Business Law
1) United Express is spending several Million dollars on an advertising campaign about how environmentally responsible the company is. the ads showcase the company's new all electric fleet of delivery vans. The CEO of United Express is negotiating with several airlines for the purchase of used passenger jets that will be converted by carry backage. the problem is that these 20-30 year old aircraft pollute ten times more than newer modern jets. Does United Express have an ethical issue to deal with? briefly explain.

Amazon leased equipment from United Machines on July 1, 2020, in a finance lease. The present value of the lease payments discounted at 10% was $82,000. Ten annual lease payments of $12,000 are due each year beginning July 1, 2020. United Machines had constructed the equipment recently for $66,000. What net effect did the lease have on the income statement of United Machines for the year ending December 31, 2020? Ignore taxes. a. $23,000 b. $0 c. $16,000 d. $19,500 e. $3,500

Read the case below and then answer the questions that follow.

Marvel Studios is an American TV and motion picture studio that is part of Marvel Entertainment, a wholly owned subsidiary of the Walt Disney Company. As a part of the Walt Disney Empire, Marvel Studios operates jointly with Walt Disney Studios on distribution and marketing of Marvel’s films, such as the incredibly successful Iron Man and Avengers movies. Other high-profile projects of Marvel Studios have included the X-Men, Spider-Man, and Captain America franchises. Anything embedded in the global branding of the Walt Disney Company has tremendous potential, reach, and longevity.

Walter Elias “Walt” Disney was an American business mogul as well as animator, cartoonist, director, philanthropist, producer, screenwriter, and voice actor who lived from 1901 to 1966. An international icon, he started Disney Brothers Cartoon Studio with his brother, Roy O. Disney, in 1923. The current name of the Walt Disney Company has been around since 1986. Disney has one of the largest and most well-known studios in the world. It also operates numerous related businesses, such as the ABC broadcast TV network, cable TV networks (e.g., Disney Channel, ESPN), publishing, merchandising, theater divisions, theme parks (e.g., Disney World, Disneyland), and much more. Mickey Mouse is the primary symbol of the Walt Disney Company, and one of the most globally recognized brands ever!

Global branding is a staple at Walt Disney, and this branding prowess carries well to the Marvel Studios projects. In a global branding move, the post-credits to the original Iron Man movie had S.H.I.E.L.D. director Nick Fury visit Tony Stark’s home. Fury told Stark that Iron Man is not “the only superhero in the world,” and says that he wants to discuss the “Avenger’s Initiative.”

The Avengers and Iron Man movie franchises have made billions of dollars for Marvel Studios. They have also contributed heavily to making Robert Downey Jr. one of the highest paid actors in Hollywood. Robert Downey Jr. was born in 1965 in the United States. He made his movie debut at the age of five when he appeared in his father’s movie titled Pound. The “up-and-down-and-up” career of Downey is also a fascinating global brand story. He is riding high with three incredible multisequel franchises—Iron Man, The Avengers, and Sherlock Holmes. He has also portrayed Tony Stark—his Iron Man and The Avengers character—in several other related Marvel Studios projects (e.g., The Incredible Hulk, Captain America: Civil War, Spider-Man: Homecoming) and coming sequels.

Iron Man premiered April 30, 2008, in international markets and a few days later in the United States. Amazingly, the movie had been in development since 1990 at Universal Pictures, 20th Century Fox, and New Line Cinema. Marvel Studios reacquired the rights to the movie in 2006. The basic plot has playboy, philanthropist, and genius Tony Stark (played by Downey) as the “superhero.” Iron Man is a fictional character that first appeared in the Marvel Comics, Tales of Suspense, in 1963. The character itself was created by Stan Lee. Iron Man 2 was released in 2010 and Iron Man 3 was released in 2013, with plans for additional sequels after more Avengers movies.

