Case 8: Case Problem 10, p. 1112 (Mallor 16th Ed. Chap 42) (No citation is available.) EZStreet.com, Inc.
Josh Thomas, Jack Wiley, and Will Regis are three close friends who have been offered the opportunity to invest $100,000 each and to become 10 percent shareholders each in a closely held corporation that will be controlled by their friends Leone and Teddy Battat, who will own the remaining the 70 percent of the shares. The business, to be named EZStreet.com, Inc., will be an online business networking site. Leone and Teddy's plan is to amass at least 500 million users worldwide, which they estimate will take five to seven years, after which they would like to take the company public or sell it to another company, like Google. Josh is a CPA with 10 years experience in business consulting and investment management. Jack is a software engineer who has designed more than 50 websites. Will has an MBA in consumer and business marketing with 12 years experience in public relations and ad sales.
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1. Because EZStreet.com, Inc. is a closely held corporation, he board of directors of EZStreet.com, Inc. may not issue shares to Josh, Jack and Will in return for their promises to provide services in the future; rather, they must purchase the securities for cash, tangible or intangible property, or performed services. |
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2. To guarantee that they get a return for their investment, Josh, Jack and Will should ask a salary for their services, rather than a mandatory dividend on their class of shares. |
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3. Josh, Jack and Will can ensure they obtain the capital appreciation of their shares if the company goes public or is sold by entering into a buy-sell agreement, which requires E-Z street or the company that purchases E-Z Street to purchase their shares at a purchase price equal to 30% of the market value of E-Z Street when it is bought out by another company. |
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4. When they purchased 30% of the shares in E-ZStreet.com, Inc., Josh, Jack and Will are not automatically given preemptive rights to retain their relative ownership of the shares of the company. |
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5. In order to ensure that they benefit from the public offering and can sell their shares in a public market, Josh, Jack and Will should require a provision in the buy-sell agreement that requires E-ZStreet.com, Inc. to go public with the same class of shares held by Josh, Jack and Will or provides that their shares are convertible into the class of shares used to go public. |
In: Finance
Problem 11-5A Computing and analyzing times interest earned LO A1
[The following information applies to the questions
displayed below.]
Shown here are condensed income statements for two different
companies (both are organized as LLCs and pay no income
taxes).
| Miller Company | ||
| Sales | $ | 1,200,000 |
| Variable expenses (80%) |
960,000 |
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| Income before interest | 240,000 | |
| Interest expense (fixed) | 74,000 | |
| Net income | $ |
166,000 |
| Weaver Company | ||
| Sales | $ | 1,200,000 |
| Variable expenses (60%) |
720,000 |
|
| Income before interest | 480,000 | |
| Interest expense (fixed) | 314,000 | |
| Net income | $ |
166,000 |
1. Compute times interest earned for Miller Company.
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2. Compute times interest earned for Weaver Company.
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3. What happens to each company's net income if sales increase by 20%. (Round your answers to nearest whole percent.)
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4. What happens to each company's net income if sales increase by 30%? (Round your answers to nearest whole percent.)
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5. What happens to each company's net income if sales increase by 60%? (Round your answers to nearest whole percent.)
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6. What happens to each company's net income if sales decrease by 20%? (Round your answers to nearest whole percent.)
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7. What happens to each company's net income if sales decrease by 30%? (Round your answers to nearest whole percent.)
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8. What happens to each company's net income if sales decrease by 40%? (Round your answers to nearest whole percent.)
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In: Accounting
The Pew Research Center conducted the Global Attitudes Survey in spring 2017 in multiple countries. In Canada, a random sample of 1,022 adults were surveyed.2 In Russia, a random sample of 1,002 adults were surveyed.3 One question asked was “How closely do you follow news specifically about the United States?”4 The proportion of Canadian adults who said they follow US news closely was 0.78 while the proportion of Russian adults who said they follow US news closely was 0.48. The standard error for Canada was 0.036 and Russia was 0.04.
a. Describe the parameters of interest in context.
b. What are the 95% confidence intervals?
Canada:
Russia:
c. Interpret the 95% confidence intervals.
Canada:
Russia:
d. Do the intervals overlap? What does that tell us about the difference in the proportion of adults who say they follow US news closely for the two different countries?
In: Statistics and Probability
Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 9%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $109 to purchase these supplies.
