Hanjuan Jin, a citizen of China, worked as a software engineer for Motorola for many years in a division that created proprietary standards for cellular communications. Contrary to Motorola’s policies, Jin also secretly began working as a consultant for Lemko Corp., as well as with Sun Kaisens, a Chinese software company, and with the Chinese military. She started corresponding with Sun Kaisens’s management about a possible full-time job in China. Jin took several medical leaves of absence from Motorola to return to Beijing and work with Sun Kaisens and the military. After one of these medical leaves, Jin returned to Motorola. Over a period of several days, Jin accessed and downloaded thousands of documents on her personal laptop and on pen drives. When, later, she attempted to board a flight to China from Chicago, she was randomly searched by U.S. Customs and Border Protection officials at the airport. U.S. officials discovered the downloaded Motorola documents. Are there any circumstances under which Jin could avoid being prosecuted for theft of trade secrets? If so, what are these circumstances? Discuss fully.
In: Operations Management
There was always a strong suspicion that the Volkswagen emissions-cheating scandal went all the way to the top. Now it’s clear that the US Department of Justice believes that to be true.
“The indictment unsealed today alleges that Volkswagen’s scheme to cheat its legal requirements went all the way to the top of the company,” U.S. Attorney General Jeff Sessions said.
The indictment alleges that Mr. Winterkorn was informed by employees of the company’s intentions to defraud U.S. regulators by cheating on diesel emissions tests in May 2014 and July 2015, but agreed with other senior VW executives to continue the efforts.
Mr. Winterkorn faces up to five years in prison and a $250,000 fine for the conspiracy count and up to 20 years jail time and a $25,000 fine for each of the three counts of wire fraud, according to the government.
Q1. Discuss why ethics are much important in this case.
Q2. Explain the ethics to be followed in marketing after Volkswagen scandal case.
Q3. Describe in detail the modern ethical models for decision making to solve Volkswagen issue.
Q4. Apply the characteristics that make a business decision ethical.
In: Operations Management
It is December 2018. You are analyzing YKNOT Inc., a company headquartered in Waukesha, WI, which is manufacturing sailing ropes. You look at managerial projections of earnings, and in 2019, the company is expected to produce EBITDA of $18M. In the same projections for 2019, you discover that the depreciation and amortization expenses of $2M are expected. And in the same projections, the company expects to invest $2.3M in property, plant, and equipment in that year. Additionally, the company expects to invest an additional $300,000 into Net Working Capital in that year. They do not expect to sell any equipment currently in place. The owners ask you to value the firm and the firm’s equity. You decide to use Discounted Cash Flow methodology to do that. To provide a better estimate, you decide to use both WACC and APV methods. Clearly, you need some additional information for that. You ask managers about their debt policy. They tell you that the company currently has about $30M of bank loans, on which the company pays an average interest rate of 5% per year. But managers also tell you that they try to maintain the proportion of debt financing at 20% of total capital, which is an industry’s average. Managers say that 2019 is expected to be very representative of the future. In the future, they expect the firm’s free cash flow to grow at 3% per year forever. You perform some research and discover that the asset beta of firms in the YKNOW’s industry is 1.5. As a finance professional, you know that the current rate on U.S. Treasury 10-year bonds is 2.9% per year, considered risk-free, the prevailing market risk premium is 5%, and the marginal Federal tax rate on U.S. corporations is 21%.
. Please calculate the weighted average cost of capital (WACC) of the firm. ______________________________________ b. Using WACC, calculate firm value using discounted cash flow approach. ______________________________________ c. Using firm value obtained in b, calculate the value of the firm’s equity.Calculate firm value using adjusted present value (APV) approach assuming 30M debt is held forever. ______________________________________ e. Using firm value obtained in d, calculate the value of the firm’s equity.
In: Finance
It is December 2018. You are analyzing YKNOT Inc., a company headquartered in Waukesha, WI, which is manufacturing sailing ropes. You look at managerial projections of earnings, and in 2019, the company is expected to produce EBITDA of $18M. In the same projections for 2019, you discover that the depreciation and amortization expenses of $2M are expected. And in the same projections, the company expects to invest $2.3M in property, plant, and equipment in that year. Additionally, the company expects to invest an additional $300,000 into Net Working Capital in that year. They do not expect to sell any equipment currently in place.
The owners ask you to value the firm and the firm’s equity. You decide to use Discounted Cash Flow methodology to do that. To provide a better estimate, you decide to use both WACC and APV methods. Clearly, you need some additional information for that.
You ask managers about their debt policy. They tell you that the company currently has about $30M of bank loans, on which the company pays an average interest rate of 5% per year. But managers also tell you that they try to maintain the proportion of debt financing at 20% of total capital, which is an industry’s average. Managers say that 2019 is expected to be very representative of the future. In the future, they expect the firm’s free cash flow to grow at 3% per year forever.
You perform some research and discover that the asset beta of firms in the YKNOW’s industry is 1.5. As a finance professional, you know that the current rate on U.S. Treasury 10-year bonds is 2.9% per year, considered risk-free, the prevailing market risk premium is 5%, and the marginal Federal tax rate on U.S. corporations is 21%.
a.) Please calculate the weighted average cost of capital (WACC) of the firm.
b.) Using WACC, calculate firm value using discounted cash flow approach.
c.) Using firm value obtained in b, calculate the value of the firm’s equity.
d.) Calculate firm value using adjusted present value (APV) approach assuming 30M debt is held forever
e.) Using firm value obtained in d, calculate the value of the firm’s equity.
