Analysts expect Walmart Inc. to have earnings per share of $5.60 for the coming year (year 1). Walmart intends to invest heavily in its online platform in the near term and therefore plans to retain and reinvest 80% of its earnings for the next three years (years 1, 2 and 3). For the next two years (years 4 and 5), retention and reinvestment is anticipated to decrease, with Walmart expected to retain 60% of its earnings. After that (year 6 onwards) the retention rate is expected to drop to 40% and remain that way. Walmart’s new investments in online shopping are expected to generate a return of 15% per year. Walmart’s equity cost of capital is estimated to be 9%.

a. Using the information provided above, estimate Walmart’s share price today.

Suppose the retention rate estimate for year 6 onwards given above is not credible and you therefore ignore it (estimates prior to year 5 are still valid). Instead, you expect Walmart’s 1- year forward price to earnings ratio in year 5 (i.e. PE ratio based on year 5 price and year 6 expected earnings) to be 24.5 (the midpoint between the S&P 500 historical average of 16 and Walmart’s current PE ratio of 33).

b. Use this information to come up with another estimate of Walmart’s share price.

The importance of big data doesn't revolve around how much data you have, but what you do with it. You can take data from any source and analyze it to find answers that enable cost reductions, time reductions, new product development and optimized offerings, and smart decision making. When you combine big data with high-powered analytics, you can accomplish business-related tasks such as:

• Determining root causes of failures, issues, and defects in near-real time.
• Generating coupons at the point of sale based on the customer's buying habits.
• Recalculating entire risk portfolios in minutes.
• Detecting fraudulent behavior before it affects your organization.

In your post give an example of an actual or potential application of big data or data mining in your own organization or an organization you are familiar with. Discuss and share this information with your classmates.

In responding to your peers, select responses that use big data or a data mining application that is different from your own. Based on your readings from Chapter 21 describe how the application meets the criteria of being big data or data mining. Consider how big data or data mining could be applied to the final project case study. Support your initial posts and response posts with scholarly sources cited in APA style.

Lexington Company produces baseball bats and cricket paddles. It has two departments that process all products. During July, the beginning work in process in the cutting department was half completed as to conversion, and complete as to direct materials. The beginning inventory included $40,000 for materials and $60,000 for conversion costs. Ending work-in-process inventory in the cutting department was 40% complete. Direct materials are added at the beginning of the process. Beginning work in process in the finishing department was 80% complete as to conversion. Direct materials for finishing the units are added near the end of the process. Beginning inventories included $24,000 for transferred-in costs and $28,000 for conversion costs. Ending inventory was 30% complete. Additional information about the two departments follows: Cutting Finishing Beginning work-in-process units 20,000 24,000 Units started this period 60,000 Units transferred this period 64,000 68,000 Ending work-in-process units 20,000 Material costs added $48,000 $34,000 Conversion costs 28,000 68,500 Transferred-out cost 128,000 Using FIFO costing method for the finishing department answer the following questions. 1. What are equivalent units for conversion costs? 2. What are equivalent units for trans-in costs? 3. What is equivalent unit costs for direct materials? 4. What is equivalent unit costs for trans-in costs? 5. What is total costs assigned to transferred out units?

2.  The profit function from manufacturing and selling xx BabCo Lounge Chairs is:
P(x)=30x−140−0.2x^2

a. Find the exact additional profit for manufacturing and selling 10 chairs instead of 9 chairs.

b. Find the marginal profit at x=9  

= per lounge chair.

3.  Acme Office Supplies manufactures file cabinets. The cost (in dollars) of producing x file cabinets is given by:

C(x)=1025+60x−x^2
a. Find the exact additional cost of producing 7 file cabinets instead of 6.

b. Find the marginal cost function. C'(x)=

c. Use the marginal cost function approximate the additional cost of producing 7 file cabinets instead of 6.

4. The cost function for the production of microwaves is given as

C(x)=50,000+40xC(x)=50,000+4

where x is the number of microwaves produced and C(x) is the total cost (in dollars) of producing x units.

