Said Al Hamli and his friend Khaled Al Masri are the owners of a small hotel, the Sun Star, in the Red Sea town of Hurghada. Close to Cairo, the resort town has grown from a fishing village to one of Egypt’s famous vacation spots. Hurghada is the gateway to many small islands and offshore reefs favored by recreational snorkelers and divers and many tourists combine their stay with excursions to the Nile Valley, the Great Pyramids and Luxor.

To take advantage of the growing numbers of tourists, particularly from Europe and the Middle East, Said and Khaled are planning to double the room capacity of their hotel by adding a second building to the already existing structure. Fortunately, Said recognized the great potential of Hurghada ten years ago, well before the town became a hub for recreational tourism, and bought the land adjacent to the hotel for relatively little money when it was still under construction.

Now, Said and Khaled are studying the new layout and trying to determine if the expected revenues justify the substantial initial investment of EGP 70 million ($11.8 million). According to their calculations, operating cost would rise by EGP 23.8 million ($4 million) in the first year, which would include hiring and training of new personnel, maintenance of facilities and equipment etc., and likely increase by about 5 percent per year thereafter. With an aggressive marketing strategy, Said and Khaled believe that a revenue enhancement of EGP 20.8 million in the first year is realistic and that a subsequent annual increase of about 15 percent for eight to nine years, with revenues leveling off thereafter, can be achieved. Ideally, Khaled would like to retire in ten years. Seeking advice from you, a knowledgeable friend, they share their detailed cost and revenue projections with you.

QUESTIONS

Thunder Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $147,150 and have an estimated useful life of 6 years. It can be sold for $68,000 at the end of that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $24,000. The company’s borrowing rate is 8%. Its cost of capital is 10%. Click here to view the factor table. Calculate the net present value of this project to the company and determine whether the project is acceptable. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places, e.g. 125.)

The project:

47.         (BONUS) Suppose that Disney wants to follow up on the success of Frozen, with a sequeal this fall. The movie will cost $165 million to produce (INVESTED TODAY), and the producers expect the movie to generate a cash flow of $160 million in the first year. After the first year, cash flows will decline to $15 million in year 2.

However, the movie will also create synergy within the company.

Disney will build a new Olaf ride at Epcot for $40 million (invested TODAY). Disney suspects that the ride will bring visitors to the park and increase merchandise sales. Disney estimates that sales will increase by $12 million per year in PERPETUITY. The after-tax operating margin on these sales is 50% for Disney. If the cost of capital is 10%, what is the combined NPV of this opportunity?

The distance between the eyepiece and the objective lens in a certain compound microscope is 21.4 cm. The focal length of the objective is 0.480 cm, and that of the eyepiece is 1.50 cm. Find the overall magnification of the microscope. (The near point of the eye is 25 cm. Assume that the object is placed at the focal point of the objective lens, and one places the eyepiece at the near point of the eye.)

a. Describe what happens to an uncharged conductor when a positive charge is brought near. Explain any forces that are exerted on the conductor. A sketch or drawing may be helpful.

b. Describe what happens to an uncharged insulator when a positive charge is brought near. Explain any (net) forces that are exerted on the insulator. A sketch or drawing may be helpful.

1. Type 1 subsequent events involve events that existed ___ the balance sheet date. (after, before, between, close to, near, on)

2. Type 1 subsequent events require ___ of the financial statements. (adjustment, consideration, disclosure, documentation, duplication)

3. Type 2 subsequent events come into existence ___ the balance sheet date. (after, before, between, close to, near, on)

4. Type 2 subsequent events occur after the balance sheet date but ___ the completion of fieldwork. (after, close to, near to, prior to, subsequent to)

5. Type 1 subsequent events come into existence due to new ___ becoming available. (auditors, clients, documentation, evidence, judgement)

Identify a company that has a HIGH DEGREE of market power. Specifically identify at least three barriers to entry that helped this company become a near monopoly, AND discuss HOW the company came to acquire these barriers to entry. Discuss the consequences of this near monopoly to potential consumer/business buyers for that company's products, and share your opinions on how you believe this firm could/should be regulated to reduce the dead-weight loss to society that is the consequence of all near monopoly industries. If you wish to discuss the benefits that accrue to consumers/businesses/society as a result of your company's product innovation, community service, etc., please feel free to do so.

As a developing countries make a transition to market-based economies, one of the first major capital investment is in "western-quality" hotels. Explain why brand-name hotel accommodations are a critical step in attracting foreign investment.

For a water park project, provide the following information.

Project Economies

 Policies

 Organizational Structure

 Marketing Strategy (Market Segmentation/4P’of Marketing)

 Funding Explanation

 Financial Plan

 Contingency Plans

 Survey/Evaluation and Analysis