1. Logitech Company had a current share price of $42.70, and the firm had 700,000 shares of stock outstanding. The CEO of the company is considering an investment project that he is confident will result in an NPV of $300,000. However, investors are pessimistic about the project's prospect and believe that the project would results in an NPV of -$140,000 instead. If the CEO decides to go ahead with the project and the negative NPV as expected by investors is realized, what would the new stock price be?

   A.		$42.30
   B.		$43.50
   C.		$43.20
   D.		$42.50
   E.		$42.90

2. Husqvana Corporation is considering an investment project that generates a cash flow of $640,000 next year if the economy is favorable but generates only $260,000 if the economy is unfavorable. The probability of favorable economy is 60% and of unfavorable economy is 40%. The project will last only one year and be closed after that. The cost of investment is $420,000 and Husqvana Corporation plans to finance the project with $120,000 of equity and $300,000 of debt. Assuming the discount rates of both equity and debt are 0%. What is the expected cash flow to Husqvana Corporationâ s creditors if the company invests in the project?

   A.		$384,000
   B.		$300,000
   C.		$284,000
   D.		$0
   E.		$260,000

3. Marcy Company had a current share price of $52.40, and the firm had 1,500,000 shares of stock outstanding. The company is considering an investment project that requires an immediate $12,600,000 investment but will produce a single cash flow of $25,800,000 after 5 years then close. If Marcy invests in the project, what would the new stock price be? Marcy' cost of capital is 12%. (Hint: calculate the project NPV then consider how the project NPV affects stock price)

   A.		$52.51
   B.		$52.74
   C.		$53.07
   D.		$53.42
   E.		$53.76

4. Which one of the following is least likely to encourage managers to act in the best interest of shareholders?

   A.		Shareholder election of the board of directors, who in turn select managers
   B.		Threat of a takeover by another firm
   C.		Linking manager compensation to share value
   D.		Compensating managers with fixed salaries
   E.		Compensating managers with stock options

Whitenall Corporation produces and sells teeth whitening products. The company has created and patented a formula for a new whitener. The CEO wants to make sure the product is priced competitively. The company anticipates that it will sell 400,000 units of the product in the first year with the following estimated costs:

Required:

1. The company believes that it can successfully sell the product for $45 a bottle. The company’s target operating income is 30% of revenue. Calculate the target full cost of producing the 400,000 units. Does the cost estimate meet the company’s requirements?

Group of answer choices

$33 per bottle, No doesn't meet target

$28.75 Yes does meet target

$35 per bottle, Yes does meet target

$15 per bottle, Yes does meet target

2. A component of the direct materials cost requires a very expensive bleaching agent. If the company could eliminate this one ingredient, the materials cost would decrease by 25%. However, this would require design changes of $300,000 to engineer a chemical equivalent of the ingredient. Will this design change allow the product to meet its target cost?

Group of answer choices

$30.50, Yes does meet target

$31.25 per bottle, No does not meet target

$33 per bottle. No does not meet target

$31.25 per bottle, Yes does meet target

3. The CEO does not believe that the formula should be altered for fear it will tarnish the company’s brand. She prefers that the company become more efficient in manufacturing the product. If fixed manufacturing costs can be reduced by $250,000 and variable direct manufacturing labor costs are reduced by $1 per unit, will Whitenall achieve its target cost?

Group of answer choices

$32.38 per bottle, Yes does meet target

$31.38 per bottle, Yes meets target

$33 per bottle, No does not meet target

$32.38 per bottle, No does not meet target

P18.8 Sarah Corp. reported the following differences between SFP carrying amounts and tax bases at December 31, 2019:

The differences between the carrying amounts and tax bases were expected to reverse as follows:

Tax rates enacted at December 31, 2019, were 31% for 2019, 30% for 2020, 29% for 2021, and 28% for 2022 and later years.

During 2020, Sarah Corp. made four quarterly tax instalment payments of $9,500 each and reported income before income tax on its income statement of $119,650. Included in this amount were dividends from taxable Canadian corporations of $5,800 (non-taxable income) and $25,000 of expenses related to the executive team's golf dues (non–tax-deductible expenses). There were no changes to the enacted tax rates during the year.

As expected, book depreciation in 2020 exceeded the capital cost allowance claimed for tax purposes by $17,500, and there were no additions or disposals of property, plant, and equipment during the year. A review of the 2020 activity in the Warranty Liability account in the ledger indicated the following:

All warranties are valid for one year only. The Pension Liability account reported the following activity:

Pension expenses are deductible for tax purposes, but only as they are paid to the trustee, not as they are accrued for financial reporting purposes.

Sarah Corp. reports under IFRS.

