Describe the roles of government bodies that determine fiscal policy. Explain fiscal policies’ effects on the economy’s production and employment. How does the enormous U.S. national debt affect the federal government’s fiscal policy? Is the current U.S. national debt a serious problem like a heavy personal debt? Why or why not? Discuss thoroughly.
In: Economics
In: Economics
The tax system is how the U.S. Government raises the revenue it needs to provide goods and services for its citizens. Do you think our tax system shares the burden of these goods and services fairly amongst all Americans? If you were in charge, what would be your policy position--or approach--to the U.S. tax system?
In: Economics
In: Statistics and Probability
Describe the roles of government bodies that determine fiscal policy. Explain fiscal policies’ effects on the economy’s production and employment. How does the enormous U.S. national debt affect the federal government’s fiscal policy? Is the current U.S. national debt a serious problem like a heavy personal debt? Why or why not? Discuss thoroughly.
In: Economics
Question 1
As companies grow in size, it is inevitable for the shareholders to hire management to run the operations of the business. The entire team of management, starting from the CEO and other top-level management, all the way to the middle and bottom level management are expected to perform towards the growth of the business. Since the shareholders of large companies are scattered across geographies, they appoint certain members as representatives who are elected to represent them on the company board. The board of directors of a company, along with the Chairman, are expected to keep the actions of the management in check.
Explain the above in context of agency theory and corporate governance. What can companies do to ensure adequate corporate governance?
Question 2
Mr. Morris had $100,000 in his account. Using this fund, he made a portfolio of two NYSE listed stocks – Johnson and Johnson (J&J) and IBM on 01 Jan 2019 in the ratio of 60:40, i.e. 60% funds in J&J & 40% funds in IBM. The daily stock data of both stocks can be found on market websites such as finance.yahoo.com. Download daily data for 1 year from 1 Jan 2019 – 1 st Jan 2020. Using the stock data of the two stocks, you are required to explain the below concepts and then compute for the given stocks:
a. Annual return of both J&J and IBM.
b. Annualized standard deviation of returns of both J&J and IBM
c. Correlation coefficient of returns of J&J and IBM. What does this correlation coefficient signify about the correlation of the two stocks and corresponding decision from an investor?
d. Portfolio return of the portfolio of two stocks.
e. Portfolio risk (standard deviation) of the portfolio of two stocks.
f. Critically analyze your investment decision in these two companies . Given an option, would you like to invest in any other company? Or would you like to have a different ratio of investment in the two?
Question 3
Your firm’s geologists have discovered a small oil field in New York’s Westchester County. The field is forecasted to produce a cash flow of C1 $2 million in the first year. You estimate that you could earn an expected return of r 12% from investing in stocks with a similar degree of risk to your oil field. Therefore, 12% is the opportunity cost of capital. What is the present value? The answer, of course, depends on what happens to the cash flows after the first year. Calculate present value for the following cases:
a. The cash flows are forecasted to continue for 20 years only, with no expected growth or decline during that period
b. The cash flows are forecasted to continue for 20 years only, increasing by 3% per year because of inflation
c. Evaluate the cashflows in a and b and explain which one you will choose and why
In: Finance
To: Kelley M&A Analysis Team
From: Thomas Mays, Senior Vice President of The Hoosier Bank
Subject: Big Merger On Walnut Street?
Mr. Isiah Knight, President and CEO of The Hoosier Bank is very concerned about a recent change in banking regulation coming from the state of Indiana. Banks in most metro areas of Indiana have previously been protected from outside competition by a law requiring banks to only operate in their hometowns’ metro areas. That law has just been repealed and local banks are now expecting to see smaller banks in each metro area acquired by gigantic global banks. Larger banks in each metro area are expected to be safe from acquisition threats because global banks would face higher regulatory scrutiny from both the State of Indiana and the Department of Justice (DOJ).
We are considering acquiring one of the banks smaller than us in the Bloomington metropolitan area local market. Mr. Knight wants to move faster than the global banks, and stay unchallenged by the Department of Justice. He believes Kirkwood Savings Bank would make a good target. Mr. Knight will call it ‘a merger of equals’ and say the proposed merger is good for local Bloomington business. Do you foresee any legal ramifications or challenges from the DOJ with the proposed merger? Below is a deposit market share table of the 8 banks in Bloomington.
|
Rank: |
Bank: |
Deposits In The Bloomington Market: |
|
1 |
The Hoosier Bank |
$500,000 |
|
2 |
First Bank of Bloomington |
$300,000 |
|
3 |
State Bank of Monroe County |
$200,000 |
|
4 |
Kirkwood Savings Bank |
$200,000 |
|
5 |
Citizens Bank of Southern Indiana |
$100,000 |
|
6 |
Farmers and Teachers Trust |
$100,000 |
|
7 |
National Boilermaker's Bank |
$50,000 |
|
8 |
The Wildcat Bank |
$50,000 |
In: Accounting
You have just received the following corporate change request from the Information Technology Division of Freektail Inc. Your task is to meet with your project team to assess the impact of this “change.”
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CORPORATE CHANGE REQUEST |
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Project Title: the Semi-Conductor Inspection Device 4th Generation project (SCID4) |
Change No.: 2011-F-0639 |
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Submitted By: Mr. Keith Adkins |
Date: November 14, 2017 |
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Description of Requested Change: Modify SOW as follows: 1100 Project Management The project team shall initiate, plan, execute, monitor, control and close the SCID4 project. The project team shall perform on-going project management activities to include the conduct of regular team meetings and status briefings. The project team shall provide weekly project performance reports that address cost, schedule and technical performance. The weekly project performance reports shall be prepared electronically in a format that is compatible with the Freektail Artemis portfolio project performance dashboard. |
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Reason for Change Request: Freektail Inc. has recently acquired and installed a project performance dashboard. The dashboard is managed using Artemis 2017 Enterprise. The CEO of Freektail is now requiring all projects, internal and external to support project reporting using Artemis 2017 Enterprise, so that all project sponsors and executives will have ready access to consistent and reliable project status information. |
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Approved By: |
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Do you consider this corporate change request to be a simple change, or does it represent a change in project scope? Why?
How will this “change” impact the cost of your project plan?
How will this “change” impact the schedule for your project plan?
How will this “change” impact the resources you acquire to execute this project?
What additional changes will you make to your project plan to incorporate this change request?
In: Operations Management
Blue Spruce Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $5,100,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Blue Spruce’s equipment. Blue Spruce’s controller estimates that expected future net cash flows on the equipment will be $3,187,500 and that the fair value of the equipment is $2,805,000. Blue Spruce intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Blue Spruce uses straight-line depreciation.
What is the carrying value of the equipment at December 31, 2020?
| Carrying value | $ |
Prepare the journal entry (if any) to record the impairment at December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation | Debit | Credit | |
| Dec. 31 | loss on impairement | 1,020,00 | |
| accum. dep-equip | 1,020,000 |
Prepare any journal entries for the equipment at December 31, 2021. The fair value of the equipment at December 31, 2021, is estimated to be $2,932,500. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date | Account Titles and Explanation | Debit | Credit |
Dec. 31 | |||
Prepare the journal entry (if any) to record the impairment at December 31, 2020. assuming that Blue Spruce intends to dispose of the equipment and that it has not been disposed of as of December 31, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date | Account Titles and Explanation | Debit | Credit |
12/31/20 | |||
Date | Account Titles and Explanation | Debit | Credit |
12/31/21 | |||
In: Accounting
John invents The Night Truck, a mobile night-shop with home delivery service between 8
pm and 6 am.
We are end December 2019 and John needs your help to evaluate this project. The project could generate annual sales of 150.000 € in 2020. The sales could then increase by 10% a year. John anticipates that a new regulation as from 2024 would prevent the sales of
alcohol during the night, meaning that sales would stop on the 31st of December 2023. Cost of sales amounts to 60% of sales.
The project requires a new warehouse as well as two trucks. The initial total investment (in 2019) is estimated at 200.000 € (which can be depreciated linearly over 10 years from 2020 onwards). At the end of 2023, the initial investment could be sold for 92,300 €.
John recently travelled to New York, where the concept already exists, to study the feasibility of the project. This trip cost 5.000 € and will be paid in 2020. In 2020, accounts receivable would increase by 75,000 €, inventories by 25.000 € and accounts payable by 50.000 €. Those accounts will stay stable until 2022, with the exception of inventories which John expects to further increase by 10.000 € in 2022 to meet the increasing demand. At the end of the project, all these amounts would be recovered.
The company is subject to a tax rate of 25%. Assume that all cash flows occur at the end of the year, that the inflation rate is 0% and that the annual risk-free rate is 2% (annually compounded). The risk premium for similar projects is 6% (annually compounded).
Questions:
1) What is a sunk cost? Do you identify such cost for the project?
2) Calculate the incremental net incomes and free cash flows of the project.
3) Which discount rate should you choose to evaluate the project? How do you interpret your answer? What is the main information included in this number?
4) Calculate the NPV of this project? What would you advise to John? Why?
5) What would be the impact of this project on the company’s value (if the project is undertaken...)?
In: Finance