Puffy Clouds, a maker of data storage products, is considering adding a new manufacturing facility. The new facility would be housed in an unused building that the firm bought 8 years ago for $5 million; the building is being depreciated over a 20 life to a salvage value of zero. The building can be sold today for $2 million, and the market value of the building is expected to increase at 5% per year going forward. The new facility would require the purchase of $50 million of equipment that would be depreciated straight line to zero over a useful life of 5 years. However, the firm expects this equipment would have a scrap value of $250,000 at the end of its 5-year life. The firm would finance the equipment purchase with a five-year debt issue that would carry an interest rate of 5% p.a. The new facility would add $20 million to annual revenues, which are currently $100 million per year. The higher manufacturing efficiency of the new facility would reduce annual operating costs from 40% of revenues to 35% for both existing and new sales revenues. The new facility would require a $500,000 increase in net working capital, which would be recovered at the end of the project. The firm’s tax rate is 20% and the required rate of return is 8%. Calculate the NPV and IRR for the new facility (25 points)

The Personnel Department at Hernandez Bros. is centralized and provides services to the two operating units: Miami and New York. The Miami unit is the original unit of the company and is well established. The New York unit is new, much like a start-up company. The costs of the Personnel Department are allocated to each unit based on the number of employees in order to determine unit profitability. The current rate is $300 per employee. Data for the fiscal year just ended show the following: Miami New York Number of employees 1,900 600 Number of new hires 35 100 Number of employees departing 15 50 Orlando, the manager of the New York unit, is unhappy with the results of the controller’s study. He asks the controller to develop separate rates for fixed and variable costs in the Personnel Department. The controller reports back to Orlando that the rates would be as follows: Allocation based on Variable Rate Fixed Rate Total Rate Employees $ 20 per employee $ 60 per employee $ 80 per employee Transitions $ 750 per transition $ 2,000 per transition $ 2,750 per transition Required: a. Orlando argues that New York should only be allocated the variable costs from this system, because the company would have to pay the fixed costs even if New York did not exist. Compute the cost allocated to each unit using the approach Orlando prefers.

Question 3

a) Enlightened Ltd is investigating the introduction of a new advanced solar light. Forecast revenue from the new light is $1,250,000 per year and variable costs $450, 000 per year. The revenue and variable costs are expected to stay constant for the four years. The new light will require a new production line that will have an initial cost of $2,000,000. For tax purposes you can depreciate the full cost down to zero over the four year life of the project. At the end of four years you expect to be able to sell the production machinery for $350,000. Selling the new fixtures will require additional working capital of $25,000 starting immediately. You expect to recover the working capital investment at the end of the four year project. You have already spent $50,000 in research and development costs to invent the new light. Assume the tax rate is 30% and the required return is 10% APR (compounded annually).

i) What is the annual depreciation of the new production line?

ii) What is the annual Operating Cash Flow for the project?

iii) What are the Project Cash Flows for the project?

iv) What is the NPV for the project? What information does the NPV provide?

v) What is the payback period for the project? What information does the payback period provide?

vi) Should Enlightened Ltd proceed with the new solar light project? Justify your answer.

b) What is sensitivity analysis and how is it used in project evaluation?

Write a 175- to 260-word response to both question 1 and 2

The West End Boutiques company was founded by Libbie Williams in 1990 with a single store in College Station, Texas, and the company now has 21 shops located in the triangle of Dallas, San Antonio, and Austin, Texas. Libbie was an accounting major in college, passed the entire CPA in her first attempt with high scores, and worked for one of the large CPA firms for 11 years prior to opening her first store. Based on her work experience, she fully understands the value of strong internal controls. Further, she recently selected a state-of-the art accounting system that connects all of her stores' financial transactions and reports.

Libbie employs two internal auditors who monitor internal controls and also search for ways to improve operational effectiveness. As part of the monitoring process, the internal auditors take turns conducting periodic reviews of the accounting records. For instance, the company takes a physical inventory at all stores once each year and an internal auditor oversees the process. Chris Domain, the most senior internal auditor, just completed a review of the accounting records and discovered several items of concern. These were:

• Physical inventory counts varied from inventory book amounts by more than 6% at two of the stores. In both cases, physical inventory was lower.
• Two of the stores seem to have an unusually high amount of sales returns for cash.
• In 9 of the stores, gross profit has dropped significantly from the same time last year.
• At 4 of the stores, bank deposit slips did not match cash receipts.
• One of the stores had an unusual number of bounced checks. It appeared that the same employee was responsible for approving each of the bounced checks.
• In 7 of the stores, the amount of petty cash on hand did not correspond to the amount in the petty cash account.

