The December 31, 2016 inventory of ABC Company consisted of four products, for which certain information is provided below.

                                                        Estimated                Expected           Estimated

Product      Original Cost            Completion Cost        Selling Price      Cost to sell

   A                        $25                          $6                            $40                      $4

   B                        $42                        $12                            $58                      $8

   C                      $120                        $25                          $150                    $15

   D                        $18                          $3                            $26                      $2

Using the lower-of-cost-or-net realizable value approach applied on an individual-item basis, compute the inventory valuation that should be reported for each product on December 31, 2016.

#2. Listed below are the amounts of net worth​ (in millions of​dollars) of the ten wealthiest celebrities in a country. Construct a 90​% confidence interval. What does the result tell us about the population of all​ celebrities? Do the data appear to be from a normally distributed population as​ required? 264 217 191 162 161 152 150 150 150 145 What is the confidence interval estimate of the population mean u ? ​

$------million<μ< $-------million (Round to one decimal place as​ needed.)

What does the result tell us about the population of all ​celebrities? Select the correct choice below​ and, if​ necessary, fill in the answer​box(es) to complete your choice. We are confident that 90​% of all celebrities have a net worth between $------million<μ< $-------million (Round to one decimal place as​ needed.)

We are 90​% confident that the interval from $------million<μ< $------- actually contains the true mean net worth of all celebrities. ​(Round to one decimal place as​needed.)

Because the ten wealthiest celebrities are not a representative​ sample, this​ doesn't provide any information about the population of all celebrities. Do the data appear to be from a normally distributed population as​ required?

A. ​Yes, but the points in the normal quantile plot do not lie reasonably close to a straight line or show a systematic pattern that is a straight line pattern.

B. ​Yes, because the pattern of the points in the normal quantile plot is reasonably close to a straight line.

C. ​No, because the points lie reasonably close to a straight​ line, but there is a systematic pattern that is not a straight line pattern.

D. ​No, but the points in the normal quantile plot lie reasonably close to a straight line and show some systematic pattern that is a straight line pattern.

#3. The pulse rates of 166 randomly selected adult males vary from a low of 35 bpm to a high of 107 bpm. Find the minimum sample size required to estimate the mean pulse rate of adult males. Assume that we want 98 % confidence that the sample mean is within 3 bpm of the population mean.

Find the sample size using the range rule of thumb to estimate q. N= ------ type whole number

B. assume that 10.7 bpm, based on values s= 10.7 bpm from the sample of 166 male pulse tares N= ------ type whole number

Compare the results from parts (a) and (b) which result is likely to be better?

The results from (a) is ----------- the results from part (b). The results from-------is likely to be better because ---------

#4. The Salaries of 45 college graduates who took a statistics course in college have a mean, x, of $ 64,900 . Assuming a standard deviation, q, of $19,881 , construct a 95 % confidence interval for estimating the population mean u. $ -----<μ< $------ round to nearest integer as needed

Step 1: Read the following scenario carefully: EverGlad Bodycare was recently co-founded by two Australian siblings who share a passion for protecting our planet and being ethical consumers. Ann and Oliver Jones, while pursuing their vocational education, realised that people the world over desire products that are not only good for them but also for the Earth. They wanted to create a line of skin and hair care products that used all-natural and organic ingredients and were cruelty-free and ethically sourced. The brother-sister duo spent months reaching out to local producers to understand which ingredients could be locally sourced with ease. After much experimentation with the various ingredients, they locked in their formulae for five product lines: shampoo & conditioner bars; hair masks; soap bars; body oils and body scrubs. As Ann and Oliver want to use only the best and safest natural ingredients, they realise that their prices will be high initially, at least until they started manufacturing on a much larger scale. Currently, they expect to just sell in their home state of South Australia. As they have no prior business or marketing experience, they approach you to be their marketing consultant.

