Dessin Company is constructing a building. Construction began on January 1, 2012 and was completed on December 31, 2012. Expenditures were

Company borrowed $1,300,000 on January 1 on a 7-year, 11% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 4-year, $2,800,000 note payable and an 10%, 4-year, $3,400,000 note payable.

1. What were the weighted-average accumulated expenditures for 2012?

2. What is the weighted-average interest rate used for interest capitalization purposes in 2012?

3. What is the avoidable interest for the company in 2012?

4. What is the actual interest for the company in 2012?

5. What is the total amount of the interest capitalized for 2012?

6. What is the total amount of the interest expensed for 2012?

Show your computations!

You are the CEO of a major US equipment manufacturer that sells its industrial construction equipment worldwide. You have seen shrinking profits in the past 5 years due to competition from Chinese equipment manufacturers and your Board of Directors and shareholders are looking to you for profit improvement. You have been approached by the Mexican government to open a factory in Juarez (just across the border from El Paso, Texas) and the Mexican government will subsidize the facility construction if you can create 200 new jobs. Opening this facility in Mexico will mean a reduction of union workers in the US plant, but will save the company $20 million a year in labor costs. On the other hand, the US government is considering a Border Adjustment Tax on parts you produce in Mexico and bring back to the US plant for final assembly. The total costs of this Tax is unknown but it could be up to 40% of the value of items produced in the new Mexican facility.

On top of this, you are looking to expand your global sales presence into third world regions such as Central Africa, South East Asia, Central America and other regions that need construction equipment to expand their infrastructure and improve their local economies. Your Global Sales and Marketing teams have advised that Chinese manufacturers are also targeting these same regions. This same team also advises that the market potential in these regions could expand sales by 50% and profits by 15% over the next 3 years.

Keeping in mind that it is the fiduciary responsibility of all leaders of for-profit corporations to maximize shareholder value, start a thread that begins with your decision to open, or not to open, a facility in Mexico and explain, in detail, your reasoning.

An analyst wanted to predict the time required to complete a construction project using four variables - size of the contract ?1x1 (in $1000 units), number of workdays adversely affected by the weather ?2x2, number of subcontractors involved in the project ?4x4, and a variable ?3x3 that measured the presence ( ?3=1x3=1) or absence ( ?3=0x3=0) of a workers' strike during the construction. Fifteen construction projects were randomly chosen, and each of the four variables as well as the time to completion were measured. The full model shown below uses ?1x1, ?2x2, ?3x3, ?4x4, ?1?3x1x3, ?2?3x2x3, and ?4?3x4x3.

a) Find the estimaing equation for the presence of workers on strike.
?̂ y^ =  -  ?1x1 +  ?2x2 -  ?4x4

b) Find the estimating equation for the absence of workers on strike.
?̂ y^ =  +  ?1x1 -  ?2x2 +  ?4x4

c) Interpret ?2(???)=0.9102R2(adj)=0.9102
% of the variation in   time to completion contract size workdays affected number subcontractors workers strike status  can be explained by   time, contract size, workdays affected, and number subcontractors contract size, workdays affected, number subcontractors, and worker strike status time, workdays affected, number subcontractors, and worker strike status time, contract size, number subcontractors, and worker strike status .

Globex Corporation is a multinational construction company based in Istanbul, Turkey. The company operates primarily in Turkey, Eurasia, and the Middle East regions. The management team is considering two new mutually exclusive projects.

• The first project involves a giant construction project of a bridge that crosses the Bosphorus Strait in Istanbul. The firm would be a subcontractor and would build only part of the motorway that will connect the bridge to a main motorway system on the Asian side of Istanbul.
• The second investment option is a construction project of a sports center in Qatar that will be used for the FIFA World Cup. The project is a high-profile project and the firm can gain a significant reputation if the project is successful.

Each project requires an $80,000,000 initial investment for the investors of the firm and their IRR and payback figures are shown below.

