Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using income from operations as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31:

The company operates three service departments: Shareholder Relations, Customer Support, and Legal. The Shareholder Relations Department conducts a variety of services for shareholders of the company. The Customer Support Department is the company’s point of contact for new service, complaints, and requests for repair. The department believes that the number of customer contacts is an activity base for this work. The Legal Department provides legal services for division management. The department believes that the number of hours billed is an activity base for this work. The following additional information has been gathered:

Question 1: You are borrowing USD 1000 for one year, at a coupon rate of 7.7%. You will get the money today, and will repay all principal and interest one year from today. If the current CAD per USD spot rate is 0.95, the CAD inflation rate is 3%, and the USD inflation rate is 1.6%, what is the CAD cost of debt for this loan?

Question 2: The current MXN/CHF spot exchange rate is 26.5. The MXN inflation rate is 6.9%, and the CHF inflation rate is 0.7%. If you are a Mexican firm with a MXN cost of capital for foreign projects of 9%, what is the PV (in MXN) of a payment of 2M CHF 4 years from today?

Question 3: You are the CEO of an American company considering investing in Brazil. Your BRL cost of capital is 19.4%, and your USD cost of capital is 11.8%. The project you are considering will cost 20M BRL to set up, and will produce free cash flows of 2.9M BRL per year in perpetuity, starting one year from today. Brazil and the US have the same inflation rate, and the current spot exchange rate is USD 0.17 per BRL. What is the NPV of this project (in the appropriate currency) from the project viewpoint?

Question 4: You are the CEO of an American company considering investing in Brazil. Your BRL cost of capital is 16.9%, and your USD cost of capital is 15.9%. The project you are considering will cost 21M BRL to set up, and will produce free cash flows of 2.7M BRL per year in perpetuity, starting one year from today. Brazil and the US have the same inflation rate, and the current spot exchange rate is USD 0.24 per BRL. What is the NPV of this project (in the appropriate currency) from the parent viewpoint?

ructions

Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using income from operations as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31:

The company operates three service departments: Shareholder Relations, Customer Support, and Legal. The Shareholder Relations Department conducts a variety of services for shareholders of the company. The Customer Support Department is the company’s point of contact for new service, complaints, and requests for repair. The department believes that the number of customer contacts is an activity base for this work. The Legal Department provides legal services for division management. The department believes that the number of hours billed is an activity base for this work. The following additional information has been gathered:

Context: Muskogee County Choppers, till recently was a small ‘custom’ motorcycle/chopper production unit, designing and manufacturing custom motorcycles and trikes for a small regional market, mainly Oklahoma and Arkansas. The firm has seen an infusion of capital from a group of rich ‘angel investors’ who had a love for motorcycling. The firm is ‘small’ and even after innovation, capital infusion and growth will in no way match the major players like Harley, Honda, Kawasaki etc. Further, ‘trikes’ unlike motorcycles may be considered a ‘niche’ rather than mass market product.

With this infusion of capital, MCC is now a LLC (Limited Liability Company) and plans to make a foray into major markets, at least catering to Kansas, Missouri, Arkansas , Oklahoma, and New Mexico, starting with a ‘trike’ to compete with the Polaris Spyder or CANAM-Ryker. The MCC Trike is similar, with two front wheels and one rear wheel. It is 500cc, in contrast with other trikes that are normally with higher capacity engines (900 cc +). The Canam Ryker and Polaris Spyder are also like the MCC trike, in that they have two front and one rear wheel, unlike Harley trikes etc that have one front wheel and two rear wheels.

MCC is a new company and even with an infusion of capital from angel investors cannot compete with the financial strength of companies like Harley and Honda.

Assignment (in two Parts 1 and 2):

Write a short note to the CEO of the firm as an internal senior executive outlining:

Part 1: A short note on the actual direction that the firm should take, that is, 'your personal summary thoughts and opinions on strategy', both (a) Marketing and (b) Integrated Marketing Communications (Promotion). When you write your note, use a format that you consider appropriate for being read by a busy CEO.

Your Task

You will engage in a negotiation for the sale and purchase of a commercial asset such as a business or a piece of real estate.

Assessment Description

You may be nominated to represent the vendor and will receive email instructions from the vendor company CEO including:

1. Appointment to represent the company as their agent for the sale of the commercial asset;

2. Specific details about the commercial asset;

3. Information about the status of current negotiations with an alternative potential purchaser;

4. Information about a new potential purchaser;

5. Contact details of the agent appointed to represent the purchaser.

Alternatively, you may be nominated to represent the purchaser and will receive email instructions from the purchaser company CEO including:

1. Appointment to represent the company as their agent for the purchase of the commercial asset;

2. Specific details about the commercial asset;

3. Information about alternative assets the company is considering purchasing instead;

4. Information about the vendor;

5. Contact details of the agent appointed to represent the vendor.

Stage 1: Pre-negotiation (1,000 words)

You must answer the following questions:

1. What is your thinking style preference form – monarchic, hierarchic, oligarchic, anarchic – and what is your thinking style scope – internal, external? Attach copies of completed Sternberg-Wagner Thinking Style Inventories.

