Instructions :

• It is recommended that you use the IRAC problem solving method.

• You may use headings and subheadings to structure your answer.

• Your answer must include legal references (relevant cases and/or sections of Acts).

The word limit is 600 words.

Question 2

Earlier in the day, when Rob arrived at the Fancy Hotel before the performance, he was surprised to find that there was a valet car parking service. Rob had not been to the Fancy Hotel before but had used a valet car parking service in the past at another venue. He gave the keys of his Mercedes to the valet attendant and received a ticket in return. He put the ticket into his wallet without reading it.

At the end of the night, he goes to the valet desk and to ask for his car, but it is missing! One of the valet attendant’s recalled handing the car keys over to a customer who had lost his ticket but who was able to identify the car when walking through the carpark.

Rob is furious and demands to speak to Steve, the hotel manager. Steve points to the back of Rob’s ticket which reads: ‘The Fancy Hotel will not be responsible for any damage caused to cars howsoever that damage is caused.’ Steve then says that the same clause is also printed on a large sign in the Hotel entrance. Rob protests and says that he never read the ticket and as he did not enter the Hotel through the main entrance he never saw the sign. Rob wants to sue.  

Using relevant legal principles, discuss whether Rob would be able to sue the Hotel, or whether the Hotel would be able to rely upon the exclusion clause.

BLADES, INC. CASE

Consideration of Direct Foreign Investment

For the last year, Blades, Inc., has been exporting to Thailand in order to supplement its declining U.S. sales. Under the existing arrangement, Blades sells 180,000 pairs of roller blades annually to Entertainment Products, a Thai retailer, for a fixed price denominated in Thai baht. The agreement will last for another 2 years. Furthermore, to diversify internationally and to take advantage of an attractive offer by Jogs, Ltd., a British retailer, Blades has recently begun exporting to the United Kingdom. Under the resulting agreement, Jogs will purchase 200,000 pairs of Speedos, Blades' primary product, annually at a fixed price of £80 per pair.

Blades' suppliers of the needed components for its roller blade production are located primarily in the United States, where Blades incurs the majority of its cost of goods sold. Although prices for inputs needed to manufacture roller blades vary, recent costs have run approximately $70 per pair. Blades also imports components from Thailand because of the relatively low price of rubber and plastic components and because of their high quality. These imports are denominated in Thai baht, and the exact price (in baht) depends on prevailing market prices for these components in Thailand. Currently, inputs sufficient to manufacture a pair of roller blades cost approximately 3,000 Thai baht per pair of roller blades.

Although Thailand had been among the world's fastest growing economies, recent events in Thailand have increased the level of economic uncertainty. Specifically, the Thai baht, which had been pegged to the dollar, is now a freely floating currency and has depreciated substantially in recent months. Furthermore, recent levels of inflation in Thailand have been very high. Hence, future economic conditions in Thailand are highly uncertain.

Ben Holt, Blades' chief financial officer (CFO), is seriously considering DFI in Thailand. He believes that this is a perfect time to either establish a subsidiary or acquire an existing business in Thailand because the uncertain economic conditions and the depreciation of the baht have substantially lowered the initial costs required for DFI. Holt believes the growth potential in Asia will be extremely high once the Thai economy stabilizes.

Although Holt has also considered DFI in the United Kingdom, he would prefer that Blades invest in Thailand as opposed to the United Kingdom. Forecasts indicate that the demand for roller blades in the United Kingdom is similar to that in the United States; since Blades' U.S. sales have recently declined because of the high prices it charges, Holt expects that DFI in the United Kingdom will yield similar results, especially since the components required to manufacture roller blades are more expensive in the United Kingdom than in the United States. Furthermore, both domestic and foreign roller blade manufacturers are relatively well established in the United Kingdom, so the growth potential there is limited. Holt believes the Thai roller blade market offers more growth potential.

Blades can sell its products at a lower price but generate higher profit margins in Thailand than it can in the United States. This is because the Thai customer has committed itself to purchase a fixed number of Blades' products annually only if it can purchase Speedos at a substantial discount from the U.S. price. Nevertheless, since the cost of goods sold incurred in Thailand is substantially below that incurred in the United States, Blades has managed to generate higher profit margins from its Thai exports and imports than in the United States.

As a financial analyst for Blades, Inc., you generally agree with Holt's assessment of the situation. However, you are concerned that Thai consumers have not been affected yet by the unfavorable economic conditions. You believe that they may reduce their spending on leisure products within the next year. Therefore, you think it would be beneficial to wait until next year, when the unfavorable economic conditions in Thailand may subside, to make a decision regarding DFI in Thailand. However, if economic conditions in Thailand improve over the next year, DFI may become more expensive both because target firms will be more expensive and because the baht may appreciate. You are also aware that several of Blades' U.S. competitors are considering expanding into Thailand in the next year.