Requirements

1. For each of these concerns, identify a risk that may have created the problem.
2. Recommend an internal control procedure to prevent the problem in the future.

Spire is a nanosatellite and data analysis company based out of San Francisco. The company specialises in gathering unique data from small satellites in a low-earth orbit. Spire collect this data, pull it down and through a network of ground stations, and sell the Spire opened its European headquarters in Glasgow, Scotland. Data, like that provided by Spire’s nanosatellites, can be the key factor in fighting the extreme and unpredictable weather events that cause so much destruction globally.

Scotland has a well-known reputation for providing a first-class welcome to all its visitors and Spire management were very impressed by the warm and open reception they received from the Scottish Government agency. CEO and Co-founder Peter Platzer stated 'Where Scotland won out was the access to risk capital, the flexibility and, importantly, the Scottish Government’s eagerness to support innovative companies – this really stood out here’. His vision when he co-founded Spire was to be able to provide satellite powered data from any location on earth. He also claims that his staff are very pleased; ‘We had a number of overseas staff come here for a temporary position to help set up who have since decided that they want to stay here permanently. Glasgow is a really great place to live and Scotland in general - our people really enjoy being here. The words friendly and hospitable are really not rich enough in meaning to describe the experience of being a part of everyday life here in Scotland’.

As well as the positive welcome and help that they have had to settle into life in Scotland, Spire management also point out that a key factor in their location decision was the access to a talented work force. ‘When we looked at Scottish staff, we found that the passion for what they do, their character and work ethic, is absolutely world-class’.

Questions

1. Why did Spire choose to locate in Scotland?

2. Why do companies set up overseas manufacture and service operations?

3. Are reduced labour costs the main reason for relocation?

Great Games Company operates miniature golf courses throughout southern Arizona. On July 1, 2016, Great Games’ balance sheet showed (all dollar figures in thousands):

Cash $40 -- Accounts Payable $50 -- Credit Card Receivables 25 -- Accruals Payable 0 -- Golf Supplies 35 -- Long-term Notes Payable 0 -- Office Equipment (net) 45 -- Common Stock 65 -- Retained Earnings 30

Draft the journal Entry and Balance Sheet

During July the following events occurred to Great Games:
a) Collected $20 cash on credit card receivables due from customers.
b) Paid $27 on accounts payable that had come due.
c) Deposited in the bank $30 of rental fees earned from customers.
d) Customer rental fees of $64 were accepted on credit cards; credit card receipts were
submitted to Trusty Bank. Cash collection from bank is expected in August.
e) Bought $2 of golf supplies (balls) on an account to be paid in August.
f) Paid employee wages of $15.
g) Received a $3 electricity bill in July; this bill will be paid in August.
h) Paid rent for July, $9.
i) Bought office equipment costing $20. Paid $5 now and signed a note payable for
the remainder, due on December 30, 2018.
j) The note payable incurred $1 of interest during July; interest is to be paid in December.
k) Signed a contract for $7 for billboard advertising to be shown during August.
Payment will not be made until after the advertisements have been displayed.
l) Trusty Bank notified Great Games that it had collected $33 of credit card receipts.
m) Declared a cash dividend of $5 to shareholders who founded the company. Payment
will be made in December, 2016.
n) Counted $24 of golf supplies remaining at the end of July.
o) Great Games received $30 for additional stock issued to friends of the founders.
p) Estimated income taxes of $21 for July 2016. These will be paid next March 2017.

