Curly Ramen Pte Ltd is a factory that manufactures instant noodles. The company has completed a research exercise amounting to $5,200 to improve its production process. Due to the outcome of the research, it is now considering purchasing new machines to replace its older machines. The new machines will cost $290,000 altogether, and incur an additional installation expense of $10,000. The old machines can be sold now for a proceed of $51,000, but required a disposal fee of $1,000. The table below shows the cash revenue and expenses for the existing machines:

The cost of capital for the company is 4%.

Required:
a. Calculate the initial investment for the proposed machines.

b. It is estimated that the new machines are expected to increase cash revenue by 35% and expenses by 10% respectively. Calculate the following:
i. Operating cash inflows for the existing machines.
ii. Operating cash inflows for the proposed new machines.
iii. Incremental cash flows for the project.

c. i. Calculate the Net Present Value for the proposed project.
ii. Should the company continue to operate the old machine or purchase the new machine? State your reason.

d. i. Explain what is sunk cost and it’s relevance to investment decisions.
ii. Identify a sunk cost from the case above.

e. If the Internal Rate of Return (IRR) for the project is 9%, should the company accept or reject the project solely based on the IRR technique? State your reason.

You are auditing Osakis Electronics Ltd, a subsidiary of a Japanese company, and will issue an audit report covering the balance sheets as of 31 December 2008 and 2007, and the income statements and cash flow statements for the two years then ended. The company's ordinary shares are traded on the Fiji and Tokyo stock exchanges. Each of the following is an independent audit reporting situation. Required: 1 Osakis does not disclose segment information, because Japanese accounting standards do not require it. Indicate the effect on your audit report, which will be widely used in Fiji. 2 Osakis reports its inventory, non-current assets, depreciation, and cost of goods sold on a current -value basis. Such accounting violates the accounting standards of both Japan and Australia. There is disclosure of the pertinent facts, including the effect on key financial statement amounts, in Note 13. 3. a What factors should you consider in deciding whether to issue a qualified or an adverse opinion? b Draft the explanatory and opinion paragraphs for: 1 a qualified opinion 2 an adverse opinion

You are auditing Osakis Electronics Ltd, a subsidiary of a Japanese company, and will issue an audit report covering the balance sheets as of 31 December 2008 and 2007, and the income statements and cash flow statements for the two years then ended. The company's ordinary shares are traded on the Fiji and Tokyo stock exchanges. Each of the following is an independent audit reporting situation. Required: 1 Osakis does not disclose segment information, because Japanese accounting standards do not require it. Indicate the effect on your audit report, which will be widely used in Fiji. 2 Osakis reports its inventory, non-current assets, depreciation, and cost of goods sold on a current -value basis. Such accounting violates the accounting standards of both Japan and Australia. There is disclosure of the pertinent facts, including the effect on key financial statement amounts, in Note 13. 3. a What factors should you consider in deciding whether to issue a qualified or an adverse opinion? b Draft the explanatory and opinion paragraphs for: 1 a qualified opinion 2 an adverse opinion

1. Under which President's administration were there multiple years of the federal budget running a surplus?

Richard Nixon (1969-74)

Ronald Reagan (1981-89)

Bill Clinton (1993-2001)

George W. Bush (2001-09)

2. In the March/April 2013 issue of Dollars and Sense, Gerald Friedman shows that the increases in the federal deficit during the G. W. Bush (Bush 2) and B. Obama administrations was primarily due to:

the Wall Street bailout.

decreases in federal revenue.

increased federal spending on the stimulus.

A and C.

3. Which of the following is NOT part of Gerald Friedman's Progressive Tax-Reform Agenda?

Elimination of Federal Income Tax on income below the Poverty Line.

Elimination of the exemption from the Social Security payroll tax of income above $118,500.

Taxing capital gains at the same rate as earned income

. Restoration of a tax on financial transactions.

4. Which is not part of the "Golden Straightjacket?"

Privatize pensions

Increase research and development

funding Reduce corruption

Privatize state-owned enterprises

5. Ha-Joon Chang argues that modern developed countries usually achieved their high level of development by practicing:

Most of the prescriptions in the Golden Straightjacket.

Most of the policy prescriptions known as the Washington Consensus.

Protectionism.

All of the above.

A club professional at a major golf course claims that the course is so tough that even professional golfers rarely break par of 73. The scores from a random sample of 20 professional golfers are listed below. Find the test statistic x to test the club professional's claim. 72 70 73 73 76 75 67 79 73 78 70 72 74 74 81 79 73 75 76 66

Answer choices: 6, 10, 4, 14

A test of abstract reasoning is given to a random sample of students before and after they completed a formal logic course. The results are given below. Construct a 95% confidence interval for the mean difference in tests scores. Research has shown that the distribution of such differences is approximately normal. Interpret your result.

Manufacturing company has 3 products: skatebords, snowboards, and kick-scooters.

They only produce boards for intermediate level riders.

They sell product in their own retail stores and offer customization to customers who are willing to pay a price premium.

1. Business Strategy? Why?

2.Appropriate production process? Why?

3. Identify all planning activities components of MPC framework and explain how the organization would plan, schedule, and control flow of material?

4. Thoroughly explain the MPC framework and how the comapsny's apporach and techniques support the business stratefy and prodcution process?