If Blades acquires an existing business in Thailand or establishes a subsidiary there by the end of next year, it would fulfill its agreement with Entertainment Products for the subsequent year. The Thai retailer has expressed an interest in renewing the contractual agreement with Blades at that time if Blades establishes operations in Thailand. However, Holt believes that Blades could charge a higher price for its products if it establishes its own distribution channels.

Holt has asked you to answer the following questions:

1. Identify and discuss some of the benefits that Blades, Inc., could obtain from DFI.

2. Do you think Blades should wait until next year to undertake DFI in Thailand? What is the trade-off if Blades undertakes the DFI now?

3. Do you think Blades should renew its agreement with the Thai retailer for another 3 years? What is the trade-off if Blades renews the agreement?

4. Assume a high level of unemployment in Thailand and a unique production process employed by Blades, Inc. How do you think the Thai government would view the establishment of a subsidiary in Thailand by firms such as Blades? Do you think the Thai government would be more or less supportive if firms such as Blades acquired existing businesses in Thailand? Why?

Many Japanese cultural traits include ancient Chinese influences. Please discuss examples of Chinese influence that you have discovered in Japanese religious activities, theater, traditional music and instruments.

Does knowing the personal, social, or political context of a work of art has a bearing on how to judge the art in question?

Give examples from:

painting or sculpture,

literature, and

theater, television or film.

Destination Hotels currently owns an older hotel on the best beachfront property on Hilton Head Island, and it is considering either remodeling the hotel or tearing it down and building a new convention hotel, but because they both would occupy the same physical location, the company can only do one—that is, these are mutually exclusive projects.

Both these projects have the same initial outlay of $1,000,000. The first project, since it is a remodel of an existing hotel, has an expected life of 8 years and will provide free cash flows of $250,000 at the end of each year for all 8 years. In addition, this project can be repeated at the end of 8 years at the same cost and with the same set of future cash flows. The proposed new convention hotel has an expected life of 16 years and will produce cash flows of $175,000 per year. The required rate of return on both of these projects is 10 percent. Calculate the NPV using replacement chains to compare these two projects.

Healthy Lifestyles

The Centers for Disease Control and Prevention (CDC) in Atlanta, Georgia, is the government agency responsible for disease-related issues in the United States. The CDC coordinates efforts to counteract outbreaks of diseases and funds a variety of medical and health research studies. The CDC also serves as a central clearinghouse for health-related data.

The CDC conducts the annual Behavioral Risk Factor Surveillance Survey. The survey measures a whole series of lifestyle characteristics that relate to health and longevity, such as smoking and use of seat belts. The survey compiles data on a stateby-state basis. Not all states are surveyed.

The data set from the 1990 Behavioral Risk Factor Surveillance Survey is on the accompanying CD in the file named HEALTHY. All numbers are percentages, and asterisks indicate the missing data for that state.

Your task is to prepare a summary of these data. Your report is to be issued to major news organizations, such as the Associated Press, and will appear in major newspapers around the United States. For this reason, it would be inappropriate to use technical jargon in your report.

Your boss has suggested a few general ideas about what is likely to appeal to your target audience. As you study the data, you might find other things worth including.

Questions

1. Report any interesting (i.e., unexpected, humorous, or odd) differences between states.

2. Devise a weighted index of all seven lifestyle variables. The weighted index is to serve as an overall or composite measure of healthy lifestyles. Apply your weight to the states of Minnesota, Florida, and California as an example of what your weighted index shows.

3. Discuss any noteworthy limitations of the survey or data set.

Please give answers of the following questions:

1. What are the strengths and limitations of using estimates of total economic value to

develop environment policy recommendations? How does your answer relate to your

worldview (anthropocentric or ecocentric)?

2. Do you think contingent valuation should be widely used as a tool for developing environmental policy recommendations? What do you think is the main strength of CV?

What do you think is its main weakness?

3. Suppose that you are asked to conduct a cost-benefit study of a proposed coal-fired

power plant. The plant will be built on the outskirts of a residential area and will emit a

certain volume of pollutants. It will require a substantial amount of water for its cooling

system. Industries in the region argue that the additional power is urgently needed, but

local residents oppose construction. How would you evaluate social and environmental

costs and weigh them against economic benefits?

4. As mentioned in the text, under U.S. law federal agencies must use cost-benefit analysis to evaluate major policy proposals. Do you agree with this requirement, in particular for environmental policies? How much weight do you believe should be given to the results of cost-benefit analyses when making policy decisions? Discuss how economic, health, and environmental criteria should be balanced in formulating regulations.

