You are 20 years old and have completed your BBA and want to pursue further education but you don’t want to take money from your father. Your plan is to start working and earn enough money so that you can finance your degree on your own and get yourself enrolled in five years’ time. You estimate that the annual cost of doing an MBA 5 years from today will be PKR 400,000 and the program will be two years long. You will need the money at the beginning your program so that you are not worried about how to clear your dues during your studies. Luckily you go for a job interview and they hire you and you start working at a salary of PKR 25,000. So you decide that 50% you will deposit in a saving account at a 10% rate with monthly compounding for your further studies and the remaining amount you will use for your daily expenses.

1. Will you be able to meet your goal at this current saving rate?
2. What percentage of your salary should you save if you want to have exactly your university expenses amount?
3. How would your answer to part 1 change if the saving account rate changed to 5%? Comment on your answer.
4. If you are given an option to invest at the 10% saving rate with monthly compounding or 10.5% semiannual compounding, which would you chose? Explain your answer

Brian Kelly is the founder and CEO of Kelly’s Barbecue and Grill (KBG).  KBG is a local retailer of outdoor cooking equipment, ranging from small portable gas grills to competition grade barbecue grills and smokers.  Kelly has operated his business profitably for nearly 15 years.  In recent years, sales revenues and profits have been stagnant.  As an old-fashioned type, Kelly has always operated his business on a cash-only basis.  After consulting with his accountant, Josh Adams CPA, Kelly believes that his sales policy has left little room for additional growth.  

Kelly is considering offering 30-day credit to customers in an effort to drive increased sales.  Initially, he plans to only offer credit on his high-end propane grill model before extending this new policy to his full inventory.  His luxury gas grill model, the Caliber Cross Flame Pro retails for $12,590 and costs Kelly $10,470 per unit from his supplier.  There should be no change to his cost per unit, but Kelly believes that he might be able to mark-up his retail price to $13,000 since he will be offering more flexible payment terms.  

KBG currently sells an average of 15 units of the Caliber model each month.  Kelly thinks that he may be able to sell up to an average of 22 units per month if he begins offering the proposed 30-day credit terms.  Kelly has further decided that a 3% per month required return would be appropriate for evaluating the proposed credit policy change.  

1. Calculate the net present value (NPV) of switching from the cash-only policy to the 30-day credit terms.

2. Determine the minimum increase, or maximum decrease, in monthly sales volume for Kelly to deem the switch appropriate.

Kelly currently places a monthly order of 15 units of the Caliber model from his supplier.  It costs him $50 to place each order and he estimates that it costs him about $23 to store each grill in inventory for a year.

3. Under his current ordering system, with monthly sales of 15 units;
   1. What is the average inventory balance (in units) for the Caliber model, assuming the grills are sold evenly throughout the month?

2. How much does Kelly pay per year in ordering costs?

3. How much does Kelly pay per year in storage costs?

4. How much money would Kelly save per year if he were to optimize his order size?  

5. Assuming his goal would be to minimize the total costs incurred for ordering/storing inventory, how many units of the Caliber model should Kelly order each time he places an order when his monthly sales volume is 22 units?  

Suppose you are now a Founder and CEO of Rent the Dresses, Inc., an online rental site for premium dresses primarily for women. Because the business is a start-up, there is no accountant on the management team yet, so you have been doing the accounting. You notice that an average of 100,000 visitors come to your website, of which 60% browse through the website. 20% of them register and put at least one item in the shopping cart. One out of three registered customers actually checkout and pay for the items. Calculate the following (and show your work for partial credit!) a. Bounce rate b. Conversion rate c. Average monthly revenue, assuming AOV is $200.

Cato Boldon 32, CEO and founder of Optimum Athletics, reside in the island of Trinidad and Tobago with his wife and children. The business has been in operation since 2008. He decided to start the business during the financial crisis that hit the world in 2008 due his passion for track and field. The company has been experiencing a loss for the last two years and cash flows are beginning to tighten. A major customer owes the company US$100,000 for almost a year. He gets a salary of 5 million per annum from the business. He has savings of US$ 100,000 and his looking to invest to secure his financial future. He wants to enjoy both safety and capital gains. The government of Trinidad is currently in discussion on whether to grant small business in the manufacturing industry an incentive package. Boldon is considering his options. Should I sell the business or go back to management in a corporate enterprise. He has a Masters of Science of 35 Degree in Kinesiology. His two children are aged 9 and 13 yrs old respectively and his wife is six months pregnant. His wife recently completed her Law Degree and is looking to be called to the bar in Trinidad and Tobago in the next six months. Her husband had been contributing to her alumni Scholarship Fund for the last 5 years and wishes to continue. His father 60, is not doing well. He was recently diagnosed with diabetes. Boldon recently found out that his father has limited insurance coverage. Boldon is concerned about his retirement and his ability to finance his children education. He wanted the business to be part of his pension plan as he wanted the company to be listed on the Trinidad Stock Exchange. He had to use the deposit that he had saved for his home ownership to fix the family car that was recently damaged by hurricane Irma. As Financial Advisors you are to:

You are required to:

1. Prepare an Investment Policy Statement for Mr. Boldon.

Cato Boldon 32, CEO and founder of Optimum Athletics, reside in the island of Trinidad and Tobago with his wife and children. The business has been in operation since 2008. He decided to start the business during the financial crisis that hit the world in 2008 due his passion for track and field. The company has been experiencing a loss for the last two years and cash flows are beginning to tighten. A major customer owes the company US$100,000 for almost a year. He gets a salary of 5 million per annum from the business. He has savings of US$ 100,000 and his looking to invest to secure his financial future. He wants to enjoy both safety and capital gains. The government of Trinidad is currently in discussion on whether to grant small business in the manufacturing industry an incentive package. Boldon is considering his options. Should I sell the business or go back to management in a corporate enterprise. His has an Masters of Science Degree in Kinesiology.

