Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other household applia nces. The company is entirely equity financed, with 9 million shares of common stock outstanding. The stock currently trades at $42.50 per share. Over the years, the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company’s finance department. One of the major revenue-producing items manufactured by Conch Republic is a smart phone. Conch Republic currently has one smart phone model on the market, and sales have been excellent. The smart phone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smart phone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smart phone that has all the features of the existing smart phone but adds new features such as WiFi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smart phone. Conch Republic can manufacture the new smart phones for $185 each in variable costs. Fixed costs for the operation are estimated to run $5.3 million per year. The estimated sales volume is 74,000, 95,000, 125,000, 105,000, and 80,000 per year for the next five years, respectively. The unit price of the new smart phone will be $480. The necessary equipment can be purchased for $38.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $5.4 million. As previously stated, Conch Republic currently manufactures a smart phone. Production of the existing model is expected to be terminated in two years. If Conch Republic does not introduce the new smart phone, sales will be 80,000 units and 60,000 units for the next two years, respectively. The price of the existing smart phone is $310 per unit, with variable costs of $125 each and fixed costs of $1,800,000 per year. If Conch Republic does introduce the new smart phone, sales of the existing smart phone will fall by 15,000 units per year, and the price of the existing units will have to be lowered to $275 each. Net working capital for the smart phones will be 20 percent of sales and will occur with the timing of the cash flows for the year; for example, there is no initial outlay for NWC, but changes in NWC will first occur in Year 1 with the first year’s sales. Conch Republic has a 35 percent corporate tax rate and a 12 percent required return. Company can obtain a debt by issuing bond carrying coupon rate of 8%. It is established at debt equity ratio can be 70:30. Beyond this financial distress risk will arise. Shelley has asked Jay to prepare a report that answers the following questions. QUESTIONS – Capital budgeting 1. What is the payback period of the project? 2. What is the profitability index of the project? 3. What is the IRR of the project? 4. What is the NPV of the project? o How sensitive is the NPV to changes in the price of the new smart phone? o How sensitive is the NPV to changes in the quantity sold of the new smart phone? QUESTIONS – Capital Structure 5. What is market value of firm before undertaking project 6. Company intend to use equity only to finance the project o Calculate companies market value after it announces that the firm will finance the project using equity. o What would be the new price per share of the firm’s stock? o How many shares need to be issued to finance the purchase? o Please explain hypothesis used. 7. Suppose the company decides to issue debt to finance the purchase. o What will the market value of the Company be if the purchase is financed with debt? o What will be the new Required return on equity ? o Construct Company’s market value balance sheet after both the debt issue and the land purchase. o What is the price per share of the firm’s stock? 8. Does financing with debt affect projects NPV? 9. Which method of financing maximizes the per-share stock price of Company’s equity? And how. 10. What would be risks of having a higher Debt equity ratio of assuming 80:20? Would it impact WACC ? Assignment need to be in 2000-2500 words you need to write you reasoning for answers. Just answers will not be sufficient

You have recently been hired by Bio Lux Company, in its relatively new treasury management department. Bio Lux was founded five years ago by Jessica Parker. Jessica found a method to produce high quality shampoo using natural ingredients. The shampoo produced by Bio Lux is in a good position to compete with other more established shampoo producers. The company is privately owned by Jessica Parker and her family, and it had sales of $12 million last year.

Bio Lux primarily sells its products through a wholesaler who distributes the products through its network of retailers throughout the country. Bio Lux’s growth to date has come from its innovation, quality, and low costs. When the company had sufficient capital, it would expand production. Relatively little formal analysis has been used in its capital budgeting process. Jessica has just read about capital budgeting techniques and has come to you for help. For starters, the company has never attempted to determine its cost of capital, and Jessica would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company. Jessica wants you to use a similar company to estimate the cost of capital (WACC) for Bio Lux, and she has chosen Procter & Gamble as a representative company. The following questions will lead you through the steps to calculate this estimate.

Go to Nasdaq.com and find the list of competitors in the industry. You can do this by clicking on the search window, then enter PG (which is the ticker of Procter & Gamble). The list of competitors of the company will be available when you click on “Competitors” in the left vertical menu. Use U.S.-based competing companies for this task.

1. a) Find the beta for each of these competitors, and then calculate the industry average beta.
2. b) Using the industry average beta, what is the cost of equity?
3. c) Does it matter if you use the beta for Procter & Gamble or the beta for the industry in this case?

Go over the three arguments below. (Don't read your classmates' posts until you are done with your own work.)

Then, choose TWO (2) of them.

In each case, identify the argument’s two parts: what is the conclusion? (There may be more than one conclusion in the passage; this means that you could identify more than one argument per passage.) What is or are the premises? (Each premise and each conclusion should be formulated in your own words; each of them must be a simple and complete declarative sentence.)