Find the marginal cost as a function of x. C'(x)=

5. The total profit (in dollars) from the production and sales of xx espresso machines is

P(x)=40x−0.02x^2−260

a. How many espresso machines must be produced and sold to have a marginal profit of 32 dollars per unit:
machines

b. Find the marginal profit at a production/sales level of 350 machines:
dollars per espresso machine

c. Use the profit at 350 machines, which is $11290, and the marginal profit at 350 machines that you computed above to estimate the profit at an output/sales level of 351.

=$

6. The price-demand function for the sale of yo-yos is:

p=6−0.02x

where p is the price of a yo-yo in dollars, and x is the demand for yo-yos at a price of p dollars.
a. R'(290)=

b. What are the correct units for R'(290)?

7. The price-demand and cost functions for the production of microwaves are given as

p=250−x80

and C(x)=16000+30x

where x is the number of microwaves that can be sold at a price of p dollars per unit and C(x) is the total cost (in dollars) of producing x units

a. Find the profit function in terms of x.
P(x)=

b. Evaluate the marginal profit function at x=1500 microwaves rounded to the nearest cent.
P'(1500)=    per microwave

8.  AnselPix is an online company that makes and sells photographs of National Parks. The profit from selling xx prints of a scene in Arches National Park is P(x) dollars. AnselPix believes that the profit from making and selling 150photos will be 22,000 dollars. Assume that the marginal profit is P'(150)=−150. As AnselPix's financial advisor, would you recommend that they sell more photos or fewer photos? Why?

Fill in the first blank with either the word "more" or "fewer" and the second with the word "increase" or "decrease".

I would recommend that AnselPix sell (Select an answer, more/ fewer?) photos because the company will (Select an answer decrease/increase?) profit by approximately ($?) if they decide to make and sell the 151st photo instead of 150 photos.

9. The revenue (in dollars) from producing and selling xx navigation systems is

R(x)=x(2100−30x)

a. Find the marginal revenue function.
R'(x)=

This case study is from the Corporate Finance book, chapter 8 in the eBook (pg. 653 in the hard copy, page 261 in eBook). The case study will require you to perform a financial analysis and make some capital investment decisions for Bethesda Mining Company. You will need to prepare various operating cash flows in order to perform your analysis and make a recommendation. The case study is also stated below. Please complete the case study using the excel template found in Engage. As a reminder, please show all of your work! You cannot receive partial credit if you do not show your work. This means that you should use formulas and link to cells whenever possible instead of typing in numbers. This reduces the risk of input errors and it also makes it easier for me to follow your work and thought process. In the “real-world”, using formulas and linking cells is an essential skill to use because it makes the review process more efficient!

Case Study – Bethesda Mining Company Bethesda Mining is a midsized coal mining company with 20 mines located in Ohio, Pennsylvania, West Virginia, and Kentucky. The company operates deep mines as well as strip mines. Most of the coal mined is sold under contract, with excess production sold on the spot market.

The coal mining industry, especially high-sulfur coal operations such as Bethesda, has been hard-hit by environmental regulations. Recently, however, a combination of increased demand for coal and new pollution reduction technologies has led to an improved market demand for high-sulfur coal. Bethesda has just been approached by Mid-Ohio Electric Company with a request to supply coal for its electric generators for the next four years. Bethesda Mining does not have enough excess capacity at its existing mines to guarantee the contract. The company is considering opening a strip mine in Ohio on 5,000 acres of land purchased 10 years ago for $5.4 million. Based on a recent appraisal, the company feels it could receive $7.3 million on an after-tax basis if it sold the land today.

Strip mining is a process where the layers of topsoil above a coal vein are removed and the exposed coal is removed. Some time ago, the company would simply remove the coal and leave the land in an unusable condition. Changes in mining regulations now force a company to reclaim the land; that is, when the mining is completed, the land must be restored to near its original condition. The land can then be used for other purposes. As they are currently operating at full capacity, Bethesda will need to purchase additional equipment, which will cost $43 million. The equipment will be depreciated on a seven-year MACRS schedule. The contract only runs for four years. At that time the coal from the site will be entirely mined. The company feels that the equipment can be sold for 60 percent of its initial purchase price. However, Bethesda plans to open another strip mine at that time and will use the equipment at the new mine.