Required:

1. Define working capital and discuss the effects of both projects on the firm’s working capital.
2. Define political risk and discuss the political risk for both projects and how a firm would mitigate this risk.
3. Define mutually exclusive projects. Identify and explain which project you would recommend based on the information presented, assuming both projects have the same level of political risk.
4. What other additional information would be helpful to evaluate these projects? Explain your answer.
5. Define hurdle rate and explain how a firm develops its hurdle rate.

The planned completion date for the bridge project is May, Year 1, and for the sports center, the completion date is December, Year 3. The sports center project also requires $1,000,000 of additional working capital in the short term. The hurdle rate for the company is 10%.

Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the San Jacinto County Courthouse Capital Projects Fund for the year ended June 30, 20X9, given the following information:

1. In June 20X8, a $10,000,000 bond referendum is voted for and approved by the citizens of San Jacinto County for the construction of a new courthouse.

2. On July 1, 20X8, a Capital Projects Fund is established for this project with a transfer of $500,000 from the General Fund.

3. The county commissioners approve another $3,000,000 transfer of General Fund monies previously committed for this project. The transfer order call for $2,000,000 to be sent to the Courthouse Capital Projects Fund to begin construction of the courthouse and $1,000,000 to the Courthouse Debt Service Fund to help satisfy the bond indenture requirements. The finance director completes these transfers on August 1, 20X8.

4. The county signs a contract for $10,000,000 on August 5, 20X8, for construction of the new courthouse.

5. On January 2, 20X9, the county issues the $10,000,000 face value courthouse bonds at 101, net of issue costs of $90,000. Also on this date, the county receives a $2,000,000 bill from the contractor for work completed to date.

6. According to the bond covenants, the county transfers the bond premium (net of bond issuance costs) to the Courthouse Debt Service Fund on January 4, 20X9.

7. On January 31, 20X9, the county pays the contractor's bill from January 2nd, less a 5% retainage.

8. On June 30, 20X9, the county receives $80,000 from the bank for interest on idle cash and a $1,250,000 bill from the contractor for work completed between January 1st and fiscal year end.

Indicate whether the following losses are covered under Section II of the homeowners policy. Assume there are no special endorsements and no deductible. Give reasons for your answers.

1. The named insured’s dog bites a neighbor’s child

2. The named insured's dog eats a neighbor's coat.

3. A neighbor’s child falls off a swing in the named insured’s yard and breaks an arm.

4. The named insured falls on his icy sidewalk and breaks a leg.

5. While driving to the supermarket, the named insured injures another motorist with the automobile.

6. The named insured paints houses for a living. A can of paint accidentally spills onto a customer’s roof and discolors it.

7. The named insured falls asleep while smoking a cigarette in a rented hotel room, and the room is badly damaged by the fire.

2. A travel agent wanted to know whether the price (in dollars) of Marriot, Hyatt, and Sheraton Hotels differed significantly. The following data represents the room rate for each hotel in 6 randomly selected cities.

1. What test is appropriate in this situation?

2. Do you think the price of Marriot, Hyatt, and Sheraton Hotels differed significantly based on the interaction plot below? Use 4 Cs analysis to justify your answer.

3. Determine which pairs differ significantly, if the price differs.

May use MiniTab for statistical analysis

You have been hired by a company that is designing a new slide (Chorrera) for an aquatic amusement park. In the conceptual design, a customer is expected to go down the curved end slide and then move horizontally across the bottom. At the end of the slide, the client grasps the end of a 16.0 m long vertical bar that can rotate around its center. After holding on to the bar, the client falls into a pool. When the bar moves (oscillates) to its maximum distance, the customer can drop it and fall into the water. Your task is to determine the height of the slide such that the maximum horizontal distance that the bar moves is 5.0 m, for a 60 kg person. The bar has five times the mass of a 60 kg person. From the physics book, you can find the moment of inertia of the bar under consideration.