For years, Worley believed that the 9% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:
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Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 9%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $109 to purchase these supplies. For years, Worley believed that the 9% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:
Worley gathered the data below for two of the many hospitals that it serves—University and Memorial (each hospital purchased medical supplies that had cost Worley $36,000 to buy from manufacturers):
Questions 1. Compute the total revenue that Worley would receive from University and Memorial. 2. Compute the activity rate for each activity cost pool. 3. Compute the total activity costs that would be assigned to University and Memorial. 4. Compute Worley’s customer margin for University and Memorial. (Hint: Do not overlook the $36,000 cost of goods sold that Worley incurred serving each hospital.) |
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In: Accounting
Tesla which was founded just a decade ago, has recently become the most valuable car company in the world. Look up the most common valuation metrics for TSLA (P/E, Book-to-Market, Price-to-Sales and other ratio) and compare them to that of the industry peers.
How overvalued is TSLA relative to its peers?
Why would investors buy such an overvalued company?
Would you personally invest in TSLA?
Would you buy one of its vehicles?
In: Finance
answer the following questions on the basis of Guess
company.
project focus:
1. efficiency
2. effectiveness
3. Resilience
4. Agile/adaptability
5. destination sourcing of materials
6. process management
7. quality control
8. global competition
9. supply chain best practices
10. supply chain challenges
Distribution management (supply chain)
Guess Company- it is an American brand founded in 1981 in Los
Angeles in California by Maurice brothers. it is an men and women
clothing brand.
In: Operations Management
If a Correlation matrix shows that the association between the IV - the percentage of residents of a state (in the US) who have graduated from high school and the DV - the percentage of murders committed with firearms in a state is -.271, with an associated sig. of .001, explain how you understand the relationship between the Independent variable and the Dependent variable.
In: Statistics and Probability
Please, edit for clarity and conciseness, for grammar, capitalization, punctuation, abbreviation, number style, word division, and vocabulary. Thank you
The Executive Summary (excerpt)
Purpose of the Proposal
This document will acquaint the reader with 3 principle topics by
· Showing what the San Diego State University (SDSU) Suntrakker project is;
· Showing that the team-oriented, interdepartmental disciplines at SDSU possess the tenacity and know-how to build and race a solar-powered vehicle in the World Solar Challenge Race in Austrailia next year;
· Define and articulate how this business team expects to promote and generate the necessary support; funds, and materials from the student body, alumni, community and local businesses to sieze and executive this opportunity.
Project Profile
The Suntrakker Solar Car project was conceived by a small group of San Diego State University engineering students motivated by the success of the General motors “Sunrayce,” committed itself to designing and building a superior solar-powered vehicle to compete in the world Solar Challenge.
From modest Beginnings, the Suntrakker project quickly revolved into a cross-disciplinary educational effort encompassing students from many colleges of San Diego State University. The project has provided students participants and volunteers with valuable real-life experiences and has brought them together in an effort that benefits not only the students and the university but also the environment.
Sponsors of this project are not only contributing to the successful achievement of the overall Suntrakker project but will also enhance their goodwill, advertising, and name promotion by association with the project. In addition, the Suntrakker offers a unique opportunity for the companies who can donate parts and accessories to showcase their name and test field their products in public in this highly publicized international contest.
?
In: Operations Management
A prospective MBA student earns $60,000 per year in her current job and expects that amount to increase by 14% per year. She is considering leaving her job to attend business school for two years at a cost of $45,000 per year. She has been told that her starting salary after business school is likely to be $90,000 and that amount will increase by 10% per year. Consider a time horizon of 10 years, use a discount rate of 12%, and ignore all considerations not explicitly mentioned here. Assume all cash flows occur at the start of each year (i.e., immediate, one year from now, two years from now,..., nine years from now). Also assume that the choice can be implemented immediately so that for the MBA alternative the current year is the first year of business school. What is the net present value of the more attractive choice? Please round your answer to the nearest dollar. Please check your answer I have received the wrong answer for this question before.
In: Finance
Swalm, who suffered from cystic fibrosis, contacted Dennis, who was authorized by a life insurance company to take applications for its insurance policies, and requested a life insurance policy for $200,000. Dennis provided Swalm with an application form that included a number of questions concerning the applicant’s health, and any existing or prior medical conditions. Dennis reviewed the form with Swalm and his spouse, and his spouse mentioned to Dennis that Swalm suffered from cystic fibrosis, but the condition was under treatment and control by certain drugs. Dennis, acknowledged the comment, but entered a ‘none’ on the form with respect to existing medical conditions for Swalm. Swalm signed the form, and the application was sent to the insurance company. A policy of insurance was then issued to Swalm. Some months later, Swalm’s cystic fibrosis could no longer be controlled by drug treatment, and a year later he died. Swalm’s spouse, as the named beneficiary in the life insurance policy, claimed payment under the policy. When the insurance company discovered the cause of death and Swalm’s medical history, it refused to pay
If Swalm’s spouse took legal action against the insurer, what would be the basis of her claim? What defences might the insurer raise?
In: Finance