The contract calls for the delivery of 500,000 tons of coal per year at a price of $60 per ton. Bethesda Mining feels that coal production will be 750,000 tons, 810,000 tons, 830,000 tons, and 720,000 tons, respectively, over the next four years. The excess production will be sold in the spot market at an average of $48 per ton, Variable costs amount to $21 per ton and fixed costs are $3.7 million per year. The mine will require a net working capital investment of 5 percent of sales. The net working capital (“NWC”) will be built up in the year prior to the sales.

Bethesda will be responsible for reclaiming the land at termination of the mining. This will occur in Year 5. The company uses an outside company for reclamation of all the company’s strip mines. It is estimated the cost of reclamation will be $3.9 million. After the land is reclaimed, the company plans to donate the land to the state for use as a public park and recreation area as a condition to receive the necessary mining permits. This will occur in Year 5 and result in a charitable expense deduction of $7.3 million. Bethesda faces a 38 percent tax rate and has a 12 percent required return on new strip mine projects. Assume a loss in any year will result in a tax credit.

You have been approached by the president of the company with a request to analyze the project. Calculate the payback period, profitability index, net present value, and internal rate of return for the new strip mine. Should Bethesda Mining take the contract and open the mine?

Required: 1. To analyze this project, we must calculate the incremental cash flows generated by the project. Since net working capital is built up ahead of sales, the initial cash flow depends in part on this cash outflow. Therefore you need to begin your analysis by calculating your sales forecast. Prepare the sales forecast in tab 1 of the excel workbook.

2. Calculate the initial cash outflow for this project; use tab 1 to calculate your answer.

3. Use tab 2 in the excel workbook to calculate your operating cash flows for this project for years 1 through 6.  

4. You will also need to calculate the net working capital cash flow each year, and the cash flow for the sale of the equipment. Calculate these amounts for this project in tab 3 of the excel workbook in Engage

5. Finally, using the net cash flows calculated above (operating cash flow, net working capital and after-tax salvage value), calculate the following for this project: a. Payback Period b. Profitability Index c. IRR d. NPV e. Recommendation – should the company accept or reject the project? Explain your recommendation (why should they accept or reject?)

Answer Format

You will be required to use the Week 6 Case Study Template that has been included on the Case Study page in Engage. The template is an excel spreadsheet and has been set up for ease of completion and grading.

You are Susan Dean, a 35 year old woman who has always been interested in owning your own business. You graduated from Gorham HS, attended SMCC, eventually transferring to USM where you earned a bachelor’s degree in Business with a major in Marketing. Eventually you went to graduate school and earned a Master’s of Business Administration (MBA). For the last 10 years you have worked as a marketing specialist/management specialist with Yum! Brands, Inc. where you helped management open several Taco Bells and Pizza Huts in southern Maine. In addition, you evaluated several underperforming stores that had to be closed. After contacting several major corporations you find that McDonalds is the only major brand looking to open another store in the town of Gorham near the USM campus. There is a Burger King in the area. You in fact actually worked at McDonalds when you were a youngster. You have decided that you would like to open a McDonald’s franchise in this area near USM. Your grandparents have left you with a significant amount of money for which you are grateful. You would like to use this towards your new business adventure. But you will need to finance the remaining balance. You apply for a business loan to a local bank. The bank requires you to submit a detailed business plan. This business plan will include projections for operating costs, revenue stream, profits, human resource needs, your business strategy, etc. There are multiple topics that have to be analyzed and for which projections have to be made. Because of this you will have to conduct a survey(s) in the Gorham region to assess multiple demographic, supply/demand issues, and other topics.

Discussion Question/Directions:

You are Susan Dean. You need to discuss issues for which you think a statistical study would be helpful (in obtaining the information needed for your business plan). his could be demographic information, assessing the desire for a McDonald’s in the region, traffic studies, household make up, what the projected demand would be, etc. There are hundreds of topics to zero in on. What topics do you think are important to know before you invest your money into such an important undertaking? What type of statistical study should be done? What types of data will you need to collect? How will you collect your data? How much do you think it will cost to gather your information?