A manufacturer of plastic products spent $2,400,000 during the course of 2004 on research and development. $800,000 of this was spent on an unsuccessful attempt to design new and cheaper moulds which would have lasted twice as long as the moulds currently in use; this proved impossible because the moulds would not sustain the temperature of the molten plastic. $1,200,000 was spent on a very successful project to enable the gnomes to be cast in a cheaper form of plastic, and the remaining $400,000 was spent in the rental, heating and lighting costs of the research and development office.

Required: Advise the manufacturer how the expenditure of $2,400,000 should be treated in the income statement (Statement of Profit & Loss) and balance sheet (Statement of Financial Position). Explain your reasoning carefully and indicate any assumptions you make.

a. In 2002 to 2004, there were 4948 Ontario residents applied to the province’s medical schools. Of these 4948 applicants, 4588 were from urban areas and the rest were from rural areas. Statistics Canada reported that 13% of the Ontario’s population live in rural areas. Do the data suggest that rural students were underrepresented among the applicants for this two-year period? Perform the test at the significance level of 0.01.

b. Assume a sample (x₁, . . . , x_n) from a normal population with mean µ and a known variance σ₀². A researcher is interested in testing if the true population mean is greater than µ₀. Find the range of the sample mean x̅ such that the researcher will reject the null hypothesis at 5% level of significance.

c. The result in part (b) is known as the rejection region. It is given to you that from a given sample, we have n = 25, σ₀² = 4 and the rejection region obtained in part (b) is x̅ > 1.658. What is the chance of a sample mean falling in the rejection region if the true µ is 2?

Proterra was founded by Dale Hill in 2004 with a vision to design and manufacture world-leading, advanced technology heavy-duty vehicles powered solely by clean domestic fuels. After launching a first successful fleet of alternative fuel buses in the 1990s, Proterra focused on developing the 'bus of tomorrow.' Proterra Inc. also designs and manufactures heavy-duty vehicles including EcoRide, a battery electric and zero-emissions bus, and Proterra Catalyst, an electric transit vehicle. The company manufactures a TerraFlex Energy System that enables customers to select amount and type of energy storage to meet specific route requirements, plus TerraVolt fast-charge batteries, TerraVolt extended range batteries, an on-route charge station and in-depot charging services. It offers financing solutions, route simulation analysis, battery lifecycle management, and standard warranty services (Proterra, 2015). It serves customers throughout the United States. The company is privately owned, but is in the process of becoming a public corporation. With this expectation, the firm's chief executive officer (CEO) has asked for determination of which of two companies appears to be a better peer to compare itself against, New Flyer Industries, Inc. (a Toronto-based firm), or Tesla. Tesla Motor Vehicles designs, develops, manufactures, and sells high-performance fully electric vehicles and stationary energy storage units similar to certain Proterra products. Tesla Motors has subsidiaries in North America, Europe and Asia, with the primary purpose of these subsidiaries being to market, manufacture, sell and/or service their vehicles (Tesla Motors, 2016). New Flyer was founded in 1930, and is now the largest transit bus and motorcoach manufacturer and parts distributor in North America with fabrication, manufacturing, distribution and service centers in Canada and the United States. It is North America's heavy-duty transit bus leader and offers clean diesel, natural gas, diesel-electric hybrid, electric-trolley and battery-electric. Information regarding Tesla and New Flyer is given here, for your use in comparing these firms.

Tesla Versus New Flyer

Significance

Measure

TSLA

NFI

Total Market Value of all outstanding shares.

Market capitalization

33.63B

1.831B

Number of outstanding shares currently held by all shareholders.

Outstanding shares of stock

147.28M

59.742M

A Beta coefficient indicates the systemic risk that an asset has relative to an average asset. A risk-free asset has a Beta of zero.

Beta

1.28

0.16

The return the firm must earn on its existing assets to maintain the value of its stock, and the required return on any investments by the firm that have essentially the same risks as existing operations.

WACC

9.03%

8.34

PE ratio divided by expected future earnings growth (after multiplying the growth rate by 100).

PEG Ratio

18.47

0.5

A measure of profit per dollar of assets.

ROA

-7.04%

6.26%

A measure of how the stockholders fared during the year.

ROE

-113.20%

13.21%

A measure of how much investors are willing to pay per dollar of current earnings. Higher PEs are often taken to mean the firm has significant prospects for future growth.

P/E Ratio

-29.17

25.3

Ratio of Net income to sales.

Profit Margin

-23.91%

-3.83%

References

Bloomberg. United States rates and bonds.

Federal Reserve. (2016). Federal Reserve economic data.

Korosec, K. (2015). This startup is gearing up to be the Tesla of electric buses. Fortune Magazine.

Proterra. (2015). About Proterra.

Securities and Exchange Commission. (n.d.) SEC.gov home.

Tesla Motors. (2016). Tesla Motors, Inc. 2016 annual report.

Yahoo. (n.d.) Yahoo finance.

Assume that you are the finance manager for Proterra and you have been asked to provide an analysis of the following issues, as the firm develops benchmarks for its cost of capital (WACC) estimates. The firm's CEO has instructed you to use the pure play approach to estimate its WACC cost of capital, and has chosen Tesla Motors (ticker symbol TSLA) and New Flyer (ticker symbol NYI.TO) as possible representative peers (Korosec, 2015).

QUESTION: Analyze the relative applicability or inapplicability of utilizing these firms as peers to evaluate Proterra's likely cost of capital, with the given above data about Proterra, Tesla and New Flyer, and the lessons of Capital Market History.