The Avengers premiered on April 11, 2012, at the El Capitan Theatre in Hollywood. The film’s development began in 2005, is based on the Marvel Comics superhero team with the same name, and was written and directed by Joss Whedon. The Avengers is a superhero team with familiar heroes such as Iron Man, Captain America, Hulk, Thor, Black Widow, Hawkeye, and so on. No one really plays the superhero, although Scarlett Johansson’s role as Black Widow was important to the movie franchise; it set the release date back from 2011 to 2012 to accommodate her inclusion. The second movie in the Avengers franchise came out on May 1, 2015, in the United States (The Avengers: Age of Ultron) and the third movie (Avengers: Infinity War) came out in 2018, with the next additional installment scheduled for 2019.

While the movie character Iron Man is heavily connected to Downey, he also plays an integral part of Tony Stark in The Avengers. In doing so, the actor has been part of Marvel Studios productions that have brought in more than $1.5 billion (The Avengers) and $1.2 billion (Iron Man 3). Iron Man 1 and Iron Man 2, respectively, made more than $600 million each as well. In total, Downey has starred in six films that have made more than $500 million each at the box office worldwide and numerous other successful movies as a part of the Marvel Studios lineup.

The connection between Tony Stark as Iron Man in the Iron Man franchise and in the Avengers franchise is perhaps not needed for the movie plot in The Avengers or its sequels. Marvel Comics has drawn from more than 100 characters for its Avengers superheroes since 1963, but Iron Man was one of the original ones (along with Ant-Man, the Wasp, Thor, and the Hulk). The global branding success of Tony Stark, as played by Robert Downey Jr., across these two brands is also very advantageous for Marvel Studios’ global branding.

Iron Man and Avengers movies represent which part of the marketing mix?

Multiple Choice

• place

• product

• production

• promotion

• price

Disney’s Mickey Mouse is one of the most globally recognized brands ever. Which of the following statements does not depict Mickey Mouse and Walt Disney Company?

Multiple Choice

• Theodore Levitt would likely suggest that the success of Mickey Mouse is a result of the globalization of markets.

• The homogenization and standardization of needs and wants among younger people facilitates the success of Mickey Mouse as a global brand.

• Pressures for local responsiveness require the Mickey Mouse character to be adapted to local markets.

• Mickey Mouse represents the convergence of certain tastes and preferences among consumers in the more advanced countries of the world.

• Mickey Mouse transcends cultural differences between countries.

The Walt Disney empire includes its motion picture studios, theme parks, cable TV networks, publishing, and merchandising. We can thus conclude that Walt Disney uses a __________ communications strategy.

Multiple Choice

• push

• brand

• source effect

• intermarket

• pull

Marvel Studios’ Iron Man premiered in international markets in 2008. Any rebates or coupons encouraging people to go to see the movie are considered to be part of Disney’s ______________ strategy.

Multiple Choice

• distribution

• mass media

• communications

• pricing

• product branding

Let x represent the average annual salary of college and university professors (in thousands of dollars) in the United States. For all colleges and universities in the United States, the population variance of x is approximately σ² = 47.1. However, a random sample of 18 colleges and universities in Kansas showed that x has a sample variance s² = 80.5. Use a 5% level of significance to test the claim that the variance for colleges and universities in Kansas is greater than 47.1. Find a 95% confidence interval for the population variance.

(a) What is the level of significance?


State the null and alternate hypotheses.

H_o: σ² = 47.1; H₁: σ² < 47.1

H_o: σ² = 47.1; H₁: σ² ≠ 47.1    

H_o: σ² = 47.1; H₁: σ² > 47.1

H_o: σ² < 47.1; H₁: σ² = 47.1

(b) Find the value of the chi-square statistic for the sample. (Round your answer to two decimal places.)
_______________

What are the degrees of freedom?
____________

What assumptions are you making about the original distribution?

We assume a normal population distribution.We assume a uniform population distribution.    

We assume a binomial population distribution.We assume a exponential population distribution.