Case Study Eskom:

Apply the information in the artical provided below, together with knowledge of various market structures. to explain the market structure of Eskom in South Africa.

20 MARKS

Eskom our biggest threat Eskom is by far the largest of South Africa’s many state owned companies. This near monopoly power utility is in crisis. It’s the single largest threat to South Africa’s economy, according to a former minister of finance. The Conversation Africa spoke to Adjunct Professor Rod Crompton about why this is the case and what can be done.
How is power generated and distributed in South Africa?
Electricity markets in most countries consist of three parts: generation, transmission and distribution. Most electricity is generated by using heat to boil water to create steam which in turn spins a turbine that generates electricity.
South Africa’s cheap and abundant coal resources made coal generated electricity an obvious choice for many years. Initially, power stations were owned by municipalities and large mining and industrial concerns. But as the costs of recapitalisation emerged, government was persuaded to take over responsibility for power.
Eskom is among the biggest power utilities in the world, famous for its ability to handle vast tonnages of low grade coal. Eskom accounts for over 90% of power generating capacity. Its power plants are mostly coal with one nuclear station and some pumped storage (water). Only a few minor power generators have remained outside Eskom’s fold.
More recently, international climate change pressure caused government to introduce renewable power generation through bidding rounds. These private investors were given 20 year price guarantees underwritten by government – some at exorbitant prices. Nevertheless, as these technologies became more globally popular, some of them – solar (photo voltaic) and wind power – emerged as the lowest cost generators.
All power generation is tied into Eskom’s national transmission grid that moves electricity from generation stations to demand areas. Transmission is a natural monopoly. If you want to use the transmission grid you need Eskom’s permission. Transmission lines end where high voltage power is stepped down to distribution networks until it reaches residential customers – at 220 volts. In many areas Eskom sells to municipal distributors.
So, Eskom is a vertically integrated near monopoly responsible for generation, transmission and distribution. In many countries competition between power generators has been encouraged to drive down prices. Transmission, being a natural monopoly, remains just that; but like toll roads they are open to all who obey the “road rules” and pay the toll. The same goes for distribution to a lesser extent.

What costs are relevant when determining how many pizzas a month alfred Pizza must sell to break even?

alfred Pizza uses a combination of robots, artificial intelligence (AI), and GPS in its food trucks to deliver pizzas to customers’ houses just as the pizza is finished baking. Pizzas are actually prepared and baked in the Alfred pizza truck by an employee assisted by robots. alfred Pizza started operations in April 2016 and is currently selling about 250 pizzas per day.

The pizza delivery process starts with a customer using Alfred Pizza’s app to order pizza. The pizza combinations offered by Alfred have been derived by analyzing customer data to offer several popular options. These preset combination recipes are programmed into Alfred’s computers, so that its robots can build and bake the pizzas efficiently.

All pizza preparation and baking happens in the Alfred pizza truck. Once the customer orders a pizza, a worker in the Alfred food truck will toss the dough, cut the vegetables, and put on toppings. A robot will put on the pizza sauce. Each Alfred pizza truck has 56 pizza ovens, which are each individually connected to the order system and the truck’s GPS. A robot will put the pizza into the designated oven exactly four minutes before the truck reaches the customer’s house. A worker will pull out the pizza when it is finished and place it into the cutter, where a robot will cut the pizza. The pizza is boxed and the pizza is delivered to the customer’s door, all within a few minutes of finishing baking. Eventually, Alfred’s owners hope to use a robot to remove pizzas from the oven as well.

Assume that average selling price per pizza is about $18. To follow are estimates of costs that might be incurred by Alfred Pizza in its pizza business.

Questions

From the list above, what costs would you classify as variable with respect to the cost of a Alfred pizza? Are there any other variable costs you could envision that Alfred might incur per pizza? Explain.

From the list above, what costs would you classify as fixed with respect to the cost of a Alfred pizza? Are there any other fixed costs you could envision that Alfred might incur in its pizza business? Explain.

