WHO WILL STAFF UP THE CHINA OPERATIONS?

Your international company headquartered in New Jersey is sending an expatriate to China for a three-year assignment to staff up and run a new branch of its industrial products business. The main Chinese customers are using the products in their Middle Eastern and North African petroleum operations. You have extensive overseas experience and presently serve as VP, Human Resources. You chair the selection committee. There were 12 internal people interested in the position, and your committee has narrowed this to 3 final candidates, all of whom want this assignment. Here are the candidates: Tom is a mid-level finance manager with stellar performance reviews. He has no foreign experience and would like to develop his career in this direction. He is single, has an MBA, and has been out of school for 20 years. His background is in finance at the undergrad level, which he studied at Ohio State University, only 50 miles from his hometown. He is involved in the local Council on Foreign Relations and is an accomplished athlete. Firdaus is a deputy VP of HR at corporate. Her family emigrated from Yemen to Chicago when she was in grade school, and she speaks, reads, and writes Arabic, both classical and the Yemeni dialect. She is married, with two children. Her husband George is a professor of history and does not speak Arabic. She has a PhD in engineering, joined the company on the operations side, and has made the midcareer transition to HR successfully. She finished her PhD at the University of London in the UK before she began with the company and is now early midcareer. Her performance reviews are stellar. She encountered an incident at HQ several years ago when there was a discussion about her wearing a headscarf, but this was resolved without her changing her practice. She is well known and well liked throughout HQ. Her husband is ready to take a leave of absence for three years to accompany her.

Gunther is VP of the German-based EU company. His functional background is accounting, and he is credited with the success of the company in the EU. He built the business from a small operation in Frankfurt to the EU sector leader in only seven years. He speaks German and English and is known for being well organized and “button-upped.” His work is timely, accurate, and detailed. Gunther’s boss, the president of international, was a bit surprised that Gunther expressed interest in this position, since it is perceived as junior to the position he has now, although it would have an equivalent title on paper. Gunther has an undergraduate degree in anthropology and took graduate-level accounting courses earlier in his career. The company would like someone who could get the operation up and running, stay for three years, and then transfer the position to a local hire whom they would have developed for the responsibility.

1. Drawing on the cultural dimensions that we have reviewed, along with your business knowledge, whom would you recommend for the position?

2. What would be your reasoning for this choice?

3. Whom would you suggest for a backup candidate, if the first selection declined the position?

The IT Manager’s Dilemma

Sally Lewis graduated from college 4 years ago with a degree in computer science. She currently runs the business application support department for a mid-sized company in Austin. Sally currently earns $73,000 per year and expects an annual raise of 3% per year. Her company does not pay bonuses. Sally is 27 and intends on working for an additional 38 years (until she is 65). She has a fully paid insurance benefit and is currently in the 26% tax bracket. Although Sally enjoys her job she is concerned that her degree and current experience is to narrow and as a result might limit her potential career opportunities and earning potential. Sally is considering two options to further her career.

Option 1 is to do a two-year MBA at Brazonian University. The degree would round out her technical skills with a sound business background. The MBA would require two years of full-time study (where Sally would be unable to work) with an annual tuition amount of $58,000 payable each year. Books and other supplies would be $2,000 per year. After finishing the MBA sally thinks she would be able to get an immediate position and make $105,000 per year and also receive a $10,000 signing bonus. The salary would be expected to grow by 4% per year. She then would be in the 31% tax bracket.

Option 2 is to do a specialize one year program at Olympus University in Data Analytics. The program would be an intense 1-year program (she would be unable to work) and offer her employment opportunities starting at $98,000 growing at 5% per year while also receiving an $8,000 initial signing bonus. The compensation would put her in the 29% tax bracket. The cost for the 12-month program is $75,000 plus an additional $4,200 in fees.

Both programs offer insurance coverage for $3,000 per year. Housing on campus at both programs would be $4,000 less than what Sally is currently paying so would be a net savings. Sally has been a diligent saver in her career and as a result has the money in savings for either of these options and would pay cash and incur no financing fees.

Sally likes her current position but also is intrigued with both options. She see’s herself being happy in either of these options or even with the status quo. What she would like to do is make the decision and pursue the path that provides the best financial upside to her. Sally wants to use a 5.5% discount rate for her analysis.

So consider:

• What other factors (financial or otherwise) should Sally consider when making this decision?

• What risks are there for Sally to pursue either option?

• On a purely economic perspective what is the best decision for Sally to make?

• How does Sally’s age play into making this decision?   Does the decision change if Sally wants to retire in 20 years?

• What initial salaries (one each for the MBA and one for the Data Analytics program) would Sally need to be offered to make her indifferent about leaving her current situation (at what salary points are the future values equal?)

• Assume Sally wanted to borrow the money to attend either option the interest rate was 5.4%, how would this change Sally’s decision?

Using the Spending Approach, determine whether each of the following is Consumption, Investment, Government Purchases, Net Exports, or not included in GDP, and briefly explain why.

(a) A yoga studio purchases new yoga mats and straps.

(b) An individual purchases a new yoga mat and straps for their home practice.

(c) Someone receives a stimulus check from the government in the mail during COVID-19.

(d) A public high school purchases new textbooks for its students.

(e) A campus bookstore increases its inventory of textbooks.

(f) Your parents purchase their dream home, newly built by a local contractor.

(g)Your parents buy a vacation home from a friend who had owned that home for years.

(h)You order falafel from a Turkish food stand, here in the US.

