MultiTech Interview Situation:
You have an interview for an IT position with MultiTech, a large telecommunications company, and you want to learn more about the firm and its organizational structure. To prepare for the interview, you decide to review your knowledge about corporations, including the following questions:
1. What are the four organizational levels in a typical company?
2. How can you classify companies based on their mix of products and services?
3. What is empowerment?
4. What types of information systems might a large company use?
Rainbow’s End Interview Situation: Your MultiTech interview seemed to go well, but you did not get the job. During the meeting, the interviewer mentioned that MultiTech uses structured analysis and relies heavily on modeling, prototyping, and CASE tools. Thinking back, you realize that you did not fully understand those terms. As you prepare for an interview with Rainbow’s End, a large retail chain, you decide to review some IT terms and concepts. You want to be ready for the following questions:
1. What are the main differences between structured, O-O, and agile development methods?
2. What is a CASE tool and what does it do?
3. What is business process modeling and how is it done?
4. What is prototyping and why is it important?
In: Computer Science
Upon graduating from college this year, you expect to earn $25,000 per year. If you get your MBA, in one year you can expect to start at $35,000 per year. Over the year, inflation is expected to be 5 percent. In today's dollars, how much additional (less) money will you make from getting your MBA (to the nearest dollar) in your first year?
In: Finance
Answer the two questions below in Excel using the WAAC Model.
1. You are considering a pair of GICs (guaranteed investment contracts) o§ered by two di§erent life insurance companies. Each promises a single payment 10 years from now.
(a) US Life Insurance Companyís GIC promises to pay 6.5% per annum and can be purchased today for $100,000.
(b) Met Lifeís GIC promises to pay 5.7% per annum compounded monthly and can be purchased today for $95,000.
Which would you buy?
2. The Board of Administrators of Tulane University has decided to o§er an early retirement program to University faculty. The typical 55-year old faculty member would receive a small cash severance payment and a pension of $50,000 per year for the next 30 years, to begin one year from now. As CFO, you plan to set aside now enough money to fully fund the pension. Youíve been assured by your insurance company that they will pay you a 7% annual return on fund deposited with them. The American Association of University Professors objects to this program, however, because, they say, it fails to account for ináation. They propose an alternative plan in which payments would begin at $40,000 for the Örst year and grow thereafter at a Öxed rate of 5% to accommodate expected increases in the cost of living. They argue that this plan should be good for the University too because it involves lower initial payments. How much will it cost you up front to fund each of these plans?
In: Finance
Case One:
On December 31, 2020, book value of patent is 6 millions. Undiscounted sum of future cash flows of patent is 10 millions, fair value of patent is 3 millions.
Determine the amount of any impairment loss to be recorded, if any.
(Please explain in detailes why book value is compared with the Undiscounted sum of future cash flows.)
Case Two:
Apple company acquired Banana Corporation for 60 millions on January 1st, 2020. In addition, he fair value of Goodwill is 10 millions.
An indicator is present signaling possible impairment in the end of 2020.
On December 31, 2020,
Fair value of Banana Corporation: 45million
Fair value of Banana Corporation (excluding goodwill): 39 million
Book value of Banana Corporation (including goodwill): 47 million
Determine the amount of any impairment loss to be recorded, if any.
In: Accounting
The topic of our negotiation is Walt Disney Studios acquisition of the Lucasfilm Ltd. LLC production company on October 30, 2012. Lucasfilm was acquired for $4.05 billion and through this deal Disney acquired ownership of Star Wars, Indiana Jones, and Lucasfilm's operating businesses in live-action film production, consumer products, video-games, animation, visual effects, and audio post-production. The first Star Wars movie released under Disney’s ownership, Star Wars Episode VII: The Force Awakens grossed over $2.066 billion in ticket sales worldwide and an estimated $6 billion in merchandise sales (Star Wars: The Force Awakens). The Force Awakens, released in 2015 is the first of five Star Wars films Disney has planned to release. In one film Disney has already made back the money spent purchasing Lucasfilms Ltd., though founder George Lucas was given 40 million Disney shares as part of the $4.05 billion making him the second largest non-institutional shareholder of Disney(Krantz).
