After reading the following case, please answer the following questions:

1. Why does agency problem arise?

2. What is the cost of agency problem?

3. How to minimize the agency problem?

CASE STUDY ON AGENCY PROBLEM ABC

Company started operations in early 1970. The company produces specialized items for manufacturing cars. Most of the raw materials used are imported from Brazil because the cost is low and the labor is very cheap. The CEO for ABC Company, Mr. Rodriguez, makes every attempt to keep the cost at the lowest. From 1970 to 2000 net income has increased at a rate of at least 25% per year. There are around 20,000 shareholders that hold ABC Company shares. Shareholders are very happy with the company’s performance. Mr. Rodriguez always held a meeting with Board of Directors to inform them of any decision involve in the company. As such the BOD is very happy with the company performance and Mr. Rodriguez managing style. Every year, the staff received cash bonus of around 2 to 3 times of their salary and Mr. Rodriguez received many incentives from the company including cars, houses and cash. However, at the end of 2001, the cost of raw material increases because of the attack of SARS virus in Brazil. The sales for the year were also reduced. By September 2001, Mr. Rodriguez held an emergency meeting with all the staffs. It is estimated that the income for the year will be reduced. By January 2002, after the preparation of the financial statements, net income showed a decreased of around 45% from last year. Mr. Rodriguez demanded the treasures and the controller to do something with the figures. During the BOD meeting in April 2002, the company announced a 15%increase in the income and declared a dividend of around 5% higher than last year. The shareholders reacted positively to the announcement and started buying more shares of the company. For the next five years, the company continue to decrease in income but providing a good news to the shareholders and giving shareholders higher profit. In 2008, the BOD requested for the company to change the auditor for the company. After the auditing process, the new auditor revealed that the company is in the state of bankruptcy and there are zero balance cash in the bank account. One month after that the company was forced to closed down. Shareholder were surprised with the announcement and lost all their money. The employees lost their job and many creditors couldn’t claim their money. Shareholders are currently suing Mr. Rodriguez and the company for their losses.

Case Study

Mrs. Smith is 82 years old and is diagnosed with hypertension, diabetes, and congestive heart failure. Her two children live in California, while she lives in North Carolina in a small family home on 10 acres of land in the Blue Ridge Mountains. Mrs. Smith has been in the hospital four times in the last year due to congestive heart failure. As her eyesight and mobility get worse with age, she has found it a challenge to stay on her medical plan and to do her shopping for the right foods she knows she should be eating. Mrs. Smith’s health plan, Purple Cross of North Carolina, assigned a nurse case manager to address her situation. Purple Cross provided a digital scale and a remote monitoring device that recorded Mrs. Smith’s condition every day by uploading her weight and transmitting the answers to a series of questions on a touch screen kiosk. The case manager also coordinated delivery of Meals on Wheels, providing low-sodium, diabetic-compliant dinners to Mrs. Smith on an ongoing basis. The case manager calls Mrs. Smith twice a week, taking the time to educate her about her medications, her activities, and the disease-specific elements that will keep her healthy and out of the hospital. When the case manager identifies that Mrs. Smith can no longer organize her daily medications, a digital medication dispenser will be provided that will keep her on her medication regimen. The medication dispenser will be preloaded with Mrs. Smith’s medications and will issue a subtle doorbell tone when it is time to take them. With the combination of remote and real-time (telephonic) support persons and technologies, Mrs. Smith can remain in her home and avoid further inpatient admissions.

To complete this assignment:

Read the case study above.