(c) Find or estimate the P-value of the sample test statistic.

P-value > 0.100

0.050 < P-value < 0.100    

0.025 < P-value < 0.050

0.010 < P-value < 0.025

0.005 < P-value < 0.010

P-value < 0.005

(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis?

Since the P-value > α, we fail to reject the null hypothesis.

Since the P-value > α, we reject the null hypothesis.    

Since the P-value ≤ α, we reject the null hypothesis.

Since the P-value ≤ α, we fail to reject the null hypothesis.

(e) Interpret your conclusion in the context of the application.

At the 5% level of significance, there is insufficient evidence to conclude the variance of annual salaries is greater in Kansas.

At the 5% level of significance, there is sufficient evidence to conclude the variance of annual salaries is greater in Kansas.    

(f) Find the requested confidence interval for the population variance. (Round your answers to two decimal places.)

Interpret the results in the context of the application.

We are 95% confident that σ² lies above this interval.

We are 95% confident that σ² lies within this interval.   

We are 95% confident that σ² lies outside this interval.

We are 95% confident that σ² lies below this interval.

Indicate if the hypothesis test is for

a.  independent group means, population standard deviations, and/or variances known

b. independent group means, population standard deviations, and/or variances unknown

c. matched or paired samples

d. single mean

e. two proportions

f. single proportion

1. It is believed that 70% of males pass their drivers test in the first attempt, while 65% of females pass the test in the first attempt. Of interest is whether the proportions are in fact equal.

2. A new laundry detergent is tested on consumers. Of interest is the proportion of consumers who prefer the new brand over the leading competitor. A study is done to test this.

3. A new windshield treatment claims to repel water more effectively. Ten windshields are tested by simulating rain without the new treatment. The same windshields are then treated, and the experiment is run again. A hypothesis test is conducted.

4. The known standard deviation in salary for all mid-level professionals in the financial industry is $11,000. Company A and Company B are in the financial industry. Suppose samples are taken of mid-level professionals from Company A and from Company B. The sample mean salary for mid-level professionals in Company A is $80,000. The sample mean salary for mid-level professionals in Company B is $96,000. Company A and Company B management want to know if their mid-level professionals are paid differently, on average.

5. The average worker in Germany gets eight weeks of paid vacation

6. According to a television commercial, 80% of dentists agree that Ultrafresh toothpaste is the best on the market.

7. It is believed that the average grade on an English essay in a particular school system for females is higher than for males. A random sample of 31 females had a mean score of 82 with a standard deviation of three, and a random sample of 25 males had a mean score of 76 with a standard deviation of four.

8. The league mean batting average is 0.280 with a known standard deviation of 0.06. The Rattlers and the Vikings belong to the league. The mean batting average for a sample of eight Rattlers is 0.210, and the mean batting average for a sample of eight Vikings is 0.260. There are 24 players on the Rattlers and 19 players on the Vikings. Are the batting averages of the Rattlers and Vikings statistically different?

9. In a random sample of 100 forests in the United States, 56 were coniferous or contained conifers. In a random sample of 80 forests in Mexico, 40 were coniferous or contained conifers. Is the proportion of conifers in the United States statistically more than the proportion of conifers in Mexico?

10. A new medicine is said to help improve sleep. Eight subjects are picked at random and given the medicine. The means hours slept for each person were recorded before starting the medication and after.

A corpus is a technical term for a collection of texts used to analyze a language and verify its linguistic properties. The first modern, computer-readable corpus was the Brown Corpus of Standard American English, compiled by Henry Kucera and W. Nelson Francis of Brown University. The Brown Corpus draws from American English texts printed in 1961 and was for many years a widely cited resource in computational linguistics.

The five most frequently occurring words in the Brown Corpus are the, of, and, to, and a. Consider a data set consisting of all occurrences of these words in the Corpus. The values of the variable named Word are and, to, of, the, and a, so Word is a nominal variable with five categories.