1) Tactics: Describe and evaluate three specific tactics each side is using to advance their strategy.
2) Critique how the strategy and tactics each side is using is affecting their position.
In: Economics
On October 10, 2019, the exchange rate for the US Dollar vs. the Swedish Krona was $1 = SEK 9.95. Over the following year, the US Dollar weakened vs. the Swedish Krona and the exchange rate was $1 = SEK 8.78 on October 10, 2020. Imagine you are an executive at a Swedish company that manufactures all of its products in Sweden. You are thinking of expanding to the United States. These two questions affect of the weakening of the US Dollar vs. the Swedish Krona on the company's expansion.
a) Would your company be more likely or less likely to build your own distribution center in the United States?
b) How would the exchange rate affect the prices of your products sold in the United States? (Remember they are manufactured in Sweden.)
In: Economics
STEPHENSON REAL ESTATE RECAPITALIZATION Stephenson Real Estate Company was founded 25 years ago by the current CEO, Robert Stephenson. The company purchases real estate, including land and buildings, and rents the property to tenants. The company has shown a profit every year for the past 18 years, and the shareholders are satisfied with the company’s management. Prior to founding Stephenson Real Estate, Robert was the founder and CEO of a failed alpaca farming operation. The resulting bankruptcy made him extremely averse to debt financing. As a result, the company is entirely equity financed, with 8 million shares of common stock outstanding. The stock currently trades at $37.80 per share. Stephenson is evaluating a plan to purchase a huge tract of land in the southeastern United States for $85 million. The land will subsequently be leased to tenant farmers. This purchase is expected to increase Stephenson’s annual pretax earnings by $14.125 million in perpetuity. Jennifer Weyand, the company’s new CFO, has been put in charge of the project. Jennifer has determined that the company’s current cost of capital is 10.2 percent. She feels that the company would be more valuable if it included debt in its capital structure, so she is evaluating whether the company should issue debt to entirely finance the project. Based on some conversations with investment banks, she thinks that the company can issue bonds at par value with a 6 percent coupon rate. From her analysis, she also believes that a capital structure in the range of 70 percent equity/30 percent debt would be optimal. If the company goes beyond 30 percent debt, its bonds would carry a lower rating and a much higher coupon because the possibility of financial distress and the associated costs would rise sharply. Stephenson has a 23 percent corporate tax rate (state and federal).
1. If Stephenson wishes to maximize its total market value, would you recommend that it issue debt or equity to finance the land purchase? Explain.
2. Suppose Stephenson decides to issue debt to finance the purchase. What will the market value of the Stephenson Real Estate Company be if the purchase is financed with debt?
3. What is the price per share of the firm’s stock? (Hint: Stock price per share = Total equity / # of outstanding shares)
In: Finance
On December 31, 2019, Sumner Company held Wall Company bonds in its portfolio of trading securities. The bonds have a par value of $40,000, carry a 10% annual interest rate, mature in 2026, and had originally been purchased at par. The market value of the bonds on December 31, 2019 was $38,000.
On January 1, 2020, Sumner acquired bonds of Doherty Company with a par value of $30,000 for $30,200. The Doherty Company bonds carry an annual interest rate of 12% and mature on December 31, 2024. Additionally, on the same date, Sumner acquired Maggio Company bonds with a face value of $20,000 for $19,500. The Maggio Company bonds carry an 8% annual interest rate and mature on December 31, 2029. At the end of 2020, the respective market values of the bonds were: Wall, $39,000; Doherty, $31,000; and Maggio, $21,000. Sumner classifies all of the debt securities as trading. Assume that Sumner uses the straight-line method to amortize any discounts or premiums.
