Innovation Inc.'s production budget for January is 35,000 units and includes the following component unit costs: direct materials, $16; direct labor, $20; variable overhead, $12. Budgeted fixed overhead is $70,000 (35,000 units × 1/2hour × $4unit). Actual production in January was 36,000 units. Actual unit component costs incurred during January include direct materials, $16.50; direct labor, $18.90; variable overhead, $13.64. Actual fixed overhead was $67,000. The standard fixed overhead application rate per unit consists of $4 per machine hour and each unit is allowed a standard of 1/2 hour of machine time.

Calculate the fixed overhead budget variance and the fixed overhead volume variance.

Innovation Co.is thinking about marketing a new software product. The initial set-up cost is$5M (and is paid at t=0).At the end of every year for the next 10 years (i.e., at t=1,2,...,10), the productwill generate revenueof$1M.Afterthat,the product will be outdated and will not be offered in the market anymore.However,the company will have to provide customer supportin perpetuity, which will cost $0.1M at the end of everyyear (i.e., at t=1,2,...,∞).The cost of capital is10%and there is annual compounding frequency.

What is the present value of the project’s totalcost? (3 points)

What is the future value of the project’s total revenuewhen it ends (at t=10)? (3 points)W

hat is theModified IRRfor this project?Based on that rule, will you take the project? (4 points)

ch 7

Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $ 4,900,000. The product is expected to generate profits of $ 1,300,000 per year for ten years. The company will have to provide product support expected to cost $ 100,000 per year in perpetuity. Assume all income and expenses occur at the end of each year.

a. What is the NPV of this investment if the cost of capital is 5.77 %​? Should the firm undertake the​ project? Repeat the analysis for discount rates of 1.39 % and 20.33 %​, respectively.

b. How many IRRs does this investment opportunity​ have? ​(Hint​: Consider the two alternative discount rates we used in our analysis in part​ a.)  

c. Can the IRR rule be used to evaluate this​ investment? Explain.

What is the NPV of this investment if the cost of capital is 5.77 %​?

If the cost of capital is 5.77 % the NPV is ​ _________

Subject: Innovation and technology management

Case 1: Use of Technology

Federal Express (FedEx) was founded about 50 years ago. It handles on an average of 3 million package-tracking requests on a daily basis. To remain ahead of its competitors, FedEx strives on customer service by keeping a comprehensive website, FedEx.com. It increases customer service and reduces costs. For example, each request for information which can be retrieved from the website rather than by the call centre help FedEx to save an estimated $1.87. The costs for FedEx have been reduced from more than $1.36 billion per year to $21.6 million per year by customers using the website instead of the call centre calculating each package-tracking request costs Federal Express 3 cents.

Another know-how that improved its customer service is Ship Manager, an application installed on customers’ sites so users can determine shipping charges, weigh packages, and print shipping labels. Customers can also tie their invoices, billing, accounting and inventory systems to the application, Ship Manager.

Nevertheless, Federal Express still spend almost $326 million annually on its call centre to reduce customers’ annoyance when the website is down or when customers have difficulty using it. It uses CRM software called Clarify in its call centres to ensure customer service representatives’ job easier and to speed up response time.

Answer the following questions:

a)     What is the importance of technology to ensure high-quality customer service?

b)    Can you estimate Federal Express’ annual savings from using information technology?

c)     Can you give a few examples of information technologies used by Federal Express?

d)    What is the role of the application ‘Ship Manager’?

e)    Your overall observations and learning from the above case study.

BONUS: Create the detailed outline of this compare/contrast essay (10%)

‘Each small innovation generated changes in his life and in everyone’s. Whether it is a language system or a poem, they make the universe a different place’. let us compare between Nikola Tesla and Thomas Alva Edison. discoverer contributed to the event of the alternating-current (AC) electrical system which is widely used today and to the rotating flux, which is that the basis of most AC machinery while Edison invented the DC which is a smaller amount widely utilized in the current but he has many great inventions just like the electric bulb the phonograph and lots of more.

Edison and tesla worked together before tesla parted ways because of business scientific conflict. While Edison was an influential figure who focused on marketing and financial success, Tesla wasn't business-minded and was somewhat vulnerable because of which tesla suffered plenty to run his company. Edison managed to convince his investors about his inventions but tesla couldn't so he suffered.

In the end, Edison held 1,093 patents and Tesla held but 300 worldwide. Of course, Edison had a bunch of assistants helping him devise inventions and had also bought a number of these patients.

Tesla's inventions are the backbone of contemporary power and communication systems, but he faded into anonymity later within the 20th century. But later his invention caught the attention of an engineer and acquired his patents he saw that it's a future. But Edison had dispelled Tesla's AC system of electrical power transmission, calling it 'impractical', instead of promoting his simpler yet less efficient DC system.

