In the United States we have seen great progress in extending quantity/years to our lives. Longer life may present greater opportunities for such things as increased time with family, more time to pursue hobbies or other activities, such as volunteerism or community activism, than was experienced by previous generations. However, the degree to which aging adults can experience these opportunities is often reduced due to health factors or disabilities. Many of these health and disability factors are the result of lifestyle, and not necessarily due solely to “aging”. Among the health threats are diabetes, arthritis, heart disease, falls, and Alzheimer’s disease, depression, and other mental health issues.

Thus, we have achieved great strides in lengthening our average years of life, but we lag behind in facilitating quality for those extended years. In other words, we have people living “longer”, but not necessarily living “better”. This scenario will have a major impact on our health care and human services systems in the U.S., especially as the Baby Boomers continue to enter their elder years. There are significant concerns that our systems are not equipped to respond to the needs of this population.

In a post of a minimum of 175 words, discuss your thoughts on this scenario.

What evidence can you point to regarding the health and human services needs of this population and the ability of our health care and human services systems to meet them?

Identify some of those health and social service needs and the barriers that elder individuals may face as they age.

End your post with a statement about what you worry about in terms of your own aging.

Unity designs and manufactures uniforms for corporation throughout the United States. Selected finacial information follows. Compute the following ratios for Year 2: receivable turnover ratio (assume that 80% of sales were credit sales), inventory turnover ratio, cash ratio, times interest earned ratio, and cash coverage ratio.

Credit card usage in the United States is substantial. Many startup companies use   E credit cards as a way to help meet short-term financial needs. The most common forms of debt for startups are use of credit cards and loans from relatives.
Suppose that you start up Fantastic Sandwich Shop. You invested your savings of $20,000 and borrowed $70,000 from your relatives. Although sales in the first few months are good, you see that you may not have sufficient cash to pay expenses and maintain your inventory at acceptable levels, at least in the short term. You decide you may need to use one or more credit cards to fund the possible cash shortfall.

Instructions
(a) Go to the Internet and find two sources that provide insight into how to compare credit card terms.
(b) Develop a list, in descending order of importance, as to what features are most impor- tant to you in selecting a credit card for your business.
(c) Examine the features of your present credit card. (If you do not have a credit card, select a likely one online for this exercise.) Given your analysis above, what are the three major disadvantages of your present credit car

7) Consider the markets for low-skilled and high-skilled labor in the United States. Draw two graphs how each of the following is likely to affect the wages of low-skilled workers relative to high-skilled workers.

1. a) Suppose that the government decided to approve more H-1B visa for high-skilled workers. In other words, more high-skilled workers come to the U.S. from foreign countries.

2. b) The aging of the U.S. population increases the demand for services such as home health care, home maintenance, transportation, and packaged food preparation that employ low- skilled workers.

Hoosier Racing Tire Company (Hoosier) is a large-scale company manufacturing tyres in the United States. After extensive research and development, Hoosier has recently developed a new tyre, the OutstandingTread, and must decide whether to make the investment to produce. The tyre would be ideal for drivers doing a large amount of wet weather and off-road driving in addition to normal freeway usage. The research and development costs so far have totalled $70 million. The OutstandingTread would be put on the market at the beginning of next year (Year 1), and Hoosier expects it to stay on the market for a total of four years (from Year 1 to Year 4). Test marketing costing $16 million has spent (tax deduction on this test marketing cost cannot be claimed) and shown that there is a significant market for a OutstandingTread tyre.

As the Chief Financial Officer at Hoosier, Robert Newton, has been asked by the board of directors to evaluate the OutstandingTread project and provide a recommendation on whether to go ahead with the investment. He was concerned with the discount rates used in the analysis, as well as various comments he had received from other executives at Hoosier whom he had asked to review the proposal.

Mr. Newton assumes that the initial investment will occur immediately (Year 0), and operational cash flows will occur at beginning of next year (Year 1). Hoosier must initially invest $140 million in production equipment to make the OutstandingTread in Year 0. This equipment can be sold for $55 million at the end of four years (Year 4). Hoosier intends to sell the SupperTread to two distinct markets, original equipment manufacturer market and replacement market.