Frequency and relative frequency distributions are constructed to summarize the data. They are shown in the table that follows

A census is an enumeration of a population. The U.S. Census Bureau conducts a census every 10 years, but in addition, the Population Estimates Program of the bureau publishes population estimates for incorporated places every year. According to 2007 estimates, the five largest U.S. cities (by population) are New York City, Los Angeles, Chicago, Houston, and Phoenix.

Consider a data set consisting of all the residents of these five cities. The values of the variable named City are Phoenix, Chicago, Houston, Los Angeles, and New York City, so City is a nominal variable with five categories. Frequency and relative frequency distributions are provided in the table below.

In 1935, Harvard linguist George Zipf pointed out that the frequency of the kth most frequent word in a language is roughly proportional to 1/k. This implies that the second most frequent word in a language has a frequency one-half that of the most frequent word, the third most frequent word has a frequency one-third that of the most frequent word, and so on. A distribution that follows this rule is said to obey Zipf’s Law.

Zipf’s Law has been observed not only in word distributions, but in other phenomena as well, such as the populations of cities. Answer the questions/ blank below in percentages

The frequency of the second most frequent word in the Brown Corpus is ----------- that of the most frequent word. The population of the second largest city in the United States is-------- that of the largest city.

The frequency of the fourth most frequent word in the Brown Corpus is-------------- that of the most frequent word. The population of the fourth largest city in the United States is --------- that of the largest city.

Pick any 2 questions and answer it ( answer should be half page long per question):

11. What is your opinion on price ceilings in the market for gasoline? Price ceilings were last imposed in the 1970s: To help ration gasoline, drivers were allowed to buy gasoline only on certain days. If the car had an even numbered license plate, the driver could buy on even numbered days and vice versa for cars with odd numbered license plates. (On the 31st of a month, anyone could buy gasoline.) But gas stations sold gasoline for only a limited number of hours per day and it typically took 60 minutes to get gasoline. The station would indicate it was selling gasoline by hoisting a green flag; when it stopped selling that day, the station showed a red flag.

12. Healthy economy caused a positive relationship between wages and employment. Explain.

13. Widely scapegoated by the general public and our elected officials as the greedy profiteers responsible for the recent economic collapse, high-income corporate executives have been made potential targets for federally mandated compensation limits. Do you believe that companies should be allowed to determine how much to pay their workers, or if the federal government should get to decide?

14. Why cigarettes and gasoline are taxed so heavily? Should the government place a tax on fast food or junk food? Why might prescription drugs, fruits, and vegetables often be exempt from sales tax?

15. The level of income over which people pay no tax has been rising over the last decade, so nowadays many people’s incomes fall below the level at which the income tax is imposed. In fact, after deductions, exemptions, and credits about 47 percent of all tax filers in the U.S. actually pay zero (or even negative) income taxes, whereas the top 1 percent of taxpayers pay about 40 percent of all the income taxes and the top 10 percent pay about 70 percent. Do you think this trend is fair or unfair? What do you predict will happen if the trend continues?

16. During 2007, as oil and gas prices continued to increase, a growing number of Americans called for the United States to become less reliant on Middle-Eastern oil. Would it make sense for the United States to try to become totally self-reliant in the production of oil? Why or why not?

17. Because wage rates are so low in Africa, why don't Microsoft, Cisco and other major corporations close down their American operations and move to Africa?

ROSETTA STONE INC.: CHANGING THE WAY PEOPLE LEARN LANGUAGES

Rosetta Stone Inc. is a leading provider of technology-based language learning solutions. Acclaimed for the speed, power and effectiveness of its Dynamic Immersion® method, Rosetta Stone has revolutionized language learning.

Rosetta Stone Inc. is changing the way the world learns languages. Rosetta Stone provides interactive solutions that are acclaimed for the lower speed and power to unlock the natural language-learning ability in everyone. Available in more than 30 languages, Rosetta Stone language learning solutions are used by schools, organizations, and millions of individuals in over 150 countries throughout the world.

