Company X is calculating its WACC. The firm’s common stock just paid a dividend of $4.5 per share and now is selling for $80. The firm’s financial staff estimates the company’s new product will generate a dividend growth rate of 7%. Today the firm issued 7000 bonds that will mature in 15 years with $1,000 face value. These bonds will pay a 9% coupon rate quarterly and are currently selling for $970. The firm has 100K preferred shares of stock outstanding with a book value of $45, but currently selling for $55 per share. The last preferred dividend payments were $3.5 per share. The firm’s tax rate is 40%. The firm has 200K shares of common stock outstanding with the same book value as that of its preferred stock.

Calculate the book value weights for each source of capital.
Calculate the market value weights for each source of capital.
Calculate the before-tax and after tax componenet cost of capital
Determine the after tax weighted average costs of capital using both market and the book value weights.

January 2010, Giant Green Company pays $3,400,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $782,000, with a useful life of 25 years and a $79,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $440,500 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $2,420,600. Giant Green also incurs the following additional costs:

What is the amount that should be recorded for Land?

Saving the Glaciers

The glaciers have been disappearing from Glacier National Park in Montana and adjoining Waterton National Park in Canada. In 1850, Glacier is said to have had 150 glaciers; in 2006 there were 27. In response to this trend, various organizations petitioned for the parks to be designated endangered by being placed on the danger list of the World Heritage Committee. As one report says,

Endangered status would require the World Heritage Committee to find ways to mitigate how climate change affects the park, [the law professor who wrote the petition] said . . . Better fuel efficiency for automobiles and stronger energy efficiency standards for buildings and appliances are among the ways to reduce greenhouse pollution that contributes to warming, the petition [said].

But some denounced the petition as unnecessary and unsupported by scientific data, while one group of scientists estimated that if climate trends continue, Glacier Park’s glaciers will disappear completely by 2030.

Justify your answers: Suppose the glaciers’ melting would have no appreciable effect on the environ- ment except that they would no longer exist. Would conservationists still be justified in trying to save the glaciers? If so, how could they justify their efforts? If not, why not? Suppose the glaciers could be saved only if the government spends $10 billion on pollution controls—money that would have to be taken away from social programs. Would this cost be worth it? Why or why not? Using the utilitarian Theory

SYN 960 Business Government & Society

Albright College

Application Test #1

Read the following case below and then answer the questions following the case.

Case: A Brawl in Mickey’s Backyard

Outside City Hall in Anaheim, California—home to the theme park Disneyland—dozens

of protestors gathered in August 2007 to stage a skit. Wearing costumes to emphasize their

point, activists playing “Mickey Mouse” and the “evil queen” ordered a group of “Disney

workers” to “get out of town.” The amateur actors were there to tell the city council in a

dramatic fashion that they supported a developer’s plan to build affordable housing near

the world-famous theme park—a plan that Disney opposed.

“They want to make money, but they don’t care about the employees,” said Gabriel de

la Cruz, a banquet server at Disneyland. De la Cruz lived in a crowded one-bedroom apartment

near the park with his wife and two teenage children. “Rent is too high,” he said. “We

don’t have a choice to go some other place.”

The Walt Disney Company was one of the best-known media and entertainment companies

in the world. In Anaheim, the company operated the original Disneyland theme park,

the newer California Adventure, three hotels, and the Downtown Disney shopping district.

The California resort complex attracted 24 million visitors a year. The company as a whole

earned more than $35 billion in 2007, about $11 billion of which came from its parks and

resorts around the world, including those in California.

Walt Disney, the company’s founder, had famously spelled out the resort’s vision when

he said, “I don’t want the public to see the world they live in while they’re in Disneyland.

I want them to feel they’re in another world.”

Anaheim, located in Orange County, was a sprawling metropolis of 350,000 that had

grown rapidly with its tourism industry. In the early 1990s, the city had designated two square

miles adjacent to Disneyland as a special resort district, with all new development restricted

to serving tourist needs, and pumped millions of dollars into upgrading the area. In 2007, the

resort district—5 percent of Anaheim’s area—produced more than half its tax revenue.

Housing in Anaheim was expensive, and many of Disney’s 20,000 workers could not

afford to live there. The median home price in the community was more than $600,000,

and a one-bedroom apartment could rent for as much as $1,400 a month. Custodians at the

park earned around $23,000 a year; restaurant attendants around $14,000. Only 18 percent

of resort employees lived in Anaheim. Many of the rest commuted long distances by car

and bus to get to work.

The dispute playing out in front of City Hall had begun in 2005, when a local developer

called SunCal had arranged to buy a 26-acre site in the resort district. (The parcel was directly

across the street from land Disney considered a possible site for future expansion.)

SunCal’s plan was to build around 1,500 condominiums, with 15 percent of the units set

aside for below-market-rate rental apartments. Because the site was in the resort district,

the developer required special permission from the city council to proceed.

