CHAPTER 9 CASE Jackson Erectors    Making Capital Investment Decisions

Jackson Erectors is a midsized electronics manufacturer located in Austin, Texas. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded more than 70 years ago. Over the years, the company has expanded, and it is now an established manufacturer of various specialty electronic items. The company’s finance department has hired YOU, a recent MBA graduate to do an analysis of a proposed new product.

One of the major revenue-producing items manufactured by Jackson is a “controller” which are used in various types of automated equipment. Jackson currently has one model on the market and sales have been good. The technology in electronic devices is constantly changing. However, as with any electronic item, technology changes rapidly, and the current model has limited features in comparison with newer models. Jackson spent $400,000 to develop a prototype for a new controller that will be “state of the art”. The company has spent a further $100,000 for a marketing study to determine the expected sales figures for the new model.

Jackson can manufacture the new controller for $300 each in variable costs. Fixed costs for the operation are estimated to run $4.0 million per year. The estimated sales volume is 70,000, 90,000, 95,000, 85,000, and 75,000 per year for the next five years, respectively. The unit price of the new controller will be $550. The necessary equipment can be purchased for $40.0 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $2.5 million.

Net working capital for the controller will be 15 percent of sales and will occur with the timing of the cash flows for the year (i.e., there is no initial outlay for NWC). Changes in NWC will thus first occur in Year 1 with the first year's sales. Jackson has a 30 percent corporate tax rate and a required return of 12 percent. Shelly has asked you to prepare a report that answers the following questions:

QUESTIONS

Prepare a detailed pro forma income statement including calculation of Operating Cash Flows

1. What is the payback period of the project?
2. What is the profitability index of the project?
3. What is the IRR of the project?
4. What is the NPV of the project?
5. How sensitive is the NPV to changes in the price of the new Controller? Assume a 5% price reduction
6. How sensitive is the NPV to changes in the quantity sold? Assume a 700 per year unit reduction in quantity sold
7. Should Jackson produce the new Controller?
8. Suppose Jackson looses sales on other models because of the introduction of the new model. How would this affect your analysis?

onch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded more than 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department.

One of the major revenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smartphone model on the market and sales have been excellent. The smartphone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smartphone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smartphone that has all the features of the existing one but adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smartphone.

Conch Republic can manufacture the new smartphone for $205 each in variable costs. Fixed costs for the operation are estimated to run $5.1 million per year. The estimated sales volume is 64,000, 106,000, 87,000, 78,000, and 54,000 per year for the next five years, respectively. The unit price of the new smartphone will be $485. The necessary equipment can be purchased for $34.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $5.5 million.

Net working capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year (i.e., there is no initial outlay for NWC). Changes in NWC will thus first occur in Year 1 with the first year's sales. Conch Republic has a 35 percent corporate tax rate and a required return of 12 percent.

Shelly has asked Jay to prepare a report that answers the following questions:

1. What is the payback period of the project?

2. What is the profitability index of the project?

3. What is the IRR of the project?

4. What is the NPV of the project?

5. How sensitive is the NPV to changes in the price of the new smartphone?

6. How sensitive is the NPV to changes in the quantity sold?

7. Should Conch Republic produce the new smartphone?

8. Suppose Conch Republic loses sales on other models because of the introduction of the new model. How would this affect your analysis?

PLEASE ANSWER ALL QUESTIONS USING EXCEL. THANK YOU!

In a large midwestern university (the class of entering freshmen is 6000 or more students), an SRS of 100 entering freshmen in 1999 found that 20 finished in the bottom third of their high school class.  Admission standards at the university were tightened in 2000.  In 2001, an SRS of 100 entering freshmen found that 10 finished in the bottom third of their high school class.  Let p1 and p2 be the proportion of all entering freshmen in 1999 and 2001, respectively, who graduated in the bottom third of their high school class.

Is there evidence that the proportion of freshmen who graduated in the bottom third of their high school class in 2001 has been reduced, as a result of the tougher admission standards adopted in 2000, compared to the proportion in 1999?  To determine this, you test the hypotheses

H0: p1 = p2, Ha: p1 > p2.

The z-test statistic is approximately 1.98, find the P-value, using a Standard Normal Table or your calculator.

