2a. How does forecasting cash flows for a multinational project differ from forecasting cash flows for a US based project? b. Describe one way the required return for the project located in a foreign country can be determined if the required return for a similar project located in the US is known. c. When determining the required return for a capital budgeting project located in a foreign country, why does it matter whether the capital market in that foreign country is integrated with the world market or is segmented? How does the required return in a segmented market differ from that in an integrated market?

1a. How does forecasting cash flows for a multinational project differ from forecasting cash flows for a US based project?

b. Describe one way the required return for the project located in a foreign country can be determined if the required return for a similar project located in the US is known.

c. When determining the required return for a capital budgeting project located in a foreign country, why does it matter whether the capital market in that foreign country is integrated with the world market or is segmented? How does the required return in a segmented market differ from that in an integrated market?

“Frankly speaking, Jeff, I didn’t think we would stand a chance in winning this $20 million program. I was really surprised when they said that they’d like to accept our bid and begin negotiations. As Chief contract administrator, you will head up the negotiation team, “remarked Gus Bell, vice president and general manager of Cory Electric. “You have two weeks to prepare your data and line up your team. I want to see you when you’re ready to go”. Jeff Stokes was chief contract negotiator for Cory Electric, a $250- million-a year electrical components manufacturer serving virtually every major U.S industry. Cory Electric had a well-established matrix structure that had withstood fifteen years of testing. Job casting standards were well established, but did include some “fat” upon the discretion of the functional manager. Two weeks later, Jeff met with Gus Bell to discuss the negotiation process. Gus Bell: “Have you selected an appropriate team? You had better make sure that you’re covered on all sides” Jeff: “There will be four, plus myself, at the negotiating table; the programme manager, the chief engineer who developed the engineering labour packages; the chief manufacturing engineer who developed the production labour package; and a pricing specialist who has been on the proposal since the kick-off meeting. We have a strong team and should be able to handle any questions” Gus Bell: “Okay, I’II take your word for it. I have my own checklist for contract negotiations. I want you to come back with a guaranteed fee of $1.6 million for our stockholders. Have you worked out the possible situations based on the negotiated costs?” Jeff: “Yes! Our minimum position is $20 million plus an 8 percent profit. Of course, this profit percentage will vary depending on the negotiated cost. We can bid the programme at $15 million cost; that’s $5 million below our target cost and still book a 1.6 million profit by overrunning the cost-plus-fee contract. Here is a list of the possible cases. See Exhibit one below. Jeff: “I’ve read over all terms and conditions, and so have all the project office personnel as well as the key functional managers. The only major item is that the customer wants us to qualify some few vendors as sources for raw material procurement. We have included in the package the cost of qualifying two new raw material suppliers” Gus Bell: “Where are the weak points in our proposal? I’m sure we have some” Jeff: “Last month, the customer sent in a finding team to go over all of our labour justifications. The impression that I get from our people is that we’re covered all the way round. The only major problem might be where we’ll be performing on our learning curve. We put into the proposal 45 percent learning curve efficiency. The customer has indicated that we should be up around 50 to 55 percent efficiency based on our previous contracts with him. Unfortunately, those contracts the customer referred to were four years old. Several of the employees who worked on those programs have left the company. Others are assigned to on-going projects here at Cory. I estimate that we could put together about 10 percent of people we used previously. That learning curve percentage will be a big point for disagreements. We finished off the previous programs with the customer at 35 percent learning curve position. I don’t see how they can expect us to be smarter, given these circumstances.” Gus Bell: “If that’s the only weakness, then we’re in good shape. It sounds like we have a fool proof audit trail. That’s good! What’s your negotiation sequence going to be? Jeff: “I’d like to negotiate the bottom line only, but that’s a dream. We’ll probably negotiate the raw materials, the man-hours and the learning curve, the overhead rate, and finally the profit percentage. Hopefully, we can do it in that order.” Gus Bell: “Do you think that we’ll be able to negotiate a cost above our minimum position?” Jeff: “Our proposal was $22.2 million. I don’t foresee any problem that will prevent us from coming out ahead of the minimum position. The 5 percent change in learning curve efficiency amounts to approximately $ 1 million. We should be well covered. “The first move will be up to them. I expect that they’ll come in with an offer of $ 18 to $19 million. Using the binary chop procedure, that’ll give us our guaranteed minimum position. Gus Bell: “Do you know the guys who you’ll be negotiating with?” Jeff: “Yes, I’ve dealt with them before. The last time, the negotiations took three days. I think we both got what we wanted. I expect this one to go just smoothly” Gus Bell: “Okay, Jeff. I’m convinced we’re prepared for negotiations. Have a good trip” The negotiations began at 9:00 A .M on Monday morning. The customer countered the original proposal of $22.2 million with an offer of $15 million. After six solid hours of arguments, Jeff and his team adjourned. Jeff immediately called Gus Bell at Cory Electric. Jeff: “Their counteroffer to our bid is absurd. They’ve asked us to make a counteroffer to their offer. We can’t do that. The instant we give them a counter-offer, we are in fact giving credibility to their absurd bid. Now, they’re claiming that, if we don’t give them a counteroffer, then we’re not bargaining in good faith. I think we’re in trouble” Gus Bell: “Has the customer done their homework to justify their bid?” Jeff: “Yes, very well”. Tomorrow we’re going to discuss every element of the proposal, task by task. Unless something drastically changes in their position within the next day or two, contract negotiations will probably take up to a month” Gus Bell: “Perhaps this is one program that should be negotiated at the top levels of management. Find out if the person that you’re negotiating with reports to a vice president and general manager, as you do. If not, break off contract negotiations until the customer gives us someone at your level. We’ll negotiate this at my level, if necessary.”