In: Finance
Please, I need the following indicators for Mexico 2020 and Peru 2020, if you can provide numbers from a trustworthy website.
· Flexibility of Exchange rate: fixed or flexible?
· Size of Current Account Deficit: large or small?
· Size of Budget Deficit: large or small?
· Amount of Foreign Reserves: small or large?
· Amount of Foreign Debt: large or small?
Political Risk: high or low?
In: Economics
Select Corporation was incorporated on January 2, 2020. The following information pertains to Select Corporation’s 2020 common stock transactions. Net income: $330,000. Convertible Preferred stock, 5%, cumulative, 5,000 shares, $10 par value per share. Preferred dividends declared in 2020: $0
Jan. 2 Number of shares authorized . . . . . . . . . . . . . . . . . . . . . 250,000
Jan. 2 Number of shares issued . . . . . . . . . . . . . . . . . . . . . . . . 85,000
Jul. 1 Number of shares reacquired but not canceled . . . . . . . 5,000
Sept. 1 Two‑for‑one stock split
Dec. 1 Reissued shares of treasury stock . . . . . . . . . . . . . . . . . 5,000
| A. |
Weighted Avg Shares outstanding are 165,000 and Basic Earnings Per Share is $2.00/share |
|
| B. |
Weighted Avg Shares outstanding are 165,417 and Basic Earnings Per Share is $2.10/share |
|
| C. |
Weighted Avg Shares outstanding are 165,417 and Basic Earnings Per Share is $1.98/share |
|
| D. |
Weighted Avg Shares outstanding are 165,000 and Basic Earnings Per Share is $1.90/share |
In: Accounting
XYZ Co. began operations on January 1, 2020. Financial statements for 2020 and 2021 contained the following errors:
Dec. 31, 2020 Dec. 31, 2021
Ending inventory $198,000 overstated $219,000 understated
Depreciation expense 126,000 overstated —
No corrections have been made for any of the errors. Ignore income tax considerations.
The total effect of the errors on the balance of XYZ’s retained earnings at December 31, 2021 is overstated or understated by _______
In: Accounting
Orange Co. began operations on January 1, 2020. Financial statements for 2020 and 2021 contained the following errors:
Dec. 31, 2020 Dec. 31, 2021
Ending inventory $198,000 overstated $219,000 understated
Depreciation expense 126,000 overstated —
In addition, on December 31, 2021 fully depreciated equipment was sold for $44,000, but the sale was not recorded until 2022. No corrections have been made for any of the errors. Ignore income tax considerations.
The total effect of the errors on the balance of Orange's retained earnings at December 31, 2021 is understated by _______
In: Accounting
3.
EASTDALE INDUSTRIES INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED MARCH 31, 2020
2020 2019
Sales revenue$1,095,000$750,000
Cost of goods sold 635,100 435,000
Gross profit 459,900 315,000
Expenses
Depreciation 29,520 24,000
Office supplies 2,200 1,600
Salaries and benefits 112,850 102,500
Rent 18,000 18,000
Utilities 27,192 20,200
189,762166,300
Operating income 270,138 148,700
Income tax expense 59,430 32,714
Net income$ 210,708$ 115,986
Additional information:
Unit sales for 2020 and 2019 were 8,760 and 6,000 units, respectively.
Required:
5a) For each cost in the above income statement, identify whether the cost is fixed, variable and mixed with respect to sales volume, and explain how this was determined.
1b) Determine a reasonable cost driver for income tax expense. That is, what is the nature of the activity that would cause income tax expense to vary?
2c) Select one mixed cost and prepare a scattergraph. From the scattergraph, use the visual fit method to determine the total fixed cost and variable cost per unit.
6d) For the remaining mixed costs, determine the fixed and variable component of each cost using the high-low method. Why is the preparation of a scattergraph of no benefit given the information you have available?
2e) Based on your knowledge of depreciation methods from financial accounting, give a reasonable explanation of the cost structure of depreciation expense that you have identified earlier.
7f) Using a contribution format, prepare a budgeted income statement for 2021 if 9,600 units are expected to be sold. Stop at the calculation of operating income, so no income tax expense need be calculated.
In: Accounting
Adcock Corp. had $500,000 net income in 2020. For all of 2020, there were 200,000 shares of Adcock’s common stock outstanding. There were also 30,000 options outstanding all year. Each option allowed the holder to buy one share of common stock at $40 a share. The market price of the common stock averaged $50 during 2020. The tax rate is 30%.
During all of 2020, there were 40,000 shares of convertible preferred stock outstanding. The preferred is $100 par, pays $3.50 a year dividend, and is convertible into 3 shares of common stock. Finally, Adcock had $2,000,000 of 7% convertible bonds (issued at face value) outstanding for all of 2020. Each $1,000 bond is convertible into 30 shares of common stock.
Required:
(1) Calculate Adcock’s basic earnings per share for 2020.
(2) Calculate the incremental per share effect of each potentially dilutive security. Note that you are not to rank the results from smallest to largest earnings effect per share nor are you to recompute earnings per share for each of these potentially dilutive securities to determine if they are dilutive or anti-dilutive.
In: Accounting