What costs from the list and any costs you thought of for Questions #1 and #2 above would you use to calculate the break even number of pizzas that Alfred Pizza must sell per day? Why did you included these costs? Calculate the break even number of pizzas.

Given your answer for the current break even number of pizzas, calculate Alfred’s margin of safety in number of pizzas (if any margin of safety exists.) What does this margin of safety mean?

What costs are relevant when determining how many pizzas a month Zume Pizza must sell to break even?
Zume Pizza uses a combination of robots, artificial intelligence (AI), and GPS in its food trucks to deliver pizzas to customers’ houses just as the pizza is finished baking. Pizzas are actually prepared and baked in the Zume pizza truck by an employee assisted by robots. Zume Pizza started operations in April 2016 and is currently selling about 250 pizzas per day.
The pizza delivery process starts with a customer using Zume Pizza’s app to order pizza. The pizza combinations offered by Zume have been derived by analyzing customer data to offer several popular options. These preset combination recipes are programmed into Zume’s computers, so that its robots can build and bake the pizzas efficiently.
All pizza preparation and baking happens in the Zume pizza truck. Once the customer orders a pizza, a worker in the Zume food truck will toss the dough, cut the vegetables, and put on toppings. A robot will put on the pizza sauce. Each Zume pizza truck has 56 pizza ovens, which are each individually connected to the order system and the truck’s GPS. A robot will put the pizza into the designated oven exactly four minutes before the truck reaches the customer’s house. A worker will pull out the pizza when it is finished and place it into the cutter, where a robot will cut the pizza. The pizza is boxed and the pizza is delivered to the customer’s door, all within a few minutes of finishing baking. Eventually, Zume’s owners hope to use a robot to remove pizzas from the oven as well.
Assume that average selling price per pizza is about $18. To follow are estimates of costs that might be incurred by Zume Pizza in its pizza business.
Description of cost Cost estimate Ingredient cost per pizza $ 6.00 Truck fuel cost per delivery $ 3.00 Cost of pizza delivery truck (estimated useful life 5 years, no salvage value) $ 80,000 Cost of initial software development (estimated useful life 3 years) $ 30,000 Annual maintenance/update costs of software $ 25,000 Supplies cost per pizza (box, napkins, etc.) $ 1.00 Cost to park pizza delivery truck per year (garage facility) $ 24,000 Insurance and other regulatory costs per year $ 36,000 Cost of cofounders' salaries per year $ 150,000 Cost to rent restaurant kitchen facility for testing and food prep (per year) $ 45,000 Direct labor cost per pizza (driving truck and preparing pizza in truck) $ 5.00  

  

Source: Wendy Tietz, PhD, CPA, CMA, AccountingintheHeadlines.com This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.  
Questions
1. From the list above, what costs would you classify as variable with respect to the cost of a Zume pizza? Are there any other variable costs you could envision that Zume might incur per pizza? Explain. 2. From the list above, what costs would you classify as fixed with respect to the cost of a Zume pizza? Are there any other fixed costs you could envision that Zume might incur in its pizza business? Explain. 3. What costs from the list and any costs you thought of for Questions #1 and #2 above would you use to calculate the break even number of pizzas that Zume Pizza must sell per day? Why did you included these costs? Calculate the break even number of pizzas. 4. Given your answer for the current break even number of pizzas, calculate Zume’s margin of safety in number of pizzas (if any margin of safety exists.) What does this margin of safety mean?

Suppose the historical mean thickness of the ice just off the coast of Barrow, Alaska, is 3.32 meters. Many scientists are concerned about changes in the ice due to global warming and ice streams that have slowed or halted. A random sample of the ice thickness near Barrow during 2008 was obtained with n = 28, and the sample mean is 4.036 meters. Assume Normality of ice thickness distribution and σ = 2.8 meters.

a. Conduct a two-sided hypothesis test to determine whether there is any change in the mean ice thickness. Use α = 0.01.

b. Find the probability of a type II error if the true ice mean thickness is 3.0; that is, find β(3.0).