Step 2: Answer the following questions 1. What marketing problems do you think EverGlad Bodycare will face once they launch their products? How should they overcome these? (You need to identify at least two possible problems and solutions. Provide reasons and support for your answers through research). (approx. 300 words) 2. On which bases should EverGlad segment the market? (Along with the segments, provide reasons and support them with your research). (approx. 150 words) 3. Which of Roy Morgan's value segments will this brand appeal to? (you need to provide reasons for your answer). (approx. 150 words) 4. Which targeting strategy would suit this brand the best? Why? (approx. 150 words) 5. Create a perceptual map for EverGlad Bodycare. Apart from showing its positioning, use external research to plot two other actual companies on the same perceptual map. Include a short write up to explain your logic. (approx. 100 words) 6. Which type of competitive advantage can EverGlad Bodycare establish? How should they go about it? (Chose one of the following - Cost, Differentiation, Niche or Sustainable competitive advantage to address this question). (approx. 150 words)

QUESTION 1: EQUITY VALUATION
Silverline Electricals Limited was founded ten years ago by Jim and Wendy Birt. The company manufactures and installs both traditional and contemporary models of lights for residential and commercial purposes. Silverline Electricals Ltd has experienced rapid growth because of the new technology that increases the energy efficiency of its systems and the introduction of new models of LED integrated lights. The company is equally owned by Jim and Wendy holding 100,000 shares each.
In August 2018, Jim and Wendy have decided to value their holdings in the company for financial planning purposes. To accomplish this, they have gathered the following information about their main competitors in the industry.
EPS ($)
DPS ($)
Share Price ($)
ROE (%)
Required rate (%)
Colonial Lighting
0.42
0.08
7.65
10.5
9.5
Reliable Lighting Plus
0.46
0.26
6.25
11.5
10.5
FullBright Electricals
-0.24
0.27
24.3
12.5
11.5
Industry Average
0.36
0.27
8.24
11.0
10.5
Last year, Silverline Electricals Ltd had an EPS of $0.52 and paid dividends to Jim and Wendy of $31,200 each. The company also had a return on equity of 15%. Jim and Wendy believe a required rate of return of 12% for the company is appropriate.
Required:
1. Assuming the company continues its current growth rate (growth rate should be inferred from the data given) into the infinite period, what is the share price of the company?
(7marks)
2. To verify their calculations, Jim and Wendy have hired Richard Wang, a consultant. Richard was previously an equity analyst, and he has a good understanding of the electrical Industry. Richard has examined the company’s financial statements as well as those of its competitors. Although Silverline Electricals Ltd currently has a technological advantage, Richard’s research indicates that Silverline Electricals Ltd’s competitors are investigating other methods to improve efficiency. Given this, Richard believes that Silverline Electricals technological advantage will last for only the next five years. After that period, the company’s growth is likely to slow down to the industry average. Additionally, Richard believes that the company’s required return currently is too high and so after year 5, the industry average required return is a more appropriate rate for valuation. Taking Richard’s assumptions into consideration, calculate the estimated share price of Silverline Electricals Ltd.

3. What is the industry average price-earnings ratio? What is Silverline Electricals Ltd’s price-earnings ratio based on Richard’s estimation in part (2) above? Comment on any differences and explain why these differences may exist?

4. After a discussion with Richard, Jim and Wendy agree that they wanted to increase the value of the company’s equity. Like many small business owners, they want to retain control of the company and do not want to sell shares to outside investors. They also feel that the company’s debt is at a manageable level and do not want to borrow more money. What steps can they take to increase the share price? - justify each of your suggestions.

Simulation Case Study:
Phoenix Boutique Hotel Group

Phoenix Boutique Hotel Group (PBHG) was founded in 2007 by Bree Bristowe. Having worked for several luxury resorts, Bristowe decided to pursue her dream of owning and operating a boutique hotel. Her hotel, which she called PHX, was located in an area that included several high-end resorts and business hotels. PHX filled a niche market for “modern travelers looking for excellent service and contemporary design without the frills.” Since opening PHX, Bristowe has invested, purchased, or renovated three other small hotels in the Phoenix metropolitan area: Canyon Inn PHX, PHX B&B, and The PHX Bungalows.

One of the customer service enhancements Bristowe has implemented is a centralized, toll-free reservation system. Although many customers book specific hotels online, the phone reservation system enables PBHG to find the best reservation match at all properties. It has been an excellent option for those customers who have preferences regarding the type of room, amenity options, and the best price across the four hotel locations.

Currently, three agents are on staff for the 6 a.m. to 2 p.m. call shift. The time between calls during this shift is represented in Table 1. The time to process reservation requests during this shift is in Table 2.

Table 1: Incoming Call Distribution

Table 2: Service Time Distribution

Bristowe wants to ensure customers are not on hold for longer than 2 minutes. She is debating hiring additional staff for this shift based on the available data. Additionally, Bristowe and PBHG will soon be featured in a national travel magazine with a circulation of over a million subscriptions. Bristowe is worried that the current operators may not be able to handle the increase in reservations. The projected increase for call distribution is represented in Table 3.