His two children are aged 9 and 13 yrs old respectively and his wife is six months pregnant. His wife recently completed her Law Degree and is looking to called to the bar in Trinidad and Tobago in the next six months. Her husband had been contributing to her alumni Scholarship Fund for the last 5 years and wishes to continue. His father 60, is not doing well. He was recently diagnosed with diabetes. Boldon recently found out that his father has limited insurance coverage. Boldon is concerned about his retirement and his ability to finance his children education. He wanted the business to be part of his pension plan as he wanted the company to be listed on the Trinidad Stock Exchange. He had to use the deposit that he had saved for his home ownership to fix the family car that was recently damaged by hurricane Irma.

As Financial Advisors you are to: 1. Prepare an Investment Policy Statement for Mr. Boldon

Cato Boldon 32, CEO and founder of Optimum Athletics, reside in the island of Trinidad and Tobago with his wife and children. The business has been in operation since 2008. He decided to start the business during the financial crisis that hit the world in 2008 due his passion for track and field. The company has been experiencing a loss for the last two years and cash flows are beginning to tighten. A major customer owes the company US$100,000 for almost a year. He gets a salary of 5 million per annum from the business. He has savings of US$ 100,000 and his looking to invest to secure his financial future. He wants to enjoy both safety and capital gains. The government of Trinidad is currently in discussion on whether to grant small business in the manufacturing industry an incentive package. Boldon is considering his options. Should I sell the business or go back to management in a corporate enterprise. His has an Masters of Science Degree in Kinesiology.

His two children are aged 9 and 13 yrs old respectively and his wife is six months pregnant. His wife recently completed her Law Degree and is looking to called to the bar in Trinidad and Tobago in the next six months. Her husband had been contributing to her alumni Scholarship Fund for the last 5 years and wishes to continue. His father 60, is not doing well. He was recently diagnosed with diabetes. Boldon recently found out that his father has limited insurance coverage. Boldon is concerned about his retirement and his ability to finance his children education. He wanted the business to be part of his pension plan as he wanted the company to be listed on the Trinidad Stock Exchange. He had to use the deposit that he had saved for his home ownership to fix the family car that was recently damaged by hurricane Irma.

What is the asset allocation in this case study?  

What investment strategy should be taken based on the asset allocation?

You are the co-founder and CEO of Fantastic PLC. The below announcement regarding one of the products (product X) your company produces has been brought to your attention by your partner asking you for advice on what the company should do in light of this event:

A documentary recently aired on the health channel followed a scientific research that confirmed products, like product X, contain carcinogenic chemicals in concentrations harmful to human health

Write a report to include the following answers:

• Describe how the above event will affect the demand for product X that your company is producing.
• In light of this change make proper business recommendations (e.g. maintain/increase revenues and/or to maintain/regain/increase customers/market share). Use examples to better explain your answer.”

Assume you are Helena Fogarty, the CEO and founder of Mi Ola, and you are facing a difficult decision about whether or not to outsource manufacturing from the United States to another country. You would like to manufacture only in the United States but competitive pressures are forcing you to consider alternatives. You have a team of advisors with diverse backgrounds whom you trust and with whom you work closely. You would like to maximize the quality of the group’s decision making.

Which of the following is an approach that you might consider using to maximize the effectiveness of the group’s decision making process? Check all that apply.

Use groupthink

Use the nominal group technique

Use the Delphi technique

Use brainstorming

Assume you are Helena Fogarty, the CEO and founder of Mi Ola, and you are engaged in an intense group decision making process with your trusted advisory board. You would like to use evidence-based management to improve your decision making process.

Which of the following things might you do to improve your evidence-based decision making?

Encourage experimentation and learning by doing

Base decisions on previous decisions because if it isn’t broken, the evidence suggests you shouldn’t try to fix it

Encourage people to stick with a decision, even if it seems to be failing, so that you will eventually succeed

Build a culture in which people avoid having unpleasant or difficult conversations

7. One of your neighbors, Mr. and Mrs. Schekel, ( an elderly couple that always bring cookies when they visit ) has been very interested in hearing about your experiences at university. They would like to send their granddaughter to your university in 8 years’ time. You estimate that tuition will be $45,000 the first year , and the tuition will grow at 1.26% annually. They estimate it will take her 5 years to complete her undergraduate and MBA degrees, provided she attends summer school . they would also like to bestow a gift of $15,000 to her upon her graduation from the MBA program. How much must your clients deposit today, assuming an intrest rate of 6% in order to send their granddaughter to your university and provide her with the graduation present ?

Show time line . use uneven cash flow method

8. The schkels also have another granddaughter of whom they are very proud. They are considering offering her the following :

a. $40,000 today or

b. $45,000 towards a house down payment when she marries 2 years from now when her fiance finishes medical school. Assuming an intrest rate of 5% , which offer should the granddaughter accept ?

9. Another neighbor, Mr Ruble, is considering depositing $1,500 at the end of each year for five years in a saving account that pays 3.5% per year . you recommend that he deposit the funds at the beginning of each year. Calculate and demonstrate the change in value that will accrue to Mr.Ruble. Explain why there is a change in value .