After you identify the argument, answer the following questions:

Is this a good argument? What’s misleading about it? Where is the reasoning mistake?

EXAMPLE 1

The following appeared in a local newspaper:

In the last school where Principal McArthur worked, he was known as very tough. The teachers resented him. Nobody liked him. He’d often call the teachers into his office and scold them for lateness, lazy work habits, and sloppy record-keeping. When Dr. McArthur arrives at his new position at the Willows High School next August, he will again create a hostile work environment.

EXAMPLE 2:

The following appeared in promotional literature for a billboard company:

Bye Bye Baby Store installed a large billboard on the side of the 95 highway exit. Sales of baby items in the store increased 13% in the next fiscal quarter. Dr. Mark Baldwin, a local dentist, would like to increase the profits of his dental practice. All that needs to be done is installing an advertising billboard next to a highway exist and his patient load will increase tremendously.

EXAMPLE 3

The following appeared in a local newspaper:

Two weeks ago, 12 female college soccer players went to the Governor’s office. They wanted to protest budget cuts for intercollegiate women’s sports. In the state, there are about 30,000 female college athletes. Because only 12 women went to the protest, obviously most female athletes don’t care at all about the Governor’s funds for athletics. Therefore, there is no need for the governor to make any changes to his budget allocations.

1. Your sister Steffi recently purchased a new car that cost $40,000. She paid 5% of the purchase price in cash and took out a 5-year loan for the remainder. The loan has an annual interest rate of 6% and requires monthly payments at the end of each month. At the end of the loan, how much will Steffi have paid in total for the car and how much total interest will Steffi have paid on the loan?

1. Total paid for the car is $40,000.00, including interest of $4,078.79
2. Total paid for the car is $44,078.79, including interest of $4,078.79
3. Total paid for the car is $46,078.79, including interest of $6,078.79
4. None of the above.

2. Sofia Kenin is thinking about a plan for retirement savings. She is 21 years old now and she would like to retire the day after her 65^th birthday. Her plan is to invest $18,000 each year on her birthday. She plans to make her first investment on her 25^th birthday and her last investment on her 65^th birthday. She expects her retirement account to earn 6% each year.

How much more would she have in her account after she makes the investment on her 65^th birthday if, instead of investing $18,000 on each birthday from her 25^th through her 65^th, she invested $1,500 monthly beginning on her 25^th birthday?

1. No more - She would have the same amount.
2. $61,500.00
3. $201,520.72
4. $219,127.33

3. Kerber is considering buying a tennis school from Navratilova who wants to sell it and retire. Navratilova is asking for a $1,000,000 payment at the sale date, and a five-year payout consisting of $150,000 at the end of the first and second years after the sale date and $233,333 at the end of the third, fourth and fifth years after the sale date. If Kerber agrees to Navratilova’s terms, and she believes that 10% is an appropriate discount rate, how much does Kerber need today in order to pay Navratilova for the tennis school?

1. $739,888.13
2. $1,000,000.00
3. $1,739,888.13
4. $1,999,999.00

LaTeisha was finally headed back from Nigeria! This trip had been transformational but she was also

glad to head back home to hot showers, familiar food, and a routine including her own car. Two weeks in

the rural countryside is a lot.... Abuja was her new favorite city! Her church had told them all about the

amazing work the medical missionaries did and she already had her CNA so why not? It would be a great

experience and look good on her application to PA school.

And it was incredible... she helped administer vaccines, culture strep throat, detect atypical pneumonia in

coughing children, just amazing. She was impressed by the resilience of the Nigerian villagers; they were

struggling with drought, the cows were spontaneously aborting the calves, and militias visited from the

north all too often but they quietly persevering all the same. . The villagers inspired her and she knew it

was international medicine she was destined to do for her whole life.

But now, just the morning after her flight landed in Atlanta, she wasn’t feeling so well. She felt it a little

on the plane but that could have just been her fear of lying. She was pretty sure she had a fever now. She

felt kinda achy too – knees and elbows and neck. Not so fun. She still had a week before school so she

could just be lazy and recover. She slept the day away.

The next day, things were worse. Her mom insisted she call a doctor. She was vomiting now and it was...

black. Her mom also said that her eyes looked funny, yellowish. They went to an urgent care clinic near

their house. As the PA on duty, you take her case history, temperature, blood and stool samples. Her

really low blood pressure and the color of the vomit were serious indicators

4.

The pathogen causing

LaTeisha’s illness is _______

5.

This organism is severely damaging LaTeisha’s body. How does it cause damage and what isONE virulence factor

For each question, write out the null and alternate hypotheses numerically. Give the test statistic and p-value. Write out the equation of the test statistic but you do not have to evaluate it by hand. Then conclude with whether you reject or fail to reject the null hypothesis.