Tesla didn't get the celebrity he deserved besides his inventions was of great practical use. Edison also launched a negative press-campaign in a trial to undermine the interest in AC power. With its repeated success and favorable press, the alternating-current system became the leading facility of the 20th century and it's remained the worldwide standard since.

Tesla suffered a breakdown and eventually returned to the figure as a consultant primarily. But as time passed, his ideas progressively became strange and impractical. He also grew increasingly eccentric and devoted much of his time in caring for wold pigeons in the big apple City's parks. He even drew the FBI's attention for his mouth building a robust "death beam", which had also received some interest from the state during warfare II.

Saudi Arabia steps up oil price war with big production increase
Saudi Arabia has intensified the oil price war by ordering its state-owned producer, Saudi Aramco, to raise the maximum production rate to record highs of 13m barrels a day.
The world’s most profitable company told the Saudi stock exchange on Wednesday that it would increase how much oil it can comfortably pump per day by 1m barrels to its highest rate ever.
The state order to raise Aramco’s “maximum sustainable capacity” comes after the kingdom launched a price war on rival petro-nations by vowing to raise its production by a quarter from last month despite an oil demand slowdown because of the coronavirus outbreak.
The Saudi government plans to raise its national oil production to an average of 12.3m barrels a day from next month, up sharply from less than 10m barrels in recent months, in an attempt to corner the global market.

(source:oilprice.com)
Saudi Arabia, the world’s biggest oil exporter, is understood to be anxious to defend its market dominance against a rising tide of oil production in the US and Russia after talks to agree new limits on global production fell apart over the weekend.
Moscow refused to cooperate with an OPEC plan to curtail oil production in line with a global demand slowdown, which is expected to wipe out forecasts for demand growth in 2020.
In response, the Saudis have offered discount rates to key buyers, in direct competition with Russia, which plans to raise its own production by 300,000 barrels a day.
The collapse of Opec’s talks with major producers outside the cartel, known as Opec+, marks an end to an almost four-year alliance established in the wake of the 2016 oil price crash to shore up market prices by limiting new supply into the market.
Russia’s energy minister, Alexander Novak, has not ruled out further talks with Opec to help stabilise the oil market. But both sides of the price standoff are adamant that they are prepared to weather a prolonged price rout.
Saudi Arabia has some of the lowest production costs in the world, meaning Aramco could withstand low prices far better than other big oil companies. However, the Saudi economy relies more heavily on oil revenues than most countries and reportedly requires prices of about $50-$60 (£38-£46) a barrel to support its state coffers.
In Russia, production costs are higher but its economy is more diverse and arguably more resilient to another oil market downturn.
The oil price war was ignited this week by the steepest price crash since 1991, which drove prices down to four-year lows of about $35 a barrel on Monday and sparked fears of an extended oil market downturn in 2020.
The price shock has wiped billions from the market value of oil companies this week, forcing down the share price of big firms including Shell and BP by about 20%, and raising concern over their dividends.
Analysts at Rystad Energy have warned that oil prices in the $30 territory could spell trouble for oilfield service companies too as big producers cut their spending on new projects. This spending could fall by $100bn in 2020 and a further $150bn next year, Rystad said.
The geopolitical spat has also compounded fears of a global economic slowdown, which accelerated this year after the outbreak of the Covid-19 virus
(Adapted from the Guardian Wed 11 Mar 2020)

Questions
.
1) What has happened to the price of oil since the beginning of January 2020? According to the article which country, Russia or Saudi Arabia, is in a better position to sustain prices at this low level for the longest period of time? Justify your answer.


2) According to the article why has Saudi Arabia decided to increase oil production to record levels at this time?

3) Using demand and supply diagrams examine the most likely causes for the fall in the price of oil since the beginning of January 2020.   
4) What is a cartel and how does it influence the price and output of oil. In your answer you should refer to the type of market structure normally associated with a cartel and the features which help or hinder collusion.

5) Why are some of the members of OPEC and other oil producers increasing production even though the price elasticity of oil is relatively inelastic?

A) What will happen to the inflation and unemployment by connecting the AD-AS model to the Short Run Phillips Curve?

B) Suppose this continues until 2020. Consider what the economy will be like in 2020. Elaborate on what impacts this economic state will have on ability to make interest payments.

conditions for a perfect futures contract hedge. To illustrate the hedge, use an abattoir (consumer) who is required to purchase 20,000 kg of live cattle in December 2020.

Futures contract on live cattle:

Contract size: 10,000 Kg

Contract maturity: Dec. 2020

Ajax had 5,000 shares of 8% PV=100 preferred stock

If the stock is cumulative and the company did not have any money

in 2019 but could pay 95000 in 2020 How much would the common

stockholders get in 2020?

1.95000

2.40000

3.15000

on April 5, 2019 janeen camoct took out an 10.5% loan for $32,000 the loan is due March 9, 2020. use ordinary interest to calculate interest.

what total amount will janeen pay on March 9, 2020? (ignore leap year)