Affordable housing advocates quickly backed SunCal’s proposal. Some of the unions

representing Disney employees also supported the idea, as did other individuals and groups

drawn by the prospect of reducing long commutes, a contributor to the region’s air pollution.

Backers formed the Coalition to Defend and Protect Anaheim, declaring that “these

new homes would enable many . . . families to live near their places of work and thereby

reduce commuter congestion on our freeways.”

Disney, however, strenuously opposed SunCal’s plan, arguing that the land should be

used only for tourism-related development such as hotels and restaurants. “If one developer

is allowed to build residential in the resort area, others will follow,” a company

spokesperson said. “Anaheim and Orange County have to address the affordable housing

issue, but Anaheim also has to protect the resort area. It’s not an either/or.” In support of

Disney’s position, the chamber of commerce, various businesses in the resort district, and

some local government officials formed Save Our Anaheim Resort District to “protect our

Anaheim Resort District from non-tourism projects.” The group considered launching an

initiative to put the matter before the voters.

The five-person city council was split on the issue. One council member said that if

workers could not afford to live in Anaheim, “maybe they can move somewhere else . . .

where rents are cheaper.” But another disagreed, charging that Disney had shown “complete

disregard for the workers who make the resorts so successful.”

Sources: “Disneyland Balks at New Neighbors,” USA Today, April 3, 2007; “Housing Plan Turns Disney Grumpy,” The New

York Times, May 20, 2007; “In Anaheim, the Mouse Finally Roars,” Washington Post, August 6, 2007; and “Not in Mickey’s

Backyard,” Portfolio, December 2007.

1. Using Disney as the focal organization, identify all the relevant stakeholders to this case.

2. For each of the stakeholders above, clear explain their respective “interest” or claim to the situation using evidence from the case. Also, indicate if each stakeholder is in

favor of, or opposed to, SunCal’s proposed development.

3. What sources of power do each of the relevant stakeholders identified above have in this case?

4. Based on the information you have included in your stakeholder analysis/map, what do you believe is the socially responsible decision for Disney? Justify your solution by applying either the ownership theory of the firm or the stakeholder theory of the firm.

1. Fixed cost, variable cost and total cost. Which costs are important for economic decision making? Explain your answer. (10 points)

Complete the following cost and revenue schedule.

Use the completed cost and revenue schedule to answer the following questions.

a. Use the optimization rule to maximize profit. What rate of output maximizes profit?

b. What is the actual amount of profit at the profit-maximizing level of output you found in (1a)?

Consider the assumptions that framed the analysis. Removing a hotel from the secondary competition and add it to the primary competition. What effect does taking out a Hotel from secondary competition has on the overall analysis? On Demand Base , changes in overall penetrations, changes in the market segment penetrations for the individual hotels, market segment mix for the entire market, and demand.

Park Corporation is planning to issue bonds with a face value of $3,500,000 and a coupon rate of 10 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and also uses a premium account. Assume an annual market rate of interest of 8.5 percent.

1. Prepare the journal entry to record the issuance of the bonds.

2. Prepare the journal entry to record the interest payment on June 30 of this year.

3. How will Park present its bonds on its June 30 balance sheet?

Hospitality and Tourism Management Subject:

A big business-oriented hotel has 505 rooms. Five of those rooms had an issue with a leaking bathroom. On Tuesday night, 440 rooms were occupied (sold). On Friday night, 240 rooms were occupied (sold).

The hotel's room revenue (sales) for Thursday was $90 200. The room revenue (sales) for Friday was $38 400

- What was the Occupancy percent, the ADR and the RevPar for Thursday and Friday?

- What do the numbers for Occupancy, ADR, and RevPar for the two days tell you - please comment on each number and explain what "conclusions" you would make if you are the general manager of the hotel.

- Which characteristic of the lodging industry is "causing" the different occupancy for Thursday and Friday night? Please explain briefly. What can a hotel manager do to address this issue?

- What are some specific services and amenities this segment (business traveler) would be interested in when staying in the hotel? Please list and explain at least 4.

1)Lexical heads are typically

Select one:

a. closed class lexical items

b. phonologically null

c. no class lexical items

d. open class lexical items

2)The subject of the sentence `the woman with a big dog on a flimsy leash in the public park behind my house saw a horse' is:

Select one:

a. the woman with a big dog

b. the woman

c. the woman with a big dog on a flimsy leash in the public park behind my house

d. the woman with a big dog on a flimsy leash in the public park

3)How many PPs are there in the sentence `the woman with a big dog on a flimsy leash in the public park behind my house saw a horse'?

Select one:

a. 3

b. 4

c. 2

d. 1

4)Which sequences of words can we perform 'it-substitution' on in the following sentence: `the proposal of Trump is very stupid'?

Select one:

a. proposal of

b. the proposal of Trump

c. Trump is

d. the proposal