5. Suppose that the government of a developing country is considering the establishment of a national park in a scenic forested area. Local opposition arises from those who wish to use the forest land for timbering and agriculture. But the national park would draw both local and foreign visitors as tourists. Could cost-benefit analysis aid the decision on whether to establish the park? What factors would you consider, and how would you measure their economic value?

6. In what respects is “natural capital” similar to human-made capital, and in what respects does it differ? We often speak of a “return to capital,” meaning the stream of income generated by a capital investment. Can we speak of a return to natural capital? What are examples of investment in natural capital? Who is motivated to make such investments? Who would suffer if such investments were not made, or if “disinvestment” occurs due to resource depletion or environmental degradation?

7. Is the concept of optimal scale for an economy useful? If so, how would you go about

determining it? Do you think that economies such as those in the United States, Europe,

and Japan have reached optimal scale? Exceeded it? How about the economies of Latin America, Asia, and Africa? How would you relate the concept of optimal scale in the global economy to economic growth in national economies at different levels of development?

8. Distinguish the concepts of strong and weak sustainability, and give some practical examples, other than those cited in the text, for their application. Where is each concept most appropriate? Which economic policy measures are relevant to achieving sustainability?

Fatima Hopkins, the CEO of Central Adventures, is having difficulties with all three of her top management level employees. With one manager making questionable decisions, another threatening to leave, and the third likely ‘in the red’, Fatima is hoping there is a simple answer to all her difficulties. She is asking you (her accountant) for some advice on how to proceed.

Central Adventures owns and operates three amusement parks in Michigan: Funland, Waterworld, and Treetops. Central Adventures has a decentralized organizational structure, where each park is run as an investment center. Park managers meet with the CEO at least once annually to review their performance, where each park manager’s performance is measured by their park’s return on investment (ROI). The park manager then receives a bonus equal to 10% of their base salary for every ROI percentage point above the cost of capital.

Fatima’s first difficulty is with the Funland park. Funland is an outdoor theme park, with twelve roller coaster rides and several other attractions. This park has first opened 1965, and most of the rides have been in operation for 20+ years. Attendance at this park has been relatively stable over the past ten years. The park manager of Funland, Janet Lieberman, recently shared with Fatima a proposal to replace one of their older rides with a new roller coaster, a hybrid steel and wood roller coaster with a 90 degree, 200 foot drop and three inversions. The proposal indicated that the ride would cost $8,000,000 with an estimated life of 20 years. In addition, this new style of coaster would require additional maintenance and insurance, costing $125,000 each year. However, it projected that this new attraction would boost attendance, earning the park an additional $1,190,000 per year in revenues. Janet ultimately decided not to invest in this new attraction. Fatima (doing a quick mental calculation) saw that the investment had a payback period of eight years—much shorter than the life of the roller coaster—and is perplexed at Janet’s decision.

The second dilemma concerns the Waterworld park. Waterworld is an indoor water park, operating year-round. Run by park manager David Copperfield, Waterworld was built in 2016 and has increased attendance by 20% every year since. David recently sent you an email complaining that, based on the current bonus payout schedule, Janet Lieberman’s bonus last year was significantly higher than his. He points to the increasing attendance, and says that his park is being punished for having opened so recently (his park assets are much more recent than the roller coasters at Funland). He currently has an employment offer from another company at the same base pay rate, which he says he will accept if his performance is not appropriately acknowledged. Fatima needs to look at the relative performance across parks to determine how to proceed with David.

Central Treetops includes a high ropes course and has a series of ziplines that criss-cross over the Chippewa River. For many years, it was a popular venue for corporate team-building activities, so it is equipped with a main indoor facility with cafeteria and overnight guest rooms. This park has lost popularity in recent years, and has been ‘in the red’ for the past two years. If the park is not profitable this year, you will need to decide whether to close it - permanently. Included in the ‘Fixed COGS’ for Treetops is a $86,000 mortgage payment on the land and buildings for the park, which would still need to be paid by Central Adventures if the park is closed. Incidentally, you recently had a conversation with the regional head of the YMCA, who would like to open a summer camp in the central Michigan region. If you decided to close Treetops, you are fairly certain that you could lease that land to the YMCA for $250,000 annually.