Assume the role as the Public Relations Director for Purple Cross of North Carolina.The CEO directs you to interview the Telehealth Director regarding the use of Telehealth with Mrs. Smith. The CEO directs you to create one thought-provoking question for each of the following topics:

Meeting the health needs of Mrs. Smith

Decision-making process for technology selected for Mrs. Smith

Benefits and risks in using Telehealth technology for Mrs. Smith

Cost and staff involved in using Telehealth technology for Mrs. Smith

Part A) For investment perspective you are analyzing the company which is working under the Fertilizer Sector Engro Fertilizer (EFERT). A long time ago, it was considered as one of the best company by investors due to high dividend payouts though investors are always willing to invest in this company. Two years ago, position of this company’s cashflows become worst which impact the overall profitability on the company and the financial health amid ongoing situation of worst financial board of directors taken decision to cut down the dividends payments to the shareholder and share price also gradually declining in the market. After recent financial results, board of directors showed their positive expectations for revival of the company where new strategies implement to boost the sales and re-gain its market share. You are again want to investment in this company after analyzing the historical dividends payout patterns. Which are mentioned below:

Further, you gathered the information pertaining to sales growth expectations and net margins which are analysis consensus for next 5 years.

Currently company’s sales for the year ended FY 2020 stood at 89.54mn. You will apply the dividend discount model to value the company after calculation of the dividends properly. For calculation of cost of equity you can use the CAPM model (hint: use risk free rate as a 5-years PIB yield and Risk premium upto 7% while beta can be calculated through statistical variance methodology as explained in the class). This calculated cost of equity you can input in your formula to find out the intrinsic value and use sustainable growth rate 5.5% for dividends growth). (at least 250 words write up required)

Part B) This party is linked with part A, use the data from the part A and sensitize the intrinsic value by changes in cost of equity and growth projections so how it will impact on the company’s intrinsic value.

Instructions:

You are required to calculate the intrinsic value of each part and then compared the calculated prices along with logical reason.

SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to evaluate a company's competitive position and to develop strategic planning. SWOT analysis assesses internal and external factors, as well as current and future potential.

Kit Kat is a chocolate-covered wafer bar confection created by Rowntree's of York, United Kingdom, and is now produced globally by Nestlé, which acquired Rowntree in 1988, with the exception of the United States, where it is made under license by H. B. Reese Candy Company, a division of The Hershey Company. The standard bars consist of two or four pieces composed of three layers of wafer, separated and covered by an outer layer of chocolate. Each finger can be snapped from the bar separately. There are many different flavours of Kit Kat, including milk, white, and dark chocolate.

Q: Discuss how a SWOT analysis can help inform strategic marketing decision making for KitKat.

Continual prospecting is primarily important to:

A bonus is a type of incentive given to the sales force that is most likely to result in a potential performance outcome of:

Which of the following is true of sales quotas?

The second step in the prospecting process of customers involves _____.

Corporate Social Responsibility

A company has just become profitable by selling sustainable stationery, computers, and other accessories. The company uses waste resources to make the products. The company’s mission is to make a difference in society. They plan to start a new CSR department and they select you as the CSR head to formulate and implement CSR in the organization.

1. Explain various steps involved in developing and implementing a CSR strategy in the organization.

The answer should be Unique and Customized. The above question carry 20 marks. As per University guidelines, the answer should be a min of 1000 words., Please prepare as per guidelines.

University Bookstore took a physical inventory on December 31. You have pointed out a number of possible problems with the count, as indicated below. Ending inventory per physical count $ 120,000 Reconciling items at year-end. Purchases in transit at December 31 FOB shipping point $ 46,680 FOB destination $ 30,970 Sales shipped and in transit at December 31 FOB shipping point $ 37,850 FOB destination $ 50,160 Consigned goods at December 31 Company is the consignor $ 34,320 Card Company is the consignee $ 62,210 What is the correct ending inventory balance on the company's balance sheet?

2. Vel Corporation had the following information on December 31, 2020:

- Assess = $350,000

- Liabilities = $100,000

- Stockholder's Equity:

Contributed Capital = $200,000

Retained Earnings = ?

On December 31, 2020, Vel Corporation's Retained Earnings is:

Group of answer choices

A) $250,000

B) $50,000

C) $150,000

D) Cannot be determined from the information.

QUESTION ONE

Zambian government officials have in several for advocated for the use of Public Private Partnerships (PPP) to enhance the delivery of public infrastructure projects in the country. This comes from the backdrop that despite the PPP Act 14 being enacted in August 2009, very few projects have been implemented in Zambia through the PPP model.

With the aid of a practical example of a PPP project in Zambia, explain the term Public private partnership (PPP).           

