Tesla is planning to open its first manufacturing plant (for the production of batteries) outside the US. You are one of the financial analyst that will help assessing the feasibility of the investment.

2. Tesla has commissioned one of the Big Four Consulting firm to provide some recommendations with regard to the current legal regulations in China. The consulting service fees will amount to 1 million dollars.

3. The Chinese government has in place a support scheme for foreign companies that invest in the manufacturing industry. The Chinese government will pay a 10% cash grant of the initial capital investment (this will be paid as a lump sum at the time of the investment).

4. Suppose that the life of the project is 10 years and the initial investment in the project today is 500 million dollars.

5. The plant will be depreciated to $0 book value over the 10 years and can be sold by Tesla in year 20 for 150 million dollars.

6. It has been estimated that Tesla would be able to generate gross revenues of 75 million dollars per year (starting at the end of the first year).

7. The new production of batteries in China will have a direct impact on the production of batteries in the US. The revenues generated in US are estimated to drop by 8 million dollars each year.

8. The annual variable costs are expected to be 25% of the “incremental annual revenues”.

9. The current weighted average cost of capital for Tesla is 12%, and the project has the same risk profile and financial structure of the company. The company tax rate is 30%.

What would happen to the WACC and NPV in the case Tesla would be using a higher proportion of debt to finance this project? Under what conditions the WACC can be used as a discount rate for the cash flows of a specific project?

The nebular theory is a name for the idea that the Solar System formed from a rotating cloud (nebula) of gas and dust. Is it really possible for science to inform us about things that may have happened billions of years ago? To address this question, test the nebular theory of the formation of the solar system against each of the three hallmarks of science discussed in the posted note Nature of Science in Week 1. Be as detailed as possible in explaining whether nebular theory does or does not satisfy these hallmarks. Use your explanations to decide whether the theory can really tell us about how our solar system formed. Explain and defend your answer.

Hallmarks of Science:

Science seeks explanations for observed phenomena that rely solely on natural causes.

Science progresses through the creation and testing of models of nature that explain the observations as simply as possible.

A scientific model must make testable predictions about natural phenomena that would force us to revise or abandon the model if the predictions do not agree with observations.

Your uncle has always owned several companies and has been very successful despite not studying Finance in university. He has heard about several finance methods to evaluate whether to take on a project or not.

1. Explain to him what the three basic decisions that a financial manager must make when overseeing a company.
2. (1 mark) Explain to him what the ultimate objective of a financial manager is.
3. Explain to him what characteristics the best methods have to determine whether or not to take on a project.
4. Provide an evaluation of four methods against the criteria you provided in part (c )
5. He has heard that IRR is a good method, but has one issue. Identify and explain the issue to him.

University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each.

The following data appear in the company records for the current period:

Required:

Allocate the service department costs using the step method, starting with the Maintenance Department. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)

Q5. Thomas Book Sales, Inc., supplies textbooks to college and university bookstores. The books are shipped with a proviso that they must be paid for within 30 days but can be returned for a full refund credit within 90 days. In 2009, Thomas shipped and billed book titles totaling $760,000. Collections, net of return credits, during the year totaled $690,000. The company spent $300,000 acquiring the books that it shipped.

a. Using accrual accounting and the preceding values, show the firm’s net profit for the past year.

b. Using cash accounting and the preceding values, show the firm’s net cash flow for the past year.

c. Which of these statements is more useful to the financial manager? Why?

Currently students have several popular fast food options (e.g. Chick fil A, Wendy’s, Papa Johns, Au Bon Pain), cafeterias (Muse, Dalton), and take out (Hisso Sushi, Pinkberry).  Currently Chartwell Food Services is the licensed operator for all food options on campus.  The company has developed a short 10-minute survey to complete in whatever manner would produce the best results.     Research questions involve the most preferred food vendors, most preferred food types, preferred locations, and price points.  Develop a sampling plan that would yield generalizable results regarding the lunch and dinner habits of Radford University students.  Explain your choices.

University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each.

The following data appear in the company records for the current period:

Required:

Allocate the service department costs using the step method, starting with the Maintenance Department. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)

) Randy's Pizza delivers pizzas to dormitories and apartments near a major state university. The company's annual fixed costs are $48,000. The sales price averages $9, and it costs the firm $3 to make and deliver each pizza.

Required:

A. How many pizzas must Randy's sell to break even?

B. How many pizzas must the company sell to earn a target profit of $54,000?

C. If budgeted sales total 9,900 pizzas, how much is the company's safety margin in dollars?

D. Tony's assistant manager, an accounting major, has suggested that the firm should try to increase the contribution margin per pizza. Explain the meaning of "contribution margin" in layman's terms.

CASE STUDY

Miss Yinnary is one of the many women who own their own businesses and her experience is not very different from others, who must contend with being a mother, a spouse and a family cheerleader in addition to owning and operating a business. She is the owner of the famous Y-Hotel. It was her first business, though she had some family background in this business. Her two sisters were also in the same line of business. But she borrowed some money, put in some of her savings and started her own venture. She was the first woman ever to enter into this business, most of her clients could not understand that a woman could be interested in the hospitality industry. To Step up her game in the hospitality Industry , Miss Yinari is seeking someone who understands innovative entrepreneurship to assist her.

During her rise to success and in management of her hotel business, she also needs to manage a family, stay teaching in university and dealing with community affairs.

In her mind, there is nothing more exhilarating than owning her own business, and for her, the fun is in facing the challenges of turning the hotel into a first ever hotel that provide customers an unforgettable experience with innovation

In the present time, more women are making this choice, pursuing entrepreneurship rather than staying as housewives or traditional careers. For the past few years, the number of women starting new ventures is three times as large as the number of men. There are several good reasons for this trend. Some women find that owning a business is the only way to combine a decent income with time for their children by having the flexibility to control their schedules. Others see themselves as unlikely corporate managers and recognizing the gender problem that exists for achieving success, they choose the entrepreneurial route. Still others see entrepreneurship as a way of controlling their lives, pursuing interests that would be impossible in a corporate job.

The dual roles of mother and entrepreneur often conflict, and husbands and wives

tend to develop separate career tracks that often cannot be reconciled. Women can

also find it lonely in a business world, especially if clients are predominantly men,

this was a problem for Yinari too.

Many women, however, have businesses that fit well with their interest and with

women customers. These include services in beauty care, nutrition, education,

entertainment etc. Nevertheless, being in business often exacts a double price for

women, yet for those with determination like Yinari, the rewards are always waiting.

Your Task as Business Consultant , Prepare a report regarding the following issues below :

F. Refer to Dave McClure’s pirate metrics, explain each and every point of the metrics of your innovation

G. Is there a possibility to make unrelated diversification under the same company for Miss Yinnary? Please Explain your thoughts