Instructions

a. Calculate the Deferred Tax Asset or Deferred Tax Liability account at December 31, 2019, and explain how it should be reported on the December 31, 2019 SFP.

b. Calculate the Deferred Tax Asset or Deferred Tax Liability account at December 31, 2020.

c. Prepare all income tax entries for Sarah Corp. for 2020.

d. Identify the balances of all income tax accounts at December 31, 2020, and show how they will be reported on the comparative statements of financial position at December 31, 2020 and 2019, and on the income statement for the year ended December 31, 2020.

e. How would your responses to parts (a) and (d) change if Sarah Corp. followed the ASPE future/deferred income taxes method?

please use accelerated investment incentive, not half rule

Fajar Factory wants to build a rice processing factory that will take a year to build. $5 million is spent right away and another $5 million is spent next year. The company CEO is expecting that the factory will lose $1 million in its first year of operation and lose another half a million in its second year of operation. with that initial investment, the factory is expected to produce 8000 rice packs per month and sold fo $30 per unit for nest 20 years. meanwhile, the production cost for pack is $20.

Calculate the fajar factory profit for a year ? Show how you calculate TC,TR, PROFIT

C&P Trading Inc. is considering a project, initial investment is $260,000. The company board of directors set the maximum requirements of return of pay back 3 years and has set the cost of capital is 10%, below is the cash flow: CF1= $75,800 , CF2= $78,960 , CF3= $82,278, CF4= $117,612.

1. Would you accept the project based on NPV, IRR?
2. Would you accept the project based on Payback rule if project cut-off period is 3 years?
3. How would you explain to your CEO what NPV means?
4. What are advantages and disadvantages of using only Payback method?

Hoping to make his flight on time, Tom (the CEO of ABC Pty Ltd) signed a stack of paperwork on his desk without reading what he was signing. Unfortunately, one of the documents he signed authorised a high-risk investment which caused shareholders to lose millions of dollars.

Required:

(a) With reference to CA s 180, how does the court decide whether a director acted with care, skill and diligence?

(b) Analyse whether Tom breached his duty of care to the company.

(c) Analyse whether Tom qualifies for a defence under the business judgment rule. You must refer to relevant law

You have recently been hired by a company that wants to “go global” and you have been selected to help research this possibility. The CEO has selected you to research your chosen country and report back. You must prepare a report on your country’s four cultural values and provide examples of how they relate to business transactions.

For your chosen country of France write a three-page paper on the following:

Individual and collective dimension of the country
Equality and hierarchy dimension of the country
Change orientation dimension of the country
Time orientation dimension of the country
Give examples of these dimensions and how they relate to global business transactions

Fruits By the Foot By General Mills.

1) Your CEO has come to you and asked that you develop a NEW approach to pricing for your product for a specific new distribution outlet (he won’t tell you much, but it will reach a new target market: urban, mid to upper-income, multicultural, 20s-30s). What pricing strategy will you utilize and why?

2) How does this new pricing strategy fit with the Marketing Mix, Positioning, and Differentiation strategy for your company? What other creative new pricing methods might your brand consider to appeal to current customers and sell more product?

You work as an HR Manager at Chenoa Automotive. Chenoa Automotive is an automobile parts manufacturer and it employs roughly 1,100 employees of whom 825 work in production facilities and are unionized. The rest of the employees are office workers employed in a variety of clerical, professional, and managerial jobs. Lately, the company is dealing with increased tardiness, absenteeism, and accidents. A preliminary investigation suggests that there might be a “drug problem.” Your CEO wants you to develop and implement a drug testing program. Describe in detail what the program will look like, how you will communicate the program, how you will implement the program, and how you will evaluate the success of the program?

Acquisition Valuation Exercise: Nestle Candy Divestiture

Situation: Nestle has decided to sell its Chocolate Division (Butterfinger, Baby Ruth and Nestle Crunch) to Ferrero, the Italia maker of Nutella. You are the Director of Corporate Development and have been asked to help set the price for the business.

The division has provided you with a projection of their Base Case EBITDA forecast:

     2019: $30M                        2021: $38M         2023: $41M

     2020: $35M                       2022: $40M

You estimate that the synergies to Ferrero, which has candy outside the US, could be as much as $5M per year in revenue synergies and $6M of cost synergies. You also learn from an industry source that Ferrero’s internal cost of capital (discount rate) is 8%

Question: Using the Discounted Cash Flow model, what price would you suggest Nestle sell at, assuming that Ferrero wants to make 10% ROI on the deal? Is that a deal that then creates value for Nestle?

Show your math below. Ignore perpetuity value (value after year 5)

Base Case Value of Nestle Chocolate:

Value of Synergies to Ferrero:

Recommended price of Nestle Chocolate to Ferrero:

ROI to Nestle of Selling Chocolate Division: