You are the HR director at Springtime Manufacturing, which employs 75 people. The VP of Human Resources has asked that you evaluate the following situations. Please provide in the format of a memorandum to the VP with captions labeling each issue and addressing the questions posed. (See template at end)

1. Springtime decides to create a new Director of Marketing and Communications position. This position is responsible for overseeing all marketing for the company as well as communicating directly with the press and other major customers about the company, its news and initiatives. Thus, Springtime includes a requirement that the “ideal candidate will be able to communicate clearly and present a positive image of Springtime Manufacturing”. Both May Flower and June Bug apply for the position and are interviewed by the President of the Company, April Showers. Both May and June have appropriate degrees in Marketing and about the same level of experience. May is a practicing Muslim and so wears a headscarf to the interview, as she always does to comply with her religious beliefs. April asks May the same questions as she has asked June, but adds a question about the headscarf. In particular, she asks May whether she always has to wear the headscarf and whether she has encountered “negative reactions” to the scarf. May answers that she does have to wear the scarf and she occasionally has negative reactions. April also asks several other questions about May’s religion. After the interview, April announces that she is hiring June Bug for the position and cites the “Very positive image” that June will present for the company. May sues for discrimination under Title VII. Will she succeed? Why or why not?

Assessment Rubric for Assignment 4-     20 points total

Identification of Legal Issues (Clarity) 5 points Is the legal issue correctly identified for each situation presented?

Analysis Explanation (Content) 5 points Does the memorandum use the correct analysis for each identified issue and thoroughly explain the analysis?

Application of Analysis to Facts (Evidence Evaluation) 5 points Does each analysis include all applicable facts?

Conclusion (Are conclusions appropriate based on evaluation and appropriate use of terminology) 5 points

Matt and Debra Pearson live in an upscale neighborhood in Orem, Utah. Matt is a partner in the family owned automotive painting business. Debra stays home with their son, Brady, who is four.

After visiting with their financial planner, the couple became concerned that they were spending too much and not putting enough funds aside for Brady’s future educational needs. Matt earns $95,000 per year, but with the rising costs of education, they are concerned.

Matt is an alumni of the University of California at Los Angeles (UCLA) with tuition and book expenses of approximately $17,000 per year today. Debra graduated from Utah Valley University. The expense for tuition and books there is currently estimated at about $6,700 per year. When Brady turns 18, the couple wishes to send him to one of these two exceptional universities. They have a slight preference for Utah Valley University. The problem, however, is that with the rate at which tuition is increasing the Pearson’s are not sure they can save enough money and they have decided they do not want to borrow to pay for Brady’s education.

Assume the tuition at both universities will increase at an annual rate of 5% from now until Brady finishes college. Living expenses are currently estimated at $11,000 per year at both schools. This expense is expected to grow at only 2.5% per year. Further assume that Pearson’s can deposit their money into a growth oriented mutual fund at the Salt Lake City based mutual fund company which has historically earned 9.5% per annum.

The couple wishes to save by having a pre-determined amount automatically withdrawn from their bank account at the end each month. They plan to contribute from now until Brady starts college. When Brady starts college, at the beginning of his freshman year, they will stop making contributions. They want to have enough in their account to cover all four years of college expenses when Brady starts college. Assume that the funds in the account will continue to earn a return while he is in college. They will make annual withdrawals from the account to cover both tuition and living expenses for Brady at the beginning of his freshman, sophomore, junior, and senior years. When the withdrawal for the senior year is made the account balance will be zero.

Complete an analysis and write a professional letter to the Pearson’s (who don’t understand finance) explaining the analysis you performed, why you performed it, what the results are, and your recommendations. Use the provided rubric in preparing your letter. In the letter and attached schedules provide information that discusses and answers the following questions.

What will be the tuition expense, living expense, and total expense for each of the four years that Brady will attend college? Provide the information for each University.

What amount will be needed in the account when Brady starts his freshman year if he attends UCLA? What amount if he attends UVU?

How much money will Matt and Debra have to deposit at the end of each month to allow Brady to attend UCLA? How much money will have to be deposited per month to allow Brady to attend Utah Valley University? Assume that Matt and Debra stop making deposits when Brady starts college.

The Pearson’s are concerned that given the current market situation the mutual fund will only earn 7.5% per year. If the return is only 7.5% how much will be needed in the account when Brady starts college and how much will have to be deposited per month for Brady to have sufficient funds to attend each school?

ou recently hired a young MBA who is advising you that you should grow more aggressively and who is suggesting that you should do so by acquiring other smaller companies. Your cookware and tableware importing business has been quite successful, but you are not sure that this new employee’s plan to acquire a series of cooking/kitchenware stores makes sense. What issues would you raise in discussing this proposal?

2. Needs Assessment for Coastal Tool Rental

Kathleen Marsh is a recent community college graduate who plans to open an equipment and tool rental store in the next few months. The store will target do-it-yourselfers who need gardening and home improvement implements that may be too expensive to purchase for a limited project.

Although this is her first real venture as an entrepreneur, Kathleen worked in a tool rental shop during high school and college. Kathleen’s store, Coastal Tool Rental, will be in a new shopping center. Kathleen chose the location because a sizable community of family homes is nearby and because no major competition is located in the area, which is about 15 miles from the nearest large town. She has arranged to rent 2500 square feet of space in the shopping center. She has located a wholesaler who can provide her with a start-up inventory of common garden and home improvement implements. The wholesaler can also serve as a supplier for new and replacement tools, equipment, and consumables.

Kathleen majored in small business management, but she also took a number of computer- related courses as electives—including some classes on programming and on using word processing, spreadsheet, and database applications. Kathleen plans to purchase a desktop computer for use in her small business venture, but her start-up money and time are limited.

Kathleen is considering the following four options to keep track of equipment rentals:

1. A manual system of file cards for each piece of equipment and each customer

2. A computer-based system she would build using a spreadsheet or database application

3. A computer-based option she would program herself

4. An off-the-shelf software package designed for equipment renta

She has asked for your help to determine the feasibility of each of these options. Complete the following:

# First, prepare a list of interview questions for Kathleen that would help you make a recommendation to her.

# After you have a list of potential questions to ask in an interview, compare your questions with those of three classmates or coworkers. Work with your group to create one merged list of questions for Kathleen. Organize the questions under several main categories.

# When you have completed the list of interview questions, your instructor will provide you with Kathleen’s responses to several questions from an interview with her. Based on her responses, complete the following:

Briefly describe the pros and cons of the four options Kathleen is considering.

Based on what you know of Kathleen’s situation, which of the four options would you recommend to her? Explain your reasoning.

In order to implement one of these options, Coastal Tools Rental would need data on each rental item and each customer. List the fields you think Coastal would need to include in either a record for each rental tool or a record for each customer.

Federated Fabrications leased a tooling machine on January 1, 2018, for a three-year period ending December 31, 2020. The lease agreement specified annual payments of $43,000 beginning with the first payment at the beginning of the lease, and each December 31 through 2019. The company had the option to purchase the machine on December 30, 2020, for $52,000 when its fair value was expected to be $67,000 a sufficient difference that exercise seems reasonably certain. The machine's estimated useful life was six years with no salvage value. Federated was aware that the lessor’s implicit rate of return was 10%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1. Calculate the amount Federated should record as a right-of-use asset and lease liability for this finance lease.
2. Prepare an amortization schedule that describes the pattern of interest expense for Federated over the lease term.
3. Prepare the appropriate entries for Federated from the beginning of the lease through the end of the lease term.