Table 3: Incoming Call Distribution

Bristowe has asked for your advice in evaluating the current phone reservation system. Create a simulation model to investigate her concerns. Make recommendations about the reservation agents.

Personally Yours: The negligent Hiring/Retention Case

GeNeral INformatIoN

Personally Yours is a personal assistant rm founded in 1997. After years of struggling to balance work and family, Sarah Winters established this company to address some of the challenges working professionals face in their busy lives. Personally Yours provides a wide range of services, including residential housekeeping, grocery shopping, household organization, home companion, adult day care and even handyperson services.

Sarah Winters started the company in her hometown of Tampa, Florida, with the help of a small business grant, personal savings, and three employees (her mother, sister and cousin). After several rocky years, Winters now has 15 branch offices located throughout central Florida and Miami. Each branch employs a branch manager who is responsible for administrative duties and approximately 15 employees who work either full time or part-time. The rest of her 250 employees are located at the Tampa headquarters. To keep operations lean, Winters has kept central administrative staff to a minimum; she has outsourced services such as payroll, accounts payable and legal services. But as the company grows, Winters has been rethinking this strategy.

role of Gary GarcIa, Hr suPervIsor

Gary Garcia has been the HR supervisor at Personally Yours for the past 9 years. His immediate supervisor is HR Manager Alyssa Williams. After attending a meeting
at the local SHRM chapter, Garcia came away with some great ideas about how their organization could improve HR operations. Overall, things are running pretty efficiently; but Personally Yours is a quickly growing, medium-sized organization, and in many ways, it still operates like the small, family-owned and -operated business it was just a few years ago.

For example, hiring processes are now standardized at headquarters and at the branch offices. Each job applicant completes a standardized application, submits a re?sume? (if appropriate for the position), does pre-employment testing, and undergoes a screening that includes contacting references and former employers and a criminal background check. However, this was not the case when the company first started, and many longtime employees have never gone through a background check. This is extremely troubling to Garcia, in light of the fact that their employees work in clients’ homes and have contact with vulnerable individuals (e.g., children, elderly, infirm).

role of alyssa WIllIams, Hr maNaGer

Alyssa Williams is the HR manager for Personally Yours, Inc. She has been in this position for more than seven years. Williams works in the corporate headquarters located in Tampa, Florida. She has an undergraduate degree in HR and is active in the local SHRM chapter.

Though her title is officially HR manager, her duties are more like a vice president of HR. She reports directly to the president and founder, Sarah Winters, who routinely consults Williams regarding both general and strategic HR management decisions. The company has outsourced some HR functions, such as payroll; however, when it comes to the remaining HR functions that are handled internally, top management takes a hands-off approach and allows Williams to exercise her judgment. (Williams is the highest-ranking human resource management professional in the company.) Williams feels complimented by the faith the senior management has shown in her. For example, all requests to create new positions must be approved by Williams.

role of vIolet jeNNINGs, braNcH maNaGer, tamPa-east

Violet Jennings has been the Tampa-East branch manager of Personally Yours,Inc., for the past 9 years. Jennings has been friends with the president and founder, Sarah Winters, ever since they attended high school together. Jennings was one of the first non–family members hired to work for Personally Yours, and she has been serving as manager of the Tampa-East branch for 6 years now. Before working for Personally Yours, Jennings worked in a number of positions, including housekeeping manager for a major hotel chain and customer service representative for a local utility company. Jennings was also a stay-at-home mother for several years and briefly owned a used-clothing store.

The Tampa-East branch is the largest branch office, with 17 full-time housekeepers, 11 full-time nurses, 19 part-time nurses, 10 part-time home health aides, and 6 full-time handymen. Jennings’ official job title is branch manager, but because of the close relationship she has with the Winters’ and her long tenure with the company, Jennings is frequently consulted by headquarters when they are making policy decisions.

Currently, hiring processes at Personally Yours are standardized at headquarters and at the branch offices. Each job applicant completes a standardized application, submits a re?sume? (if appropriate for the position), does pre-employment testing, and goes through a screening that includes contacting references and former employers and a criminal background check. However, this was not the case when the organization was first started, and many longtime employees have never gone through a background check. Because their employees work in clients’ homes and have contact with vulnerable individuals (e.g., children, elderly, infirm), HR supervisor Gary Garcia would like to reevaluate the company’s screening policies.