For the case study above, Create a PERT schedule with the key activities for the $20 million contract negotiation project. There should be between 6 to 10 activities identified from the case study. Additional relevant activities may be included. Create an AON network diagram and find the critical path using slack once estimated activity time is established.

Question 5 (a) Modigliani and Miller showed that when firms have to pay taxes, a firm’s value increases with leverage. Briefly discuss what prevents a firm from taking on high levels of debt. (b) Maturity Rating Features Bond A 10 years AA Put provision Bond B 10 years A Call provision Appraise which bond has the higher yield to maturity. (c) Your company buys from a supplier who offers credit terms of 3/10 net 130. Discuss whether your company should or should not pay cash for the goods it buys if it can borrow funds from the bank at 10% per annum. (Use a 360-day year for your computations.)

A). Suppose Travel and Leisure reported the average hotel price in Miami, Florida, was $153.57 per night in 2019. Assume the population standard deviation is $26.86 and that a random sample of 30 hotels was selected. Calculate the standard error of the mean.

B). According to the US Labor Department, the average hourly wage for private-sector production and non-supervisory workers was $20.04 in February 2013. Assume the standard deviation for this population is $6.00 per hour. A random sample of 35 workers from this group was selected. What is the standard error of the mean?

C). According to the US Labor Department, the average hourly wage for private-sector production and non-supervisory workers was $20.04 in February 2013. Assume the standard deviation for this population is $6.00 per hour. A random sample of 35 workers from this group was selected. What is the probability that the mean for this sample is less than $19.00?

D). According to the US Labor Department, the average hourly wage for private-sector production and non-supervisory workers was $20.04 in February 2013. Assume the standard deviation for this population is $6.00 per hour. A random sample of 35 workers from this group was selected. What is the probability that the mean for this sample is more than $20.84??

How would we interpret the probability calculated in the questions D?

E). According to the US Labor Department, the average hourly wage for private-sector production and non-supervisory workers was $20.04 in February 2013. Assume the standard deviation for this population is $6.00 per hour. A random sample of 35 workers from this group was selected. What is the probability that the mean for this sample is exactly $20.00?

A team of researchers would like to find out if Country X residents, who favor a low fat diet, have significantly lower cholesterol levels compared to that of the US population. They collected data from a large sample of Country X residents and the Z statistic is calculated to be -1.34 in a one-tailed test with an alpha level of .05. What is the researchers' conclusion of the hypothesis test?