Required:
| 1. | Prepare the journal entries necessary to record the purchase of the investments on January 1, 2020, the annual interest payments on December 31, 2020, and the adjusting entry needed on December 31, 2020. |
| 2. | What would Sumner disclose on its December 31, 2020, balance sheet related to these investments? |
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In: Accounting
Selected accounts included in the property, plant, and equipment
section of Tamarisk Corporation’s balance sheet at December 31,
2019, had the following balances.
| Land | $306,000 | |
| Land improvements | 142,800 | |
| Buildings | 1,122,000 | |
| Equipment | 979,200 |
During 2020, the following transactions occurred.
| 1. | A tract of land was acquired for $153,000 as a potential future building site. | |
| 2. | A plant facility consisting of land and building was acquired from Mendota Company in exchange for 20,400 shares of Tamarisk’s common stock. On the acquisition date, Tamarisk’s stock had a closing market price of $37 per share on a national stock exchange. The plant facility was carried on Mendota’s books at $112,200 for land and $326,400 for the building at the exchange date. Current appraised values for the land and building, respectively, are $234,600 and $703,800. | |
| 3. | Items of machinery and equipment were purchased at a total cost of $408,000. Additional costs were incurred as follows. |
| Freight and unloading | $13,260 | |
| Sales taxes | 20,400 | |
| Installation | 26,520 |
| 4. | Expenditures totaling $96,900 were made for new parking lots, streets, and sidewalks at the corporation’s various plant locations. These expenditures had an estimated useful life of 15 years. | |
| 5. | A machine costing $81,600 on January 1, 2012, was scrapped on June 30, 2020. Double-declining-balance depreciation has been recorded on the basis of a 10-year life. | |
| 6. | A machine was sold for $20,400 on July 1, 2020. Original cost of the machine was $44,880 on January 1, 2017, and it was depreciated on the straight-line basis over an estimated useful life of 7 years and a salvage value of $2,040. |
(a)
Calculate the balance at December 31, 2020 in each of the following
balance sheet accounts. (Hint: Disregard the related
accumulated depreciation accounts.)
| Balance at December 31, 2020 | ||
| Land |
$ |
|
| Land Improvements |
$ |
|
| Buildings |
$ |
|
| Equipment |
$ |
In: Accounting
Selected accounts included in the property, plant, and equipment section of Pearl Corporation’s balance sheet at December 31, 2019, had the following balances.
Land $438,000
Land improvements 204,400
Buildings 1,606,000
Equipment 1,401,600
During 2020, the following transactions occurred.
1. A tract of land was acquired for $219,000 as a potential future building site.
2. A plant facility consisting of land and building was acquired from Mendota Company in exchange for 29,200 shares of Pearl’s common stock. On the acquisition date, Pearl’s stock had a closing market price of $37 per share on a national stock exchange. The plant facility was carried on Mendota’s books at $160,600 for land and $467,200 for the building at the exchange date. Current appraised values for the land and building, respectively, are $335,800 and $1,007,400.
3. Items of machinery and equipment were purchased at a total cost of $584,000. Additional costs were incurred as follows.
Freight and unloading $18,980
Sales taxes 29,200
Installation 37,960
4. Expenditures totaling $138,700 were made for new parking lots, streets, and sidewalks at the corporation’s various plant locations. These expenditures had an estimated useful life of 15 years.
5. A machine costing $116,800 on January 1, 2012, was scrapped on June 30, 2020. Double-declining-balance depreciation has been recorded on the basis of a 10-year life.
6. A machine was sold for $29,200 on July 1, 2020. Original cost of the machine was $64,240 on January 1, 2017, and it was depreciated on the straight-line basis over an estimated useful life of 7 years and a salvage value of $2,920.
(a) Calculate the balance at December 31, 2020 in each of the following balance sheet accounts. (Hint: Disregard the related accumulated depreciation accounts.)
Balance at December 31, 2020
Land?
Land Improvements?
Buildings?
Equipment?
In: Accounting