Assignment:

- You and the HR supervisor, along with suggestions from the branch manager, must determine if background checks on all employees (new and existing) are necessary. If so, you must develop a protocol to conduct them (e.g., which employees; how thorough).

- It has come to Branch Manager Violet Jennings’s attention that one of her longtime employees, Jackson Tibbits, a handyman, is on the Florida Sexual Offender list. After doing more research, they learn that 17 years ago, when Tibbits was 24, he was convicted of having unlawful sexual contact with a 15-year-old female. As a registered sexual offender, Tibbits cannot live within 1,000 yards of a school and must register with the state any time he moves. Also, he is prohibited by law from holding positions such as schoolteacher and healthcare professional. You, Garcia and Jennings must decide whether you should terminate Tibbits based on this newly discovered information.

Mini Case

Share Valuation At Gold Coast Constructions.

Gold Coast Constructions was founded nine years ago by siblings Elise and Paul Nelson. The company constructs prestige homes in the Gold Coast region of Queensland. Gold Coast Constructions has experienced rapid growth because a number of celebrity customers have used them to build their homes on the new canal developments. The company is equally owned by Elise and Paul. The original partnership agreement gave each sibling 50,000 shares. In the event that either wished to sell their shares, the shares first had to be offered to the other partner at a discounted price.

Although neither sibling wants to sell, they have decided they should value their holdings in the company. To get started, they have gathered the following information about their main competitors:

Expert Homes Ltd negative earnings per share were the result of an accounting write-off last year. Without the write-off, earnings per share for the company would have been $1.10. Last year, Gold Coast Constructions had an EPS of $3.15 and paid a dividend to Elise and Paul of $45,000 each. The company also had a return on equity of 17%. The siblings believe that 14% is an appropriate required return for the company.

Questions.

1. Assuming the company continues its current growth rate, what is the value per share of the company’s shares?

2. To verify their calculations Elise and Paul have hired Josh Schessman as a consultant. Josh was previously an equity analyst and covered the building industry. Josh has examined the company’s financial statements, as well as those of their competitors. Although Gold Coast Constructions currently has a reputational advantage, his research indicates that other companies are investigating ways to improve their own standing. Given this, Josh believes that Gold Coast Constructions’ reputational advantage will last only for the next five years. After that period, the company’s growth will probably slow to the industry growth average. Additionally, Josh believes that the required return used by the company is too high. He believes the industry average required return is more appropriate. Under this growth rate assumption, what is your estimate of the share price?

Step 1: Read the following scenario carefully:

EverGlad Bodycare was recently co-founded by two Australian siblings who share a passion for protecting our planet and being ethical consumers. Ann and Oliver Jones, while pursuing their vocational education, realised that people the world over desire products that are not only good for them but also for the Earth. They wanted to create a line of skin and hair care products that used all-natural and organic ingredients and were cruelty-free and ethically sourced. The brother-sister duo spent months reaching out to local producers to understand which ingredients could be locally sourced with ease. After much experimentation with the various ingredients, they locked in their formulae for five product lines: shampoo & conditioner bars; hair masks; soap bars; body oils and body scrubs. As Ann and Oliver want to use only the best and safest natural ingredients, they realise that their prices will be high initially, at least until they started manufacturing on a much larger scale. Currently, they expect to just sell in their home state of South Australia. As they have no prior business or marketing experience, they approach you to be their marketing consultant.

Step 2: Answer the following questions 1. What marketing problems do you think EverGlad Bodycare will face once they launch their products? How should they overcome these? (You need to identify at least two possible problems and solutions. Provide reasons and support for your answers through research). (approx. 300 words)

2. On which bases should EverGlad segment the market? (Along with the segments, provide reasons and support them with your research). (approx. 150 words)

3. Which of Roy Morgan's value segments will this brand appeal to? (you need to provide reasons for your answer). (approx. 150 words)

4. Which targeting strategy would suit this brand the best? Why? (approx. 150 words)

5. Create a perceptual map for EverGlad Bodycare. Apart from showing its positioning, use external research to plot two other actual companies on the same perceptual map. Include a short write up to explain your logic. (approx. 100 words)

6. Which type of competitive advantage can EverGlad Bodycare establish? How should they go about it? (Chose one of the following - Cost, Differentiation, Niche or Sustainable competitive advantage to address this question). (approx. 150 words)

