Iron Ore What? (IOW) Casting Company is considering adding a new line to its product mix. Sydney Johnson, a recently minted MBA, will be conducting the capital budgeting analysis. The new production line would be set up in unused space in IOW’s main plant. The machinery invoice price totals approximately $250,000, with another $20,000 in shipping charges and $30,000 to install the equipment, for a total requirement estimated at $300,000. The machinery has an economic life of 4 years, and IOW has obtained a special tax ruling that places the equipment in the Modified Accelerated Cost Recovery System (MACRS) 3-year class. After 4 years of use the machinery is expected to have a salvage value of $25,000.

The new product line would generate incremental sales of 1,350 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. Each unit can be sold for $200 each in the first year. The sales price and cost are expected to increase by 3% per year due to inflation. Further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 15% of sales revenues. The firm’s tax rate is 40%, and its overall weighted average cost of capital is 12%.

1. Calculate and provide the annual sales revenues and costs (other than depreciation). Why is it important to include inflation when estimating cash flows?
2. Construct 4 years of annual incremental operating cash flow statements for IOW Casting Company. Estimate the required net working capital for each year, and the cash flow due to investments in net working capital. Calculate the after-tax salvage cash flow.
3. Calculate the net cash flows for each of the 4 years. Based on these cash flows, what are the project’s NPV, IRR, MIRR, PI, payback, and discounted payback? Do these indicators suggest the project should be undertaken? Explain.
4. What does the term “risk” mean in the context of capital budgeting? To what extent can risk be quantified, and, when risk is quantified, is the quantification based primarily on statistical analysis of historical data or on subjective, judgmental estimates? Provide your rationale.
5. Describes sensitivity analysis and discuss a) its primary weakness; and b) its primary usefulness? For the IOW project, perform a sensitivity analysis on the unit sales, salvage value, and cost of capital. Assume that each of these variables can vary from its expected, or “base-case” value by ± 10%, ± 20%, and ± 30%. Include a sensitivity diagram, and discuss the results.
6. Assume that Sydney Johnson is confident of her estimates of all the variables that affect the project’s cash flows except unit sales and sales price. If product acceptance is poor, unit sales could be only approximately 1,000 units a year and the unit price would be set at $150. Conversely, an excellent consumer response could produce sales of 2,000 units and a unit price of $220. Sidney believes that there is a 25% chance of poor acceptance, a 25% chance of excellent acceptance, and a 50% chance of average acceptance (the base case). What is the worst-case NPV? The best-case NPV? Use the worst-, base-, and best-case NPVs and probabilities of occurrence to find the project’s expected NPV, standard deviation, and coefficient of variation.
7. Explain scenario analysis and any problems, issues, or concerns that surround this type of projection.
8. Define simulation analysis, and discuss its principal advantages and disadvantages.
9. Assume that IOW’s average project has a coefficient of variation in the range of 0.2 to 0.4. Would the new product line be classified as high risk, average risk, or low risk? What type of risk is being measured here?
10. IOW typically adds or subtracts 5 percentage points to the overall cost of capital to adjust for risk. Given this consideration, should the new line be accepted? Explain.
11. Describe other subjective risk factors that should be considered before the final decision is made, and their individual impact on the project.

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Prepare a 1,400- to 1,750-word paper in which you conduct a political, legal, cultural, financial, and ethical risk analysis for your selected global business venture. Analyze the following elements in your paper: Political, legal, and regulatory risks Exchange and currency risks Competitive risk assessment Taxation and double taxation risks Social, Ethical and cultural risks Cyber or technology risks Tariff and nontariff barriers Roles of international financial institutions (e.g. IMF, World Bank, ADB, etc.) Describe the country specific risks andhow you would manage these risks. Summarize your strategic planning process: Define and clarify mission and objectives Assess the role of marketing in your product or service SWOTT or PESTEL analysis of target country Make strategy selection(s) Select and justify an appropriate mode of entry for your global product or service Devise contingency plan

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A powerful city court magistrate engages in a number of questionable activities while on duty. A list of some of the activities includes the following:

• Borrowing money from court employees
• Publicly endorsing and campaigning for a candidate for judicial office
• Conducting personal business from the court chambers
• Directing other business court employees to perform personal errands for him during court hours
• Shutting court down early to prevent defendant from filing pleadings in an ongoing case
• Taking kickbacks from private juvenile detention facilities for locking more juveniles up on questionable charges
• Banning one of the defense attorneys in a case from speaking during the trial
• Jailing an entire courtroom because a cellphone went off during a proceeding, and no one came forward to accept responsibility
• Suggesting to persons appearing before him to contribute to certain charities in lieu of paying fines
• Using court employees to perform translating services for his mother’s day care business

Assignment Guidelines

• In 1,000–1,250 words, address the following:
  • Which, if any, of these activities would be considered unethical? Why?
  • Which of these activities, if any, would be considered ethical and acceptable? Why?
    • Be sure to use any research or examples to support your arguments.
    • Also be sure to address each of the above activities and explain whether or not you feel each is ethical or unethical.
  • Taken together, would these actions warrant the judge’s being disciplined? Would it warrant the judge’s removal from office? Why or why not?
• Be sure to reference all sources using APA style.

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Project Management: Contracting Process Paper

Assignment Requirements:

Write a 1,400- to 1,750-word paper in which you explain the process for conducting and closing procurements. Include the following: 

• Outline and explain high-level process steps for conducting project procurements.
• Outline and explain contract administration policies and procedures. 
• Describe tools and techniques for the contract administration process, including the following: 

• Contract change control process
• Procurement performance reviews
• Inspections and audits
• Performance reporting
• Payment process (n/30, n/60, and so forth)
• Records management system (RMS) 

• Describe conflict resolution techniques used while managing contractual relationships. 
• Outline steps to be taken to close out project procurements. 
• Explain the importance of closing project procurements and accounts. 
• Examine external influences on the procurement and risk management process. 
• Analyze the relationship between the risk response plan and the external influences. 

Format your paper consistent with APA guidelines.

Additional Requirements:

• Complete the assignment using your own words with correct spelling, punctuation, and grammar in APA format.  No plagiarism.
• If you are not using your own words or if you are quoting any information or definitions, make sure to cite the information by using proper APA format citations and don’t forget to include the source of the information as a reference on the references page by using proper APA format.

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Our costs are out