2. Are your thinking style preferences – form and scope – optimal for conducting this negotiation? Explain your answer.

3. What adjustments (if any) could you make to adapt to a more optimal thinking style for this negotiation?

Stage 2: Negotiation (300 words) You must:

1. Enter negotiations with your counterpart for the sale and purchase of the commercial asset;

2. Maintain a communications log that captures the date, method, items discussed, and outcomes of each communication. Attach copies of any communications that confirm agreed price

Stage 3: Post negotiation (400 words)

You must prepare a 1 page letter to your client advising the outcome of the negotiation.

4. What is your client’s BATNA? What is your client’s reservation value?

5. What is the other party’s BATNA? What is the other party’s reservation value?

6. What is the ZOPA range? What is your strategy for claiming the greater proportion of the ZOPA? Include at least fifteen academic references in your answers to the above questions with a minimum of five references coming from academic journals.

The table below lists infant mortality in Maryland in 2007 and the estimated racial breakdown of the U.S. population according to the 2000 census. Calculations should be done by hand, but feel free to use software or Excel to check your work. The total U.S. population is 281,421,906.

1. (1) If possible, calculate the crude infant mortality rate for Maryland (all races).
2. (2) Calculate the race-adjusted infant mortality rate for 2007 Maryland using the U.S. population in 2000 as the standardizing population.
3. (1) The U.S. population is 281,421,906. Is that needed to solve this problem?

The Germans are highly satisfied with their health care system. It offers high quality health care and most are able to access necessary care without impediments. Yet, we spend roughly 80% more per capita on health care in the U.S. than Germany does and we have 30% more preventable deaths per 100,000 than in Germany.

Describe three things that are similar between the U.S. health care system and the German system. Describe three things that are different between the U.S. health care system and the German system. If your objective were to make the U.S. system more like the German system, what reforms would you propose for the U.S. health care system?

. Evaluate the effect of the following situations on the AD curve, AS curve, equilibrium price level, and equilibrium output in the U.S.

                (a) The U.S. imposes tariffs on foreign goods to promote domestic industry. In retaliation, foreign countries impose tariffs on U.S. goods.

                (b) Congress decides to decrease personal income taxes, and to compensate for the lost revenue they decrease business subsidies.

                (c) A technology boom improves technology across industries, improving their productivity.

(d) U.S. oil companies discover new large oil reserves in the U.S. The international price of oil falls.

   (e) Consumers expect a recession

(For supply and demand use shift left, right, or NC for No Change)                 

             Supply                        Demand                        

example:   right                          NC                                                                    

1.   _______                    _____________

2.    _______                    _____________   

3.    _______                    _____________

4.    _______                    _____________

5. _______    _____________

1. The following questions concern the supply and demand for Japanese yen. The exchange rate is denoted as E$/Yen. For each question state whether the supply of yen, demand for yen or both curves will shift, and in which direction.

a. Record Japanese audiences see the American film, Captain Marvel.

b. U.S. tax cuts increase U.S. GDP

c. The Japanese central bank lowers interest rates

d. Toyota introduces a new electric car that sells well in the U.S.

e. The U.S. raises tariffs on imports of Japanese steel

f. Large numbers of Japanese baseball fans visit the U.S. to watch Shohei Ohtani, a Japanese baseball player for the California Angels.

On January 1, 2021, Cullumber Company, a public company, purchased 30% of the common shares of Triple Titanium Inc. for $500,000. The remaining shares (70%) are held by the family members of the company’s founder. Cullumber considers this a strategic investment and a critical step into developing consumer markets. Triple Titanium is currently a supplier to Cullumber. Cullumber placed two members on the 10-person board of directors of Triple Titanium and the two members believe they have been influential on the board through the year. Cullumber and Triple Titanium both have December 31 year ends.

During 2021, Triple Titanium reported profit of $230,000 and paid total dividends of $85,000.

1)

Prepare the following journal entries for Cullumber, assuming significant influence does exist. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

2)

During 2022, Triple Titanium reports profit of $220,000 and pays total dividends of $70,000.

Prepare the required journal entries related to these transactions on Cullumber’s books. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

3)

Determine the balance in the investment account on December 31, 2021, and December 31, 2022.

4) Show how the investment account and related revenue accounts would be reported on the financial statements for December 31, 2021.