1) The original equipment manufacturer (OEM) market: The OEM market consists primary of the large automobile companies (like General Motors) that buy OutstandingTread tyres for new cars. In the OEM market, the OutstandingTread is expected to sell for $41 per tyre in Year 1. The variable cost to produce each tyre is $18 in Year 1.

2) The replacement market: The replacement market consists of OutstandingTread purchased after the automobile has left the factory. This market allows higher margins; Hoosier expects to sell the OutstandingTread for $62 per tyre there in Year 1. Variables costs are the same as in the OEM market.

Hoosier intends to raise prices at 1 percent above the inflation rate from Year 2 to year 4 in the OEM and the replacement market; variable costs will increase at 1 percent above the inflation rate from Year 2 to Year 4 as well. In addition, the OutstandingTread project will incur $25 million in marketing and general administration costs in the first year (Year 1). This cost is expected to increase at the inflation rate in the subsequent years (Year 2 to Year 4).

Hoosier’ corporate tax rate is 35 percent. Annual inflation is expected to remain constant at 3.25 percent over the life of the project. Automotive industry analysts expect automobile manufacturers to produce 6.2 million new cars in Year 1 and production will grow at 2.5% per year thereafter. Each new car needs four tyres (the spare tyres are undersized and are in a different category). Hoosier expects the OutstandingTread to capture 11 percent of the OEM market from year 1 to year 4. Page 3 of 3

Industry analysts estimate that the replacement tyre market size will be 32 million tyres in Year 1 and that it will grow at 2 percent annually. Hoosier expects the OutstandingTread to capture an 8% market share.

The production equipment would be depreciated using the straight-line depreciation method over 4 years to a zero balance. The immediate initial working capital requirement is $11 million in Year 0. Thereafter, the net working capital requirements will be 25% of sales. At the end of year 4, the company (Hoosier) will get all working capital back.

In last year, the Hoosier used a 12% discount rate to evaluation a new project, AllTyres. However, Mr. Newton believes the overall risk of OutstandingTread is 2% higher than the AllTyres and requires additional 4% return to compensate this perceived risk.

Mr. Newton requires you to prepare a capital budgeting analysis to show the directors in a meeting to be held soon. Based on the case study, please answer all of the following questions in your report.

1. Using the financial and qualitative information provided in the case, estimate the incremental free cash flow of this project in each year (from Year 0 to Year 4). Please show all your working.

2. The depreciation is a non-cash charge. Do you need to consider the depreciation in the capital budgeting process? Why? Explain.

3. Based on the riskiness of this project, what discount rates are you going to use to compute the net present value?

4. Mr. Newton had been told that there are various techniques for valuation such as the NPV, payback period, and discount payback period, IRR, and PI which all could be used for this project. He wants you to use all of these techniques and help Hoosier make this investment decision. Hoosiers requires the payback period is less than 3 years and discounted payback period is less than 4 years. What can you conclude from information these techniques provided. Based on your analysis, should Hoosier accept this project? Show all your working.

5. Recently, Mr. Newton received another project proposal, ‘X-tyre’ which has the similar overall risk as the OutstandingTread. This project is expected to generate NPV for Hoosier $300 million in total and will operate for 10 years. If the OutstandingTread and X-Tyre are mutually exclusive projects, which project should Hoosier choose?

Zylex Corporation has multiple factories across the United States. The upper management at Zylex evaluates each factory based on the capital turnover ratio from the DuPont system. The following is information for the factory in Pennsylvania for the past year.

a. Compute the ROI for the Pennsylvania factory using total assets and assets net of depreciation.

b. Find residual income if the company expects a 25 percent return on total assets.

c. Is the Pennsylvania factory performing up to management’s expectations?

                                                                                              Revenue from U.S. Business

                           Exchange Rate of A$                                 (in millions)

                                   A$ = $.48                                              $100

                                   A$ =      .50                                                105

                                   A$ =      .54                                                110

Premier’s sales revenues from Australia are expected to be A $600 million.