            Rosetta Stone’s mission was to change the way people learn languages. The company blended language learning with technology at a time when globalization connected more and more individuals and institutions to each other.

The potential for profit in the language learning industry encouraged management to become more proactive and aggressive about Rosetta Stone’s growth. In 2007, an industry analysis commissioned from The Nielsen Company, a market research firm, found that the language learning industry produced over $83 billion in consumer spending. Of this amount, $32 billion, or 39 percent of the total, was spent on self-study options. In the United States, the industry generated $5 billion in consumer spending in 2007, of which $2 billion was for self-study. Over 90 percent of the $83 billion was spent outside the United States.

The company’s debut on the New York Stock Exchange brought capital and resources that placed Rosetta Stone in an exciting and promising position. Tom Adams, President and Chief Executive Officer, said “We are excited about hardware trends and the potential of educational technology in general. We are working in new ways with online socialization. We see our primary opportunity as growing through our own innovation… With added financial resources we can entertain mergers and acquisitions down the line.” To effectively compete, Rosetta Stone will have to push product and service development as well as attract and retain talented personnel.

Case Study Questions (25 marks each):

1. How should the company move forward in order to sustain its momentum? Discuss.

2. How can Rosetta Stone grow internationally? Elaborate.

3. Under which strategic type, can Rosetta Stone Inc. fall? Elaborate.

4. Choose any two variables from the societal environment and discuss whether they can be considered as opportunities or threats for Rosetta Stone Inc.

You are a senior financial analyst with IBM in their capital budgeting division. IBM is considering expanding in Australia due to its positive business atmosphere and cultural similarities to the U.S.

The new facility would require an initial investment in fixed assets of $5 billion Australian and an additional capital investment of 3% would be required each year in years 1–4. All capital investments would be depreciated straight-line over the five years that the facility operates. First-year revenues from the facility are expected to be $6 billion Australian and grow at 10% per year. Cost of goods sold would be 40% of revenue; the other operating expenses would amount to 12% of revenue. Net working capital requirements would be 11% of sales and would be required the year prior to the actual revenues. All net working capital would be recovered at the end of the fifth year. Assume that the tax rates are the same in the two countries, that the two markets are internationally integrated, and that the cash flow uncertainty of the project is uncorrelated with changes in the exchange rate. Your team manager wants you to determine the NPV of the project in U.S. dollars using a cost of capital of 12%.

1. Obtain exchange rates and comparable interest rates for Australia at Bloomberg’s Web site (www.bloomberg.com).
   1. Click “Currencies” from the quick menu. Copy the “AUD-USD” exchange rate (the U.S. dollars per Australian dollar) from the table and paste it into the same spreadsheet as the IBM Income Statement.
   2. Go to www.investing.com, click “Markets,” then “Bonds,” then click “World Government Bonds,” and select Australia from the drop down menu under “Find Government Bonds” to get the interest rates for Australia. Copy and paste the data into Excel.
   3. Now select “United States” from the drop down menu under “Find Government Bonds” to get the interest rates for the United States. Copy and paste the data into Excel.
2. You may have noticed that the four-year rate is not available at www.investing.com for the U.S. Treasury. To find an estimate of the four-year yield, calculate the average of the three- and five-year yields.
3. In your Excel spreadsheet, create a new worksheet with a timeline for the project expected cash flows.
   1. Use 20% as IBM’s effective tax rate.
   2. Determine the expected free cash flows of the project.
4. Note that the free cash flows you calculated in Question 4 are in Australian dollars. Use Eq. 30.3 to determine the forward exchange rates for each of the five years of the project. Then, use the forward rates to convert the cash flows to U.S. dollars.
5. Compute the NPV of the project in U.S. dollars using the 12% required return given by your team manager.