Carolyn Shaw is 27. - She works as an accountant for an oil company. - Her salary next year will be $80,000. - She expects to receive a 5 percent raise each year until she retires at age of 65. - Carolyn is considering a return to school to pursue an MBA degree. - She expects the cost of books, tuition, and fees to be $70,000 the first year and $72,000 the second. - These costs are paid at the beginning of the year (as you surely know). - She will not work while in school. - Graduates of the school Carolyn is considering receive starting salaries that average $130,000. - Raises average 7 percent per year. - Carolyn considers the opportunity costs to be 12 percent. a)Determine the present value of Carolyn’s lifetime earnings if she does not return to school. b)Determine the present value of Carolyn’s lifetime earnings with an MBA degree. Remember, she won’t start her job for two years. c) What is the NPV of an MBA degree given Carolyn Shaw's assumptions?

1. Based on the percentages that were observed statewide, if the percent of students in each category at the high school did not differ from the statewide percentages, what would be the expected values for each classification?

2. What are the observed percentages for each category at the local high school? (Note: SPSS does not include this information in the output. It must be manually calculated by dividing the number in each category by the total number of students and multiplying by 100)

3. Write an appropriate null hypothesis for this analysis.

4. What is the value of the chi-square statistic?

5 What are the reported degrees of freedom?

6. What is the reported level of significance?

7. Based on the results of the one sample chi-square test, is there a statistically significant different between the distribution of students at the local high school and the statewide distribution?

8. Report and interpret your findings as they might appear in an article.

In that same year, the mean of the math portion of the SAT was 466, with a standard deviation of 117. Keep that in mind to answer the following questions:

a) Some schools use SAT scores for admission. Suppose an engineering school established 600 as the lowest acceptable score for admission. What proportion of the high school seniors would be excluded by such a policy? Draw the picture

b) What proportion of the population would be expected to score between 350 and 550? Draw the picture

c) Some colleges have a fairly stiff math requirement. Suppose the college decided not to admit anyone who was in the bottom 15 percent of the population. What would the cutoff score be? Draw the picture

d) In an urban high school, there were 750 college-bound seniors. How many could be advised to not bother to apply to the school mentioned in A and C above? Draw the picture

e) In working the problems above, you have been making an important assumption about the distribution of math SAT scores. What is that assumption?

In that same year, the mean of the math portion of the SAT was 466, with a standard deviation of 117. Keep that in mind to answer the following questions:

a) Some schools use SAT scores for admission. Suppose an engineering school established 600 as the lowest acceptable score for admission. What proportion of the high school seniors would be excluded by such a policy? Draw the picture

b) What proportion of the population would be expected to score between 350 and 550? Draw the picture

c) Some colleges have a fairly stiff math requirement. Suppose the college decided not to admit anyone who was in the bottom 15 percent of the population. What would the cutoff score be? Draw the picture

d) In an urban high school, there were 750 college-bound seniors. How many could be advised to not bother to apply to the school mentioned in A and C above? Draw the picture

e) In working the problems above, you have been making an important assumption about the distribution of math SAT scores. What is that assumption?

Type Everything Please

Please answer the following question in reference to the ‘Columbine survivors are now parents in world of school of school shootings’ = The emotional toll of the shooting that killed 12 classmates and a teacher has been amplified by fears about their own kids’ safety. This tragic event that occurred on April 16, 2019

• 1a. Please share your reaction to - Columbine survivors are now parents in world of school of school shootings. How prevalent of a problem is this? Do you think there is enough time or resources devoted to them? Why or why not?
• 1b. Where does this issue fall on the issue maturity scale? Why? Where do you think it should fall and why
• 1c. Which level of corporate responsibility does this fall into for most businesses? Where do you think this should fall and why?
• 1d. How would the CEO advocate for these efforts or sustainability in their efforts?
• 1e. Lastly, what stage of corporate citizenship do you think this falls into? Where do you think it should fall?

Put the following sentences in the correct and create an APA unstructured informative abstract.

The purpose of this study was to document the type of food marketing activities occurring in Canadian schools and examine differences by school characteristics. Overall, 84% of schools reported at least one type of food marketing and the median number of distinct types of marketing per school was 1 (range 0–6). Food marketing, Schools, Canada, Policy, Food environment, Obesity, Self-regulation, Children, Adolescents An online survey was sent to public primary and secondary schools from 27 school boards in Ontario, British Columbia, and Nova Scotia and was completed by 154 Principals in spring 2016. The presence of food marketing in most participating schools suggests that the current patchwork of policies that restrict food marketing in Canadian schools is inadequate. Unhealthy food marketing is considered a contributor to childhood obesity. In Canada, food marketing in schools is mostly self-regulated by industry though it is sometimes restricted through provincial school policies.