A UK company is opening a store in the US and needs 390$ investment. Currently exchange rate in the UK is 8.5% and Exchange Rate is 1.6 $/£. Company wants to avoid exchange rate exposure by raising loan from the US. In order to get a favorable term from the US banks, UK company enters a swap with a US firm which also needs financing in UK. According to terms, US company raised 390$ financing from a US bank at a fixed interest rate of 3.5% and is payable in 3 years. Interest Payments are semi-annual.

Zero Rates in the UK and the USA are provided in the below table:

The Case of the Phony PA

As a Senior Investigator at University Hospital, you were awarded a large grant to study the effects of new medications on healing leg wounds. The grant calls for either a nurse practitioner (NP) or a physician assistant (PA) who will be able to document the processes and keep the paperwork up-to-date on the grant. You interviewed several candidates and have found that Charles Tony, a PA, appeared to be the best candidate. His resume indicated that he earned a bachelor’s degree from a prestigious midwestern university, worked several years as an EMT, then went to PA school and earned an associate’s degree as a PA. He presented diplomas and copies of licensure certificates and had excellent recommendations from many reliable sources. This package was presented to you by the Human Resources Department. He was interviewed by several colleagues who would be participating in the study and was hired. He began work and appeared to be doing a good job. After a few months, some strange events started to occur. For instance, the locker he shared with one of the physicians was broken into. Multiple purchases were made on the physician’s credit cards in a very short time. Mr. Tony claimed his wallet had been stolen during that same incident. Other employees stated he was acting somewhat strange around them. He began dating an employee in the institution, then her apartment was broken into. At this point, no one was really suspicious, and Mr. Tony appeared to perform the functions of this job without any problems. Approximately 14 months after he was hired, he did not show up for work, did not answer his phone, and none of the records he was responsible for could be located. You contacted the HR Department and they began an investigation. To everybody’s surprise, you learned none of his credentials was actually checked back to their primary sources. When this check was completed after he disappeared, none of the academic institutions had ever heard of him. His references were all fraudulent. The police searched his apartment and found many missing pieces of University Hospital equipment. Mr. Tony was, however, nowhere to be found. It appears you hired a true pretender.

• Background Statement

• Major Problems and Secondary Issues

• Your Role

• Organizational Strengths and Weakness

• Alternatives and Recommended Solutions

• Evaluation

The Case of the Phony PA

As a Senior Investigator at University Hospital, you were awarded a large grant to study the effects of new medications on healing leg wounds. The grant calls for either a nurse practitioner (NP) or a physician assistant (PA) who will be able to document the processes and keep the paperwork up-to-date on the grant. You interviewed several candidates and have found that Charles Tony, a PA, appeared to be the best candidate. His resume indicated that he earned a bachelor’s degree from a prestigious midwestern university, worked several years as an EMT, then went to PA school and earned an associate’s degree as a PA. He presented diplomas and copies of licensure certificates and had excellent recommendations from many reliable sources. This package was presented to you by the Human Resources Department. He was interviewed by several colleagues who would be participating in the study and was hired. He began work and appeared to be doing a good job. After a few months, some strange events started to occur. For instance, the locker he shared with one of the physicians was broken into. Multiple purchases were made on the physician’s credit cards in a very short time. Mr. Tony claimed his wallet had been stolen during that same incident. Other employees stated he was acting somewhat strange around them. He began dating an employee in the institution, then her apartment was broken into. At this point, no one was really suspicious, and Mr. Tony appeared to perform the functions of this job without any problems. Approximately 14 months after he was hired, he did not show up for work, did not answer his phone, and none of the records he was responsible for could be located. You contacted the HR Department and they began an investigation. To everybody’s surprise, you learned none of his credentials was actually checked back to their primary sources. When this check was completed after he disappeared, none of the academic institutions had ever heard of him. His references were all fraudulent. The police searched his apartment and found many missing pieces of University Hospital equipment. Mr. Tony was, however, nowhere to be found. It appears you hired a true pretender.

1. Were there red flags that should have altered you to the problem earlier?

2. Provide a detailed plan for evaluation and verification of health care professional's credentials and recommendations to avoid this type of issue in the future.

1.In 2019, Elaine paid $3,000 of tuition and $700 for books for her dependent son to attend State University this past fall as a freshman. Elaine files a joint return with her husband. Elaine’s AGI is $168,000.What is the maximum American opportunity credit Elaine can claim for the tuition payment and books?

2.In 2019, Amanda and Jaxon Stuart have a daughter who is one year old. The Stuarts are full-time students and they are both 23 years old. Their AGI is $25,000, consisting of $22,000 of wages and $3,000 of lottery winnings (unearned income). What is their earned income credit if they file jointly?

A popular blog reports that 42% of college students use Twitter. The director of media relations at a large university thinks that the proportion may be different at her university. She polls a simple random sample of 200 students, and 101 of them report that they use Twitter. Can she conclude that the proportion of students at her university who use Twitter differs from 0.42? Answer by showing the five steps of signigicance test, allowing a Type I error rate of 0.05.

Assume a corporate tax rate is 40% and an individual tax rate of 25%. Perryton Corp. earned $12,000,000 before income taxes during the year. Perryton kept $5,000,000 of after-tax profits inside the company to support future growth. How much total tax would have been paid to Internal Revue Service (IRS) by all related parties?

Partnership P ("P") has two individual partners (A and B). Each are 50% owners in P. At the beginning of Year 1,
A's outside basis was $1,000 and B's outside basis was $10,000. During Year 1 P earned $2,000 of income from
operations, $1,000 of tax exempt income, and paid off $10,000 of a recourse liability. What income, gain or loss, if
any, will A report on A's individual income tax return (for Year 1) as a result of being a partner in P?