Chapter 9

1. (Question 98.) Toastmasters International cites a report by Gallop Poll that 40% of Americans fear public speaking. A student believes that less than 40% of students at her school fear public speaking. She randomly surveys 361 schoolmates and finds that 135 report they fear public speaking. Conduct a hypothesis test to determine if the percent at her school is less than 40%.

2. (Question 100.) According to an article in Bloomberg Businessweek, New York City's most recent adult smoking rate is 14%. Suppose that a survey is conducted to determine this year’s rate. Nine out of 70 randomly chosen N.Y. City residents reply that they smoke. Conduct a hypothesis test to determine if the rate is still 14% or if it has decreased.

Chapter 10

3. (Question 124). A powder diet is tested on 49 people, and a liquid diet is tested on 36 different people. The population standard deviations are two pounds and three pounds, respectively. Of interest is whether the liquid diet yields a higher mean weight loss than the powder diet. Conduct a hypothesis test to determine if there is a difference in these two diets

4. (Question 13) Lesley E. Tan investigated the relationship between left-handedness vs. right-handedness and motor competence in preschool children. Random samples of 41 left-handed preschool children and 41 right-handed preschool children were given several tests of motor skills to determine if there is evidence of a difference between the children based on this experiment. The experiment produced the means and standard deviations shown Table 10.36. Conduct a hypothesis test to determine if there is a difference in motor competence

Left-handed Right-handed

Sample size                                        41                    41

Sample mean                                     97.5                 98.1

Sample St. Dev.                                 17.5                 19.2

You are a public health nurse working in an elementary school in Hamilton, Ontario. You have seen a substantial increase in the number of children in your school presenting with Attention Deficit Disorder (ADD). You are interested in whether a new drug developed by a local drug company improves the ability of children with ADD to maintain attention. You obtain ethics approval to study the drug, informed consent from the parents of 24 fifth grade children with ADD, administer the drug to the 24 children, and administer a test to the children to determine their ability to maintain attention while performing a task. Scores are continuous, can range from 0 to 25 with higher scores reflecting a better ability to maintain attention, and you know from previous research that scores tend to be normally distributed. Six of these students receive a placebo containing none of the drug. Six students receive 2 mg of the drug, six students receive 4 mg of the drug, and six students receive 6 mg of the drug. The table below summarizes the results from your study. Use these data to answer the following questions. Assume α=0.05.

1. 1. You hypothesize that there will be a difference among the groups in the ability to maintain attention. Run the appropriate statistical test to determine if your hypothesis is correct. Was your hypothesis confirmed by the study results? Provide the calculation and/or SPSS output to support your answer.  
2. 2. You have one further prediction, and that is that children with ADD who receive the drug will perform significantly better than children with ADD who do not receive the drug. Conduct the appropriate test to confirm this prediction, if the results from question a support doing this additional testing. Are you able to confirm your prediction? Explain, including the calculations and/or SPSS output to support your answer.

cenario Part 1 Koorine and Tau are good friends who have known each other since starting high school. Upon finishing school Tau enrolled in a Bachelor of Business (Financial Planning) and Koorine travelled overseas where she studied accountancy and worked for a number of years in an accountancy firm. Tau has also worked since graduation as a financial planner with a local firm. When Koorine returned to Australia and caught up with Tau, they decided to go into business together under the name FinRight. Tau handles the financial services and planning side of the business and Koorine provides the accounting services. They rent premises together and have some administrative assistance. They have never executed any formal agreement but have always shared the profits and losses. It initially cost them $40,000 to set up the business. Tau contributed $25,000 and Koorine contributed $15,000. Business is growing quickly and going really well. In the last financial year, the business made a profit of $220,000. Unfortunately, problems arose when Tau claimed that he was entitled to 70% of the profit because he generated 70% of the revenue, and he argued that his initial contribution was greater. To try to increase her contribution, Koorine decided to purchase expensive computer equipment and software from Computers2U. It cost $10,000. Koorine did not consult with Tau about the purchase and when Tau was presented with the invoice from Computers2U, he refused to authorise payment. Unfortunately, Tau was unfamiliar with the new computer equipment and as a result produced a misleading report. This led to negligent advice being given to a client, KX, who suffered some financial loss as a result. Both KX and Computers2U and have talked of suing FinRight if a resolution is not reached soon. Despite their recent disagreements, Koorine and Tau are determined to work through their differences and make a go of their business, if they are able. They would like your advice. Please advise on the following matters using case law and statute to support your answers:

1. Discuss the various business structures available and advise Tai and Koorine as to what type of business structure they are currently operating.