A partial report of this year’s financial results for Central Adventures shows the following:

The ‘Selling and administrative costs’ are all incurred directly by each park, and are determined at the beginning of each year (that is, they do not change with the number of tickets sold). In addition to the information above, there are $2,542,920 in corporate costs, which are currently allocated evenly between the three parks. These costs are primarily due to employee benefits costs, which are billed at the corporate level. If the Treetops park is closed, the allocated corporate costs would decrease by $12,000. Central Adventures has a cost of capital of 12 percent (and Fatima uses the cost of capital as their required rate of return) and are subject to 18% income taxes.

Fatima needs to evaluate this year’s performance results before she can make any decisions. Is David’s complaint about the performance evaluation metrics valid? Is that also affecting management decisions in the form of Janet’s rejection of the proposed new rollercoaster? And is the company better off without Treetops? She sets off to the company accountant’s office to help get some answers.

a.     Create a segmented income statement for Central Adventures.

b.     Calculate the current annual ROI, residual income and EVA for the three parks.

c.    why it was/was not in Central Adventure’s overall best interest for Funland to reject the new rollercoaster.

d.     is David Copperfield’s (the Waterworld park manager) complaint valid? Explain why it is (or is not valid), and what further information would be necessary.

e.     why should they close/ not close treetops.

f.      what should you recommend she do to improve the evaluation of park manager performance measurement at Central Adventures.

I need an introduction and conclusion for the following paragraph please. Intro should be between 10-15 sentences and conclusion should be between 5-10 sentences

One thing that sets London and Washington, D.C. apart is their history. These cities developed on very different time lines. London, for example, has a history that dates back over two thousand years. It was part of the Roman Empire and known by the similar name, Londinium. It was not only one of the northernmost points of the Roman Empire but also the epicenter of the British Empire where it held significant global influence from the early sixteenth century on through the early twentieth century. Washington, DC, on the other hand, has only formally existed since the late eighteenth century. Though Native Americans inhabited the land several thousand years earlier, and settlers inhabited the land as early as the sixteenth century, the city did not become the capital of the United States until the 1790s. From that point onward to today, however, Washington, DC, has increasingly maintained significant global influence.

Another difference between the two city concerns their cultural life and heritage. While Washington, DC, has the National Gallery of Art and several other Smithsonian galleries, London’s art scene and galleries have a definite edge in this category. From the Tate Modern to the British National Gallery, London’s art ranks among the world’s best. This difference and advantage has much to do with London and Britain’s historical depth compared to that of the United States. London has a much richer past than Washington, DC, and consequently has a lot more material to pull from when arranging its collections. Speaking of theaters, London wins this comparison, too, both in quantity and quality of theater choices. With regard to other cultural places like restaurants, pubs, and bars, they also have some differences, While London may be better known for its pubs and taste in beer, DC offers a different bar-going experience. With clubs and pubs that tend to stay open later than their British counterparts, the DC night life tend to be less reserved overall.

The two cities also differ in cultural diversity. Perhaps the most significant difference between the resident demographics is the racial makeup. Washington, DC, is a “minority majority” city, which means the majority of its citizens are races other than white. In 2009, according to the US Census, 55 percent of DC residents were classified as “Black or African American” and 35 percent of its residents were classified as “white.” London, by contrast, has very few minorities—in 2006, 70 percent of its population was “white,” while only 10 percent was “black.” However, things are changing rapidly for London. According to UCL, 1/3 of Londoners were born abroad, and 200 languages are spoken in the city.

Question 2 – ALL CALCULATIONS MUST BE SHOWN

A local theme park is losing money. The current price of admission is $60 per person with an average daily attendance of 750 people. You are an independent consultant employed to recommend a pricing strategy. The demand schedule estimated by the consultant is shown in the table below.

a. Fill in the blanks in the table above. There are 7 empty cells [marked as 0.5 marks per cell correctly filled]. Use the point method (ΔQ/ΔP)*(P/Q) to calculate the own-price elasticity of demand. (3.5 marks)

b. As a consultant what would be your recommendation regarding pricing strategy? Should the theme park change the price from $60? Justify your answer based on the price elasticity of demand. .

c. From the information in the table write the equation for the daily demand for theme park tickets in price dependent form (P=a-bQ). (2.5 marks)

d. Use the midpoint method to calculate the price elasticity of demand from $85 to $90. Explain whether demand is price elastic or price inelastic and interpret the value of this elasticity.

e. Theme park customers are able to purchase a $15 photographic package. At the current ticket price of $60, 34% of customers purchase photographic packages. The theme park estimates that a $3 price increase in theme park tickets would result in a 20% reduction in photographic packages purchased. Provide the name of, and calculate the value of, this elasticity. Interpret its value. What does this elasticity value tell the theme park managers about the relationship between theme park ticket prices and photographic packages? How many customers would purchase the photographic packages if theme park tickets increased by $3?