                    The forecasted Net Cash Flows for Premier Company are below.

                    The figures are in millions.

                                    A$ = $.48                   A$ = $.50                   A$ = $.54

Sales

      U.S.                                            $100                            $105                            $110       

      Australia A$600 =     288           A$600 =     300           A$600 =     324

      Total                                           $388                            $405                            $434

Cost of materials

      U.S.                                            $200                            $200                            $200

      Australia                  A$100 =         48           A$100 =         50           A$100 =         54

      Total                                           $248                            $250                            $254

Operating expenses

      U.S.: Fixed                                  $ 30                             $ 30                             $ 30

      U.S.: Variable (20%

          of total sales)                               78                                 81                                 87

      Total                                           $108                             $111                             $117

Interest expense

      U.S.                                            $ 20                             $ 20                             $ 20

      Australia                 A$0 =               0           A$0 =               0           A$0 =               0

      Total $ 20                             $ 20                             $ 20

Net Cash Flows                                 $ 12                             $ 24                             $ 43

1. Is the cash flow of Grand Tour Co. sensitive to movements in the exchange rate of the Australia dollar? Why?
2. Does Grand Tour Co. suffer from economic exposure, or translation exposure?
3. If Grand Tour Co. shifts some of its expenses from U.S. to Australia, will this reduce its exposure?

Cincinnati Paint Company sells quality brands of paints through hardware stores throughout the United States. The company maintains a large sales force who call on existing customers and look for new business. The national sales manager is investigating the relationship between the number of sales calls made and the miles driven by the sales representative. Also, do the sales representatives who drive the most miles and make the most calls necessarily earn the most in sales commissions? To investigate, the vice president of sales selected a sample of 25 sales representatives and determined:

• The amount earned in commissions last month (y)
• The number of miles driven last month (x₁)
• The number of sales calls made last month (x₂)

The information is reported below.

Develop a regression equation including an interaction term. (Negative amount should be indicated by a minus sign. Round your answers to 3 decimal places.)

Comissions= ______+_______ calls +__________ Miles +__________

Complete the following table. (Negative amounts should be indicated by a minus sign. Round your answers to 3 decimal places.)

Compute the value of the test statistic corresponding to the interaction term. (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.)

Mexico tends to have much higher inflation rate than the United States and also much higher interest rate than the United States. Inflation and interest rates are much more volatile in Mexico than in industrialized countries. The value of the Mexican peso is typically more volatile than the currencies of industrialized countries from a US perspective; it has typically depreciated from one year to the next, but the degree of depreciation has varied substantially. The bid/ask spread tends to be wider for the peso than for currencies of industrialized countries.

1. Identify the most obvious economic reason for the persistent depreciation of the peso.

2. High interest rates are commonly expected to strengthen a country’s currency because they can encourage foreign investment in securities in that country, which results in the exchange of other currencies for that currency. Yet, the peso’s value has declined against the dollar over most years though Mexican interest rates are typically much higher than US interest rates. Thus, it appears that the high Mexican interest rates do not attract substantial US investment in Mexico’s securities. Why do you think US investors do not capitalize on the high interest rates in Mexico?

3. Why do think the bid/ask spread is higher for pesos than for currencies of industrialized countries? How does this affect a US firm that does substantial business in Mexico?

Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information:

• Each T-shirt is expected to sell for $18.
• The purchasing manager buys the T-shirts for $7 each.
• The company needs to have enough T-shirts on hand at the end of each quarter to fill 28 percent of the next quarter’s sales demand.
• Selling and administrative expenses are budgeted at $86,000 per quarter plus 15 percent of total sales revenue.

Required:
1. Determine budgeted sales revenue for quarters 1, 2, and 3.
2. Determine budgeted cost of merchandise purchased for quarters 1, 2, and 3.
3. Determine budgeted cost of good sold for quarters 1, 2, and 3.
4. Determine selling and administrative expenses for quarters 1, 2, and 3.
5. Complete the budgeted income statement for quarters 1, 2, and 3.