Federated Fabrications leased a tooling machine on January 1, 2018, for a three-year period ending December 31, 2020. The lease agreement specified annual payments of $30,000 beginning with the first payment at the beginning of the lease, and each December 31 through 2019. The company had the option to purchase the machine on December 30, 2020, for $39,000 when its fair value was expected to be $54,000 a sufficient difference that exercise seems reasonably certain. The machine's estimated useful life was six years with no salvage value. Federated was aware that the lessor’s implicit rate of return was 11%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the amount Federated should record as a right-of-use asset and lease liability for this finance lease. 2. Prepare an amortization schedule that describes the pattern of interest expense for Federated over the lease term. 3. Prepare the appropriate entries for Federated from the beginning of the lease through the end of the lease term.

Federated Fabrications leased a tooling machine on January 1, 2018, for a three-year period ending December 31, 2020. The lease agreement specified annual payments of $31,000 beginning with the first payment at the beginning of the lease, and each December 31 through 2019. The company had the option to purchase the machine on December 30, 2020, for $40,000 when its fair value was expected to be $55,000 a sufficient difference that exercise seems reasonably certain. The machine's estimated useful life was six years with no salvage value. Federated was aware that the lessor’s implicit rate of return was 11%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1. Calculate the amount Federated should record as a right-of-use asset and lease liability for this finance lease.
2. Prepare an amortization schedule that describes the pattern of interest expense for Federated over the lease term.
3. Prepare the appropriate entries for Federated from the beginning of the lease through the end of the lease term.

Before you started applying for university, a job recruiter offered you a full-time cashier position at a department store earning an after-tax salary of $21,000 per year. However, you turn down this offer and attend your first year of university. The additional monetary cost of university to you, including tuition, supplies, and additional housing expenses, is $32,000.

Krause Company on January 1, 2020, enters into a five-year noncancelable lease for equipment having an estimated useful life of 6 years and a fair value to the lessor, Daly Corp., at the inception of the lease of $4,000,000. The cost to manufacture the equipment was $3,000,000. Daly’s required rate of return is 8%. Krause’s incremental borrowing rate is 10% and is aware of Daly’s required rate of return. Krause uses the straight-line method to amortize its assets. Daly is reasonably confident that Krause will make the lease payments and has no material cost uncertainties.

The lease contains the following provisions:

1. Rental payments of $896,050 are payable at the beginning of each year.
2. A guarantee by Krause Company that Daly Corp. will realize $200,000 from selling the asset at the expiration of the lease. However, the actual residual value is expected to be $120,000.

Round your numbers to the nearest whole numbers.

Required:

1. According to the FASB, how should the lease be classified by both Krause (lessee) and Daly (lessor)? Why?
2. Calculate the present value of lease liability and lease receivable on lease signing date.
3. Prepare lease amortization schedules up to 1/1/2021 for both Krause and Daly
4. Prepare the journal entries to record the inception of the lease and the first lease payment on January 1, 2020 for both Krause and Daly.
5. Prepare all appropriate adjusting journal entries for both Krause and Daly at December 31, 2020.

You want to buy a car which will cost you $10,000. You do not have sufficient funds to purchase the car. You do not expect the price of the car to change in the foreseeable future. You can either save money or borrow money to buy the car.

• Plan 2: You decide to borrow $13,000 from the bank and purchase the car now, as well as cover some other expenses. The bank offers two options for the structure of the repayments.

- Option 1: The first repayment will not start until you graduate from university. Therefore, no month-end-instalments will be made for the first 36 months. Then, commencing at the end of the 37^th month, a total of 30 month-end-instalments of $X will be made over the life of the loan. The nominal interest rate is 6% per annum compounded monthly.

d) Calculate X. (2 mark)

e) Your parents agree to help you repay the loan by contributing a lump sum of $1,800 when you successfully graduate from university. Calculate the new value of X. (1 mark)

- Option 2: For the first 36 months (while you are still studying), you will be making month-end-instalments of $Y. Then, commencing at the end of the 37^th month (when you graduate from university), you will double the amount of monthly repayment for the remaining 30 month-end-instalments. The nominal interest rate is 6% per annum compounded monthly.

f) Calculate the value of Y.