HarLeY-DaViDSOn Founded in 1903 in Milwaukee, Wisconsin, Harley-Davidson has twice narrowly escaped bankruptcy but is today one of the most recognized motor vehicle brands in the world. In dire financial straits in the 1980s, Harley licensed its name to such ill-advised ventures as cigarettes and wine coolers. Although consumers loved the brand, sales were depressed by product-quality problems, so Harley began its return to greatness by improving manufacturing processes. It also developed a strong brand community in the form of an inclusive owners’ club, called the Harley Owners Group (H.O.G.), which sponsors bike rallies, charity rides, and other motorcycle events and now numbers more than 1 million members in some 1,400 chapters. H.O.G. benefits include a magazine called Hog Tales, a touring handbook, emergency road service, a specially designed insurance program, theft reward service, discount hotel rates, and a Fly & Ride program enabling members to rent Harleys on vacation. The company also maintains an extensive Web site devoted to H.O.G. with information about club chapters and events and a special members-only section. Harley is active with social media too and boasts more than 3.3 million Facebook fans. One fan inspired a digital video and Twitter campaign dubbed E Pluribus Unum—“Out of Many, One”—where Harley riders from all walks of life show their diversity and their pride in their bikes. Companies large and small can build brand communities. When New York’s Signature Theatre Company built a new 70,000-square-foot facility for its shows, it made sure there was a central hub where casts, crew, playwrights, and audiences for all productions could mingle and interact.65 Online, marketers can tap into social media such as Facebook, Twitter, and blogs or create their own online community. Members can recommend products, share reviews, create lists of recommendations and favorites, or socialize together online. Online forums can be especially helpful in a business-to-business setting for professional development and feedback opportunities. The Kodak Grow Your Biz blog is a place for members to learn and share insights about how Kodak products, services, and technologies can improve important company or industry business performance.66 The Pitney Bowes User Forum is a place for members to discuss issues related to Pitney Bowes equipment and to mailing and marketing in general. Members often answer each other’s business questions, though Pitney Bowes customer service representatives are available for any particularly difficult support questions.67 maximizing the benefits of branD Communities A strong brand community results in a more loyal, committed customer base. One study showed that a multichannel retailer of books, CDs, and DVDs enjoyed long-term incremental revenue of 19 percent from customers—what the authors called “social dollars”— after customers joined an online brand community. The more “connected” a member of the community was, the greater the likelihood he or she would spend more.68 A brand community can be a constant source of inspiration and feedback for product improvements or innovations. The activities and advocacy of members of a brand community can also substitute to some degree for activities the firm would otherwise have to engage in, creating greater marketing effectiveness and efficiency as a result.69To better understand how brand communities work, one comprehensive study examined communities around brands as diverse as StriVectin cosmeceutical, BMW Mini auto, Jones soda, Tom Petty & the Heartbreakers rock and roll band, and Garmin GPS devices. Using multiple research methods such as “netnographic” research with online forums, participant and naturalistic observation of community activities, and in-depth interviews with community members, the researchers found 12 value creation practices taking place. They divided them into four categories—social networking, community engagement, impression management, and brand use—summarized in Table 5.5. Building a positive, productive brand community requires careful thought and implementation.70 One set of researchers offers these recommendations for making online brand communities more effective:71

1. Enhance the timeliness of information exchanged. Set appointed times for topic discussion; give rewards for timely, helpful responses; increase access points to the community

. 2. Enhance the relevance of information posted. Keep the focus on topic; divide the forum into categories; encourage users to preselect interests.

3. Extend the conversation. Make it easier for users to express themselves; don’t set limits on length of responses; allow user evaluation of the relevance of posts.

4. Increase the frequency of information exchanged. Launch contests; use familiar social networking tools; create special opportunities for visitors; acknowledge helpful members.

3. The scores for all students taking the ACT test in a recent year are normally distributed with a mean of 21.0 and a standard deviation of 4.7.

1. If a student who takes the ACT is randomly selected, find the probability that their score is above 23.
2. If five ACT scores are randomly selected from the population of students who took the test, find the probability that all five of the scores are above 23. (Remember the Multiplication Rule from Chap 4)
3. If five students who took the ACT are randomly selected, find the probability that their mean score is above 23.
4. Find P₉₀, the score separating the bottom 90% from the top 10%.