Group of answer choices

The researchers fail to reject the null hypothesis.

The researchers reject the alternative hypothesis.

The researchers reject the null hypothesis.

More information is needed to reach a conclusion.

A study was conducted on the effect of money on life satisfaction by comparing a group of people who are financially wealthy to the general population. Based on the statistical result, the researchers failed to reject the null hypothesis, so it can be concluded that ____.

Group of answer choices

the probability is high that the life satisfaction of people who are wealthy is different from the general population

life satisfaction of people who are wealthy has been proven to be the same as the general population

life satisfaction of people who are wealthy has been proven to be different from the general population

the probability is high that the life satisfaction of people who are wealthy is the same as the general population

Based on the national statistics on MPG ratings, the national average rating for sedans is 25 with a standard deviation of 5. My car has an MPG of 29, what is the percentage of sedans performing better than my car in MPG?

Group of answer choices

50 + 28.81% - 78.81%

50% - 28.81% = 21.19%

100% - 34.13% = 65.87%

100% - 34.13% = 65.86%

When using the Z table for a two-tailed hypothesis test with a preset alpha (significance) level, what is the correct sequence of the following steps (it is possible not all steps will be used):

1) Look for the corresponding Z value(s)
2) Multiply the percentage of alpha by 2 to be the "tail area percentage"
3) Look in the "tail" column for the "tail area percentage”
4) Divide the percentage of alpha by 2 to be the "tail area percentage"
5) Convert the alpha to percentage

Group of answer choices

5, 4, 3, 1

5, 2, 3, 1

5, 4, 3, 1, 2

1, 2, 3

How does a two-tailed test compared to a one-tailed test when given a sample statistic and a fixed alpha level?

Group of answer choices

The critical value to be compared to the statistic would be less extreme with a two-tailed test.

The critical value to be compared to the statistic would be more extreme with a two-tailed test.

The total significance area in the comparison distribution is larger in a two-tailed test.

The total significance area in the comparison distribution is smaller in a one-tailed test.

1.The pre merger balance sheets of firm A and B are given below.Firm A is interested in taking over firm B.Prepare the post- merger balance sheet for firm A according to the pooling of interest method.

2.Using the Same balance sheets in Question 1,Prepare the post -merger balance sheet for A under the Purchase Method.Take into account the following additional information:

(A) The fair value of the firm B's net fixed assets is US$10000

(B) Firm A pays US$20000 for firm Band Finances the purchase by issuing additional long -term debt

Earlene’s Eyewear manufactures eyeglass frames.  The company uses a standard cost system.  Earlene has set the following standards for frame model 19841.

Direct Material                        4.5 oz. plastic per frame at $3.65 per oz.                 $16.425 per frame

Direct Labor                            .8 hours at $28 per hour                                             $22.40 per frame

In April, Earlene’s made 2,500 frames with a material cost of $48,000.  Earlene’s Eyewear purchased 12,000 oz. of plastic but only used 10,000 oz. of plastic for frame 19841.  

What is the Material Price Variance?

Which of the following could explain the material price variance calculated above?

a.   Earlene’s Eyewear paid less per oz because the material was purchased in bulk to receive a discount.

b.   Earlene’s Eyewear earned less per frame because more materials were purchased than used.

c.    Earlene’s Eyewear earned more per frame because there were no machine breakdowns and fewer labor hours were required than planned.

d.   Earlene’s Eyewear paid more per oz because the company decided to go with a higher quality material.       

1. Based on the post-employment conflict of interest, over time regulatory agencies can develop a bias to support the

welfare needs of society in general.

groups of individuals who are not likely to be affected by regulation.

desires of the firms that are being regulated.

goals of attaining economic efficiency.

2. According to public choice theory, individual self-interests influence the actions of

consumers in the private sector, but not voters in the public sector.

producers in the private sector, but not politicians in the public sector.

taxpayers, but not the recipients of government produced public goods.

consumers, producers, voters, and politicians in both the private and public sectors