Great Games Company operates miniature golf courses throughout southern Arizona. On July 1, 2016, Great Games’ balance sheet showed (all dollar figures in thousands):

Cash $40 -- Accounts Payable $50 -- Credit Card Receivables 25 -- Accruals Payable 0 -- Golf Supplies 35 -- Long-term Notes Payable 0 -- Office Equipment (net) 45 -- Common Stock 65 -- Retained Earnings 30

Draft the Journal Entry

During July the following events occurred to Great Games:
a) Collected $20 cash on credit card receivables due from customers.
b) Paid $27 on accounts payable that had come due.
c) Deposited in the bank $30 of rental fees earned from customers.
d) Customer rental fees of $64 were accepted on credit cards; credit card receipts were
submitted to Trusty Bank. Cash collection from bank is expected in August.
e) Bought $2 of golf supplies (balls) on an account to be paid in August.
f) Paid employee wages of $15.
g) Received a $3 electricity bill in July; this bill will be paid in August.
h) Paid rent for July, $9.
i) Bought office equipment costing $20. Paid $5 now and signed a note payable for
the remainder, due on December 30, 2018.
j) The note payable incurred $1 of interest during July; interest is to be paid in December.
k) Signed a contract for $7 for billboard advertising to be shown during August.
Payment will not be made until after the advertisements have been displayed.
l) Trusty Bank notified Great Games that it had collected $33 of credit card receipts.
m) Declared a cash dividend of $5 to shareholders who founded the company. Payment
will be made in December, 2016.
n) Counted $24 of golf supplies remaining at the end of July.
o) Great Games received $30 for additional stock issued to friends of the founders.
p) Estimated income taxes of $21 for July 2016. These will be paid next March 2017.

How to do a value stream map (VSM) of the customer ordering process for the X-opoly scenario?

X-Opoly, Inc., was founded by two first-year college students to produce a knockoff real estate board game similar to the popular Parker Brothers; game Monopoly®. Initially, the partners started the company just to produce a board game based on popular local landmarks in their small college town, as a way to help pay for their college expenses. However, the game was a big success and because they enjoyed running their own business, they decided to pursue the business full-time after graduation.

X-Opoly has grown rapidly over the last couple of years, designing and producing custom real estate trading games for universities, municipalities, chambers of commerce, and lately even some businesses. Orders range from a couple of hundred games to an occasional order for several thousand. This year X-Opoly expects to sell 50,000 units and projects that its sales will grow 25 percent annually for the next five years.

X-Opoly’s orders are either for a new game board that has not been produced before, or repeat orders for a game that was previously produced. If the order is for a new game, the client first meets with a graphic designer from X-Opoly’s art department and the actual game board is designed. The design of the board can take anywhere from a few hours to several weeks, depending on how much the client has thought about the game before the meeting. All design work is done on personal computers.

After the client approves the design, a copy of the computer file containing the design is transferred electronically to the printing department. Workers in the printing department load the file onto their own personal computers and print out the board design on special decals, 19.25 inches by 19.25 inches, using high-quality color inkjet printers. The side of the decal that is printed on is usually light gray, and the other side contains an adhesive that is covered by a removable backing.

The printing department is also responsible for printing the property cards, game cards, and money. The money is printed on colored-paper using standard laser printers. Ten copies of a particular denomination are printed on each 8.5-inch by 11-inch piece of paper. The money is then moved to the cutting department, where it is cut into individual bills. The property cards and game cards are produced similarly, the major difference being that they are printed on material resembling posterboard.

In addition to cutting the money, game cards, and property cards, the cutting department also cuts the cardboard that serves as the substrate for the actual game board. The game board consists of two boards created by cutting a single 19-inch by 19.25-inch piece of cardboard in half, yielding two boards each measuring 19.25 inches by 9.5 inches. After being cut, game boards, money, and cards are stored in totes in a work-in-process area and delivered to the appropriate station on the assembly line as needed.

Because of its explosive growth, X-Opoly’s assembly line was never formally planned. It simply evolved into the 19 stations shown in the following table.

I need the output of the code like this in java

First we create a new building
and display the result:

This building has no apartments.

Press enter to continue.........................

Now we add some apartments to the building
and display the result:

This building has the following apartments:

Unit 1 3 Bedroom
Rent $450 per month
Currently unavailable

Unit 2 2 Bedroom
Rent $400 per month
Currently available

Unit 3 4 Bedroom
Rent $1000 per month
Currently unavailable

Unit 4 1 Bedroom
Rent $500 per month
Currently unavailable

Unit 5 5 Bedroom
Rent $10000 per month
Currently available

Press enter to continue.........................

Now we try to add another apartment to the building
Cannot add another apartment the building is full.

Now we create a new building and add some apartments
then we collect the rent from all the occupied apartments
The total rent collected was: $2500

Finally we use the getUnits method to get a copy of the 3rd unit
from the building and change its rent to $10then we display
the building again to show that the apartment has not changed.

