QUESTIONS 1 and 2 are based on the information below:

FLF Corporation is preparing to evaluate capital expenditure proposals for the coming year. Because the firm employs discounted cash flow methods, the cost of capital for the firm must be estimated. The following information is provided for your analyses—

1. The market price of common stock is $60/ share

2. The dividend next year is expected to be $3/share

3. The company has paid 10% dividends in the past; the company projected to keep that rate of dividend payments to keep their investors happy.

4. New bonds can be issued at face value with a 10% coupon rate in order to attract additional investors in bonds and not in stocks.

5. The total liabilities as of this date is $400M and total equity is $600M. The company considered this their optimal capital structure.

6. As of the latest investor relations press meeting, the CEO announced that the expected revenue will grow as projected and the intend to retain $3M of the earning for expansion plans.

7. The firm’s marginal tax rate is 40%.

Without prejudice, assume that the after-tax cost of debt financing is 10% , the cost of retained earnings is 14%, and the cost of new common stock is 16%.

Question 1: If the capital expansion needs to be $7M for the coming year, what is the after-tax weighted-average cost of capital?

Question 2: What is the marginal cost of capital for any projected capital expansion in excess of $7M?

You are a recently designated accountant. As a result of having your designation, you have been hired as the controller at a national manufacturing company. Due to a recent economic slowdown, the company has been struggling to meet earnings targets. These targets are the basis for senior management bonuses. You report directly to the CFO.

This is your second month with the company; however, it is your first year end (December 31). The auditor will be coming to audit the books in three weeks. You have fi nalized the fi nancial statements, and
you have reviewed them with the CFO and the CEO.

The week before the auditor is expected to arrive, the CFO comes to your office and explains that the financial results are very disappointing. He explains that: on December 31, a sales contract was signed for $500,000 of goods with delivery to take place January 3. He asks you to record the revenue for this contract on December 31, the date the contract is signed and before the work is performed. This will result in early revenue recognition, and doing so will eliminate the overall net loss for the year.

You are married with a stay-at-home spouse and two small children. To celebrate your success, you recently purchased a new home. It cost a little more than you planned to spend and the mortgage payments are pretty expensive.

What would you do? What are the ethical issues you would need to consider?

I'm not sure if this is a good issue statement for short case study. Thanks for the help!

An American multinational widely diversified media and entertainment organization, Disney Company which started their journey from 1923 are now recognized as one of the most successful enterprise in the century. Bob Iger who has lead the company with his magical, yet fundamental and strong business strategy to overcome the barriers that Disney faced in the last ten years in his career as a newly appointed CEO from 2005. One of the main issues that Disney faced entered from the mass diversification and acquisition while expanding their business firms into three main divisions, Walt Disney Parks and Resorts, Disney Media Networks, and Disney Consumer Products and Interactive Media. The main issue in this process was the inability to maintain a neutral and open behavior and lack of communication in team based works. Two external environmental factors involved in diversification process are analyzed in the report; political as in dealing with local government where Disney expands their theme park in other countries and technological factors that is required to produce content that satisfies customer demand as well as producing high quality content. Understanding these issues and implementing preventative tools will seize the misleading of the company for the next ten years. Other possible issues and external environment factors are considered as out of scope in this report.

Explore how multinational giant Philips NV has evolved over time. The Dutch company, which was internationally oriented almost from the start, moved to a national organization approach during World War II. This approach, which allowed the company to tailor its product line and marketing to each national market, remained in place for several decades, however, by the 1970s, the duplication of effort the approach required began to cause problems and Philips shifted toward a product division structure that established international production centers. In the mid-1990s, a new CEO implemented significant changes replacing Philips’ 21 product divisions with just 7 global business divisions. This new structure was further refined in 2008 to establish three global divisions responsible for product strategy, global marketing, and production decisions. QUESTION 1: Why did Philips’ decentralized structure make sense in the 1950s and 1970s? Why did this structure start to create problems for the company in the 1980s? QUESTION 2: What was Philips trying to achieve by tilting the balance of power in its structures away from national organizations and toward the product divisions? Why was this hard to achieve? QUESTION 3: What was the point of the organizational changes made by Cor Boonstra? What was he trying to achieve? QUESTION 4: In 2008 Philips reorganized yet again. Why do you think it did this? What is it trying to achieve?

You have just signed on as the Manager of Human Resources for a large manufacturing company in the Chicago area. Your company manufactures parts to the automotive industry such as air duct assemblies for various models of new vehicles as well as to the secondary market for these same parts. Upon conducting an audit of HR initiatives and trying to understand the challenges you want to tackle, you find that the overall turnover rate for this company is 37%. You have not worked in this specific industry but you feel at first glance that this number is high. Based on this limited information that you have, lay out a strategy for addressing turnover. You should include the following in your answer:

1. Is the 37% turnover a cause for concern? How would you go about finding out this information?

2. What additional data will you gather to learn more about the turnover in this organization? Remember that your readings discuss different types of turnover and this should be addressed in your answer along with any benefits of turnover.

3. Assume that you find that the turnover is problematic. Particularly, you discover that the turnover for non-exempt staff is 42% - well over the total turnover for the organization. Prepare a strategy to suggest to the CEO for addressing this turnover, specifically addressing possible causes of the turnover and solutions related to those causes. You will need to think about many of the concepts we have discussed throughout this course in order to answer this question fully.

E6.14 (LO 5) (Computation of Pension Liability) Nerwin, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2020. Each employee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, the controller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of the Personnel Department and an actuary from an insurance company, the controller develops the following information related to the pension plan.

The interest rate to be used is 8%.

Instructions

On the basis of the information above, determine the present value of the pension obligation (liability).

The time and cost required to manufacture its product R&D costs were $120,000. The process was patented. On July 1, 2016. Legal costs and fees to require the patent totaled $12,500. Browen estimated the useful life of the patent at 10 years.

On July 1,2018, Browen sold the nonexclusive right to use the new process to Kennedy Company for $90,000. Because Bowen retained the patent, the agreement allows Kennedy to use, but not sell, the new technology for a period of 5 years. But Bowen Company and Kennedy Company have December 31 fiscal years.

On July 1, 2020, another competitor obtained a patent on a new process that made Browen's patent obsolete.

1) How should Bowen Company account for the R&D costs and legal costs incurred to obtain the patent? Show the effects of these entries using the financial statement effects template, prepare the appropriate journal entries necessary to account for the costs incurred in 2016, and psot the entries to T-accounts

$6,000

$7,000

$0

None of the other answers is correct

$4,500

a. The Australian dollar against the US dollar (and against other major currencies) has appreciated in recent months (mid-March 2020 to early June 2020). Identify the underlying drivers and the implications of this rising exchange rate in Australia.

Prepare a comparative balance sheet of Headland Company showing the percent each item is of the total assets or total liabilities and stockholders’ equity. (Round percentages to 2 decimal places, e.g. 2.25%.)

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Prepare a comparative balance sheet of Headland Company showing the dollar change and the percent change for each item. (If there is a decrease from 2020 to 2021, then enter the amounts and percentages with either a negative sign, i.e. -92,000, -25.25 or parenthesis, i.e. (92,000), (25.25).)