial transaction.
What are the benefits for each public actor/party? What are the costs to each?
What is the market inefficiency? Refer to the book and explain the market inefficiency of your issue in those terms.
Compare the private transaction to the public. Overall, do you think there is a social benefit or a social cost to what's happening? You can change your answer in the final draft. Your goal now is to track your thought process.
What do you think the best solution will be? You can change your answer in the final draft. Your goal now is to track your thought process.
In: Economics
Which of the following is true of sole proprietorships in the United States?
| There are no opportunity costs involved in operating such firms. |
| They offer the owners less personal liability than the other forms of business organization. |
| Such firms employ only one individual. |
| They are responsible for a large portion of the total production of goods and services in the U.S. economy. |
| They are the most important form of business organization in terms of their numbers. |
Taxes collected on the basis of the benefits-received principle:
| tend to redistribute income from rich to poor. |
| make it possible for the government to spend money on activities that markets cannot provide. |
| do not vary in amount among the taxpayers. |
| connect the revenue side of the budget with the spending side of the budget. |
| provide states with their main sources of revenue. |
Which of the following is true of sole proprietorships in the United States?
| There are no opportunity costs involved in operating such firms. |
| They offer the owners less personal liability than the other forms of business organization. |
| Such firms employ only one individual. |
| They are responsible for a large portion of the total production of goods and services in the U.S. economy. |
| They are the most important form of business organization in terms of their numbers. |
Which of the following is true of a recession?
| It is typically accompanied by inflation and investment growth. |
| It begins after an expansion has peaked. |
| It is typically longer than periods of expansion. |
| It continues as long as actual output exceeds the potential output. |
| It lasts for more than two years on an average. |
In: Economics
Is there too little regulation and protection for business in the United States or is there too much regulation slowing down the efficiency and reducing the profitability of business in this country. Be sure to support your reflections with several examples from the text, or any other source.
In: Economics