Identify and briefly discuss five(5) models of PPP                                  

Briefly discuss the reasons(objectives) why public institutions enter into PPP agreements                                                                                           

Briefly discuss the challenges encountered in the implementation of PPP       

QUESTION TWO                                                                                                

The University of Lusaka (Unilus) intends to build a new campus on a newly acquired piece of land along the Great East Road. It intends to use the project finance model to realize this project and has therefore set up a special purpose vehicle (SPV) called University of Lusaka(2014) Limited(Unilus 2014).Unilus will hold 60% of the equity of Unilus 2014 while the other 40% will be shared equally between City Works Construction Limited and Top-Hole consulting Limited.

The total cost of this project is $2Million.The shareholders will provide $500,000 while the balance will be raised from the Zambian syndicated loan Markets. The idea to raise funds from via a syndicated loan was made by the consultants who were engaged to the best way of financing the project. The shareholders and project team have limited knowledge on what loan syndication entails.

Required:

Explain what loan syndication is and what the process involves.             

Different banks play different roles in the syndicated process. Discuss the roles banks play in the loan syndication process.                                                        

Explain the forms of compensation typically available to banks who participate in a syndicate.                                                                                              

Lead managers typically invite a number of banks to participate in the syndicate by way of booking the transaction on their balance sheets. However, in practice not all banks take up the invitation to participate. Discuss some of the reasons banks cite for their non-participation in a project finance deal                    

QUESTION THREE

Big-Brain, a Lusaka company is considering a K9, 000,000 investment in a product called ‘ALPHA’ with a life span of four years. The scrap value of the equipment used in the production of ‘ALPHA’ is estimated to be K1, 500,000 at end of year four. The company has estimated production costs to be as follows:

Variable costs are K8 per unit and;

Fixed costs are K270,000 per year

The company expects to produce and sell 250,000 units per year. The estimated selling price for ALPHA is K21 per unit. Included in the fixed costs is depreciated of K15, 000 per year.

The project cost of capital is 10%.

Required:

Find the relevant cash flows for years zero through four                           

Calculate the NPV of the project and advise whether the investment is financially viable.                                                                                      

Calculate the payback period and discounted payback period                  

Calculate the PI and the ARR for the project                                         

Calculate the Internal Rate of Return (IRR) of the project and advise whether the investment is financially viable.                                                       

QUESTION FOUR

In order to determine the ability of a project to meet its debt obligations, it is important to forecast the project cash flows. Explain why it is important to carry out a cash flow analysis in project finance and the five factors that need to be considered when calculating cash flows.                                                                                                                                 

Explain the two terms in relation to project finance Limited recourse and Non- recourse.                                                                                  

Identify three groups of potential risks to project finance and explain how you can hedge against such while managing the project.

QUESTION FIVE                                                                                        

Venture capitalists are businesses that will invest in new start-ups. They will give the new start-up financial backing and advice in return for a share of the company and any potential profits, this could be an effective way to raise project finances for start-up and other project ventures that have limited operating history, little experience and don’t have access to capital market.

List and explain the stages in the funding process.                                                                                                                  

List and explain the different types of capital funding available from Venture capitalists.                                                                                              

The exit strategy is the venture capitalist way of cashing out on its investment in a portfolio company. List and explain three exit strategies for venture capitalist.                                                                                                                                                                                                                                                                                                                         

You are seeking K1.5million from a venture capitalist to finance the launch of your online financial search engine. You and the VC agree that your venture is currently worth K3million, and when the company goes public in an IPO in five years, it is expected to have a market capitalization of K20 million. Given the company’s stage of development, the VC requires a 50 percent return on investment. What fraction of the firm will the VC receive in exchange for its K1.5 million investment in your company?                                                                                                                                                                            

Consider for the following subquestions a university medical services department.

- Consider a university medical services department. Describe what could be the typical information items that are kept within the information system of such a department.

-What details should be included in a typical physical vital records inventory specifically for at least one type of data records at such a medical services department which is needed for business recovery planning.

-Describe the typical functions of a university medical services department with respect to public health issues.