Which of the following can improve the trade balance between the US and other countries?

I. When US citizens visit other countries

II. When French tourist visit the US

III. When German investors buy homes in the US

IV. When US citizens buy an Apple product

A- I only

B- II only

C- II and III only

Exotic Food Inc., a food processing company located in Herndon, VA, is considering adding a new division to produce fresh ginger juice. Following the ongoing TV buzz about significant health benefits derived from ginger consumption, the managers believe this drink will be a hit. However, the CEO questions the profitability of the venture given the high costs involved. To address his concerns, you have been asked to evaluate the project using three capital budgeting techniques (i.e., NPV, IRR and Payback) and present your findings in a report. CASE OVERVIEW The main equipment required is a commercial food processor which costs $200,000. The shipping and installation cost of the processor from China is $50,000. The processor will be depreciated under the MACRS system using the applicable depreciation rates are 33%, 45%, 15%, and 7% respectively. Production is estimated to last for three years, and the company will exit the market before intense competition sets in and erodes profits. The market value of the processor is expected to be $100,000 after three years. Net working capital of $2,000 is required at the start, which will be recovered at the end of the project. The juice will be packaged in 20 oz. containers that sell for $3.00 each. The company expects to sell 150,000 units per year; cost of goods sold is expected to total 70% of dollar sales. Weighted Average Cost of Capital (WACC): Exotic Food’s common stock is currently listed at $75 per share; new preferred stock sells for $80 per share and pays a dividend of $5.00. Last year, the company paid dividends of $2.00 per share for common stock, which is expected to grow at a constant rate of 10%. The local bank is willing to finance the project at 10.5% annual interest. The company’s marginal tax rate is 35%, and the optimum target capital structure is: Common equity 50% Preferred 20% Debt 30%

What is the projected net income and Operating Cash Flows (OCF) for the three years?

Complete an income statement for each year. What are the Free Cash Flows (FCF) generated from the project? Create a projected cash flow schedule

Classic Bicycles Inc. makes moderately expensive bikes and very high end custom bikes. The moderately expensive bikes sell for $600 apiece whereas the high end bikes sell for $8,000 apiece.

The Company uses an outside marketing agency to promote both of their products. The Company pays the agency $4,000,000 per year for marketing activities.

Income Statement

40% of the total sales dollars are from High-End bikes
60% of the total sales dollars are from Moderate bikes.

The $4,000,000 in Marketing Costs has been allocated based on relative sales amounts. So, $1,600,000 is allocated to High-End bikes and $2,400,000 is allocated to Moderate Bikes.

The Board of Directors is considering dropping the Moderate Bike line. The CEO agrees. However one Board member has asked: “is the allocation of the marketing costs reasonable?”

In the past no one has solicited detailed cost information from the marketing Company. Upon your request the Marketing Company has provided the following information.

Directed Advertisement    Cost $1,600,000
2,000 advertisements at $800 per ad.
1,200 advertisements for High-End Bikes
800 Advertisements for Moderate Bikes

Direct Calling     Cost $2,200,000
100,000 direct calls at $22 per call
100,000 direct calls for High-End Bikes
No direct calls for Moderate Bikes

Product Demonstrations Cost $200,000
400 Demonstrations at $500 per demonstration
80 Demonstrations for High-End Bikes
320 Demonstrations for Moderate Bikes

Required

Re-allocate Marketing Costs using ABC Techniques

Identify operating income by Product line with the new allocation

Make a recommendation about product line retention

Tax savings are being passed down

President Trump signed the Tax Cuts and Jobs Acts into law on Dec. 22, 2017, reducing personal income taxes for most families for the next 10 years. Corporations, however, received much bigger and more permanent tax cuts with the new law reducing the corporate tax rate from 35% to 21% and reducing the tax on repatriated cash to 15.5%. The Congressional Budget Office estimates businesses will save about $320 billion in taxes over the next 10 years. The tax overhaul prompted hundreds of businesses to offer bonuses and pay raises to their workers and expand employee benefits. Here’s a selection of companies that have passed on some of their savings to their employees. 37.

Wells Fargo

Wells Fargo (NYSE: WFC) smartly avoided paying out bonuses to its employees in the wake of tax reform. The company has a murky history with employee bonuses. Instead, it increased the minimum wage to $15 per hour, pushing competing banks to do the same. It’s unclear whether that pay raise is linked to the tax cuts as Wells Fargo’s press team has issued conflicting reports. Wells Fargo is also planning to donate $400 million to nonprofits this year. Wells Fargo stands to benefit from the 14 percentage point decrease in the U.S. corporate tax rate more than most other companies. Nearly all of its operations take place in the U.S. As a result, its effective tax rate could fall to about 22% this year, according to Goldman Sachs analysts, down from 33% last year. That would result in about $3.7 billion in tax savings. Even with a $1 billion fine hanging over its head, Wells Fargo is making out quite well from tax reform.

Companies will still come out ahead

There are many more companies that offered wage increases, bonuses, and other employee benefits in the wake of tax reform. Over 400 companies have announced plans to pass on some of their savings to employees in some form, with 4 million-plus workers receiving over $4 billion in bonuses, according to the GOP. Corporations should still come out well ahead even after paying out employee bonuses. The corporate tax cuts are permanent, and most companies opted to pay a relatively small one-time bonus compared to the benefits they’ll see this year alone. It’s also unclear if the wage and benefits plan increases are more closely tied to the tax cuts or a booming job market where companies are forced to compete more aggressively for labor. American workers are seeing more money in their pockets this year, but they need to save that money because it’s likely a one-time bonus and the personal income tax cuts aren’t permanent. Adam Levy owns shares of Apple, Express Scripts, Lowe's, and Starbucks. The Motley Fool owns shares of and recommends Anheuser-Busch InBev NV, Apple, CarMax, Chipotle Mexican Grill, Mastercard, Starbucks, and Walt Disney. The Motley Fool owns shares of Verizon Communications and Visa and has the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, short September 2018 $180 calls on Home Depot, and long January 2020 $110 calls on Home Depot. The Motley Fool recommends Aflac, Amerco, CVS Health, FedEx, Home Depot, JetBlue Airways, and Marriott International. The Motley Fool has a disclosure policy.

We see the headline that states unemployment is at the lowest rate in history, yet we seem to miss the news that many organizations are laying off large numbers of employees. This is a real time example of the hazards that result from poor or no workforce planning. Pick one of the companies mentioned in the slide show and do a bit more research on the situation surrounding the layoff plan and then answer your discussion question for this week.

- Write a one paragraph summary of whether or not you think that workforce planning could have avoided or minimized the layoffs at the company you selected from the list. Explain your answer.

- Write a second paragraph giving your view on whether or not effective workforce planning can create a more stable employment situation for the average worker in the US. This explanation should demonstrate your understanding of the HRP process.

3. a) What does an income elasticity of demand of +1.33 mean? b) Explain why the government potentially can raise more tax revenue if it applies a tax to a good with inelastic demand than if it applies the tax to a good with elastic demand? c) The Vice Chancellor of a university is concerned about increasing costs, and decides to raise tuition fees in an attempt to increase university revenue. Briefly explain (i.e. 2 or 3 sentences) whether you think this move will accomplish the Vice Chancellor’s objective.

Weekly gross income earned by lecturers in XYZ University is normally distributed with a mean of $1,600 and a standard deviation of $250. The Chief Operation Manager of XYZ University would like to do an audit on the weekly gross income earned by lecturers in his institution. Assist the manager is answering this: what is the probability that if 50 lecturers are randomly selected, their average weekly gross income would be more than $1,700?

Weekly gross income earned by lecturers in XYZ University is normally distributed with a mean of $1,600 and a standard deviation of $250. The Chief Operation Manager of XYZ University would like to do an audit on the weekly gross income earned by lecturers in his institution. Assist the manager is answering this: what is the probability that if 50 lecturers are randomly selected, their average weekly gross income would be more than $1,700?

A report states that the mean yearly salary offer for students graduating with a degree in accounting is $48,744. Suppose that a random sample of 50 accounting graduates at a large university who received job offers resulted in a mean offer of $49,850 and a standard deviation of $3400. Do the sample data provide strong support for the claim that the mean salary offer for accounting graduates of this university is higher than the national average of $48,744? Test the relevant hypotheses using α = 0.05. t= p-value=