This building has the following apartments:

Unit 1 3 Bedroom
Rent $450 per month
Currently unavailable

Unit 2 2 Bedroom
Rent $400 per month
Currently available

Unit 3 4 Bedroom
Rent $1000 per month
Currently unavailable

Unit 4 1 Bedroom
Rent $500 per month
Currently unavailable

Unit 5 5 Bedroom
Rent $10000 per month
Currently available

Unit 6 3 Bedroom
Rent $550 per month
Currently unavailable

Press enter to end the program...................

and now I have to make a new class Building.java to show output like this given above and given below is the main java file

package lab06;

import properties.Building;
import properties.Apartment;
import util1228.Utilities;

//Tests the class Building

public class Lab06Driver {
    public static void main(String[] args) {
        
        //testing constructor and toString
        System.out.println("\nFirst we create a new building");
        Building b=new Building(5);
        System.out.println("and display the result:\n");
        System.out.printf("%s\n\n", b);
        Utilities.pause("Press enter to continue.........................");

        //testing addUnit
        System.out.println("\nNow we add some apartments to the building");
        b.addUnit(new Apartment(1,3,450,true));
        b.addUnit(new Apartment(2,2,400,false));
        b.addUnit(new Apartment(3,4,1000,true));
        b.addUnit(new Apartment(4,1,500,true));
        b.addUnit(new Apartment(5,5,10000,false));     
        System.out.println("and display the result:\n");
        System.out.printf("%s\n", b);
        Utilities.pause("Press enter to continue.........................");

        System.out.println("\nNow we try to add another "
                + "apartment to the building");
        b.addUnit(new Apartment(6,3,550,true));
        
        
        
        //testing collectRent
        System.out.println("\nNow we create a new building "
                + "and add some apartments");
        b=new Building(10);
        b.addUnit(new Apartment(1,3,450,true));
        b.addUnit(new Apartment(2,2,400,false));
        b.addUnit(new Apartment(3,4,1000,true));
        b.addUnit(new Apartment(4,1,500,true));
        b.addUnit(new Apartment(5,5,10000,false)); 
        b.addUnit(new Apartment(6,3,550,true));
        System.out.println("then we collect the rent from "
                + "all the occupied apartments");
        System.out.println("The total rent collected was: $"+b.collectRent());
        
        //testing getUnits
        System.out.print("\nFinally we use the getUnits method to get a copy "
                + "of the 3rd unit \nfrom the building and change its rent to "
                + "$10");
        b.getUnits()[2].setRent(10);
        System.out.println("then we display \nthe building again to show that "
                + "the apartment has not changed.\n");
        System.out.printf("%s\n", b);
        Utilities.pause("Press enter to end the program...................");
    }
}

THE MBA DECISION

Ben Bates graduated from college six years ago with a finance undergraduate degree. Since graduation, he has been employed in the finance department at East Coast Yachts. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither schools will allow its students to work while enrolled in its MBA program.

Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $65,000 per year, and his salary is expected to increase at 3 percent per year until retirement. He is currently 28 years old and expects to work for 40 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program.

The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $70,000 , payable at the beginning of each school year. Books and other supplies are estimated to cost $3,000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $110,000 per year , with a $20,000 signing bonus. The salary at this job will increase at 4 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent.

The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated, one-year program, with a tuition cost of $85,000 , to be paid upon matriculation. Books and other sup- plies for the program are expected to cost $4,500. Ben thinks that after graduation from Mount Perry, he will receive an offer of $92,000 per year , with a $18,000 signing bonus The salary at this job will increase at 3.5 percent per year. His average income tax rate at this level of income will be 29 percent.

Both schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben also estimates that room and board expenses will cost $2,000 more per year at both schools than his current expenses, payable at the beginning of each year. The appropriate discount rate is 6.3 percent.

1. How does Ben’s age affect his decision to get an MBA?

2. What other, perhaps non-quantifiable factors, affect Ben’s decision to get an MBA?

3. Assuming all salaries are paid at the end of each year, what is the best option for Ben—from a strictly financial standpoint?

4. Ben believes that the appropriate analysis is to calculate the future value of each option. How would you evaluate this statement?

5. What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?

6. Suppose that instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 5.4 percent. How would this affect his decision to get an MBA?