Hoping to make his flight on time, Tom (the CEO of ABC Pty Ltd) signed a stack of paperwork on his desk without reading what he was signing. Unfortunately, one of the documents he signed authorised a high-risk investment which caused shareholders to lose millions of dollars.

Required:

(a) With reference to CA s 180, how does the court decide whether a director acted with care, skill and diligence?

(b) Analyse whether Tom breached his duty of care to the company.

(c) Analyse whether Tom qualifies for a defence under the business judgment rule. You must refer to relevant law

AUSTRALIAN LAW

Fajar Factory wants to build a rice processing factory that will take a year to build. $5 million is spent right away and another $5 million is spent next year. The company CEO is expecting that the factory will lose $1 million in its first year of operation and lose another half a million in its second year of operation. with that initial investment, the factory is expected to produce 8000 rice packs per month and sold fo $30 per unit for nest 20 years. meanwhile, the production cost for pack is $20.

If the discount rate is 4% ,what is the net present value of the investment ?

What if discount rate is 2%? Whould your decision different ?

1. This question is on capital structure.
   1. List and explain all the theories on capital structure.
   2. As the CEO of Pokebook, you are contemplating debt issuance. In particular, your CFO suggests a capital restructuring program where the company will issue $7 billion of perpetual debt. Beginning with the definition of a capital restructuring program, explain to your board of directors the reasons of issuing (or not issuing) debt and consequently to restructure the capital of Pokebook.
   3. What factors affect your decision to choose dividend or share repurchase as a way to distribute the money raised under the capital restructuring program?

2. You should highlight different factors (including those not covered in a) to get full credits. All parts have equal weights.

C&P Trading Inc. is considering a project, initial investment is $260,000. The company board of directors set the maximum requirements of return of pay back 3 years and has set the cost of capital is 10%, below is the cash flow: CF1= $75,800 , CF2= $78,960 , CF3= $82,278, CF4= $117,612. (15')

1. Would you accept the project based on NPV, IRR? (4')
2. Would you accept the project based on Payback rule if project cut-off period is 3 years? (3')
3. How would you explain to your CEO what NPV means? (4')
4. What are advantages and disadvantages of using only Payback method? (4')

C&P Trading Inc. is considering a project, initial investment is $260,000. The company board of directors set the maximum requirements of return of pay back 3 years and has set the cost of capital is 10%, below is the cash flow: CF1= $75,800 , CF2= $78,960 , CF3= $82,278, CF4= $117,612. (15')

1. Would you accept the project based on NPV, IRR? (4')
2. Would you accept the project based on Payback rule if project cut-off period is 3 years? (3')
3. How would you explain to your CEO what NPV means? (4')
4. What are advantages and disadvantages of using only Payback method? (4')

Smith Inc. is a public company but is tightly controlled by Joe Smith. Mr. Smith is quite confident about his ability to evaluate investments in all aspects of the business. The situation at Smith Inc. is quite different from that at Jones Inc., although they share a similar line of business. Jones Inc. has a much less powerful CEO, Fred Jones, who delegates much more control to the firm’s divisional heads. Mr. Fred meets with the divisional heads to make a capital allocation choices as a group.

Discuss how and why Smith Inc. and Jones Inc. might have different approaches for determining the discount rates used to evaluate their projects.

InternationalClothiersLtd.hasofficesinCanada,Bermuda,EuropeandtheUnitedStates. Eachofthe following events have occurred after the company’s 31 December 2019 year-end, but before their financial statements had been finalized:

1. On January 25, International Clothiers Ltd entered into a long-term lease for a private airplane for the company president and CEO. The lease requires payments of US$75,000 per month for 60 months.

2. One of the company’s major retail customers declared bankruptcy on March 22. The retail customer accounted for 20% of International Clothier’s year-end receivables and 35% of International Clothier’s revenue in 2019.

Required:

Identify and explain the appropriate accounting treatment for the subsequent events described above.

DISCUSSION :

We have pointed out that the value chain will indicate many support areas that could be candidates for outsourcing. These are not essential functions (accounting, human resources, training, support technology, facility maintenance, security, phone call center,etc.) for the company and perhaps could be or cheaper and better by an outside firm.

a. Is this a case of "its just business" or is it unethical to outsource certain functions meaning you lay off long term employees that are specialized?

b. Would this be a good reason to outsource? What about the community you are located in?

c. Your thoughts if you are the CEO or top management in the firm?

• Discuss the pro's and con's of these possible actions as if you were top management.

Assume you are the HR director of a tech company located in Jackson, MS. Based on the kind of service it provides, it will see a sharp increase in their business due to the coronanvirus pandemic. Your CEO has tasked you with hiring a significant number of new employees, both professional and non-professional. Professional employees include computer scientists, engineers, designers, accountants, and marketing/sales people. The non-professional employees includes clerical staff, maintenance staff, and custodial staff. How would you go about successfully recruiting each group? How would you ensure the best possible and most diverse applicant pool? Assume that things will be back to normal by summer.

a) Describe the organizational culture at the Newskool. Be sure to use specific course concepts in your answer .

b) Is the culture at the Newskool strong or weak? How do you know?

c) In general, what are the pros and cons of a strong culture?

Imagine you are a senior manager at Newskool Grooves who has been tasked with putting together a cross-functional team that will decide on which type of communication platform the company should use for corporate communications (e.g., email, video conferencing, secure group chats, etc).

Imagine CEO Gerd Finger wishes to introduce a new line of music equipment at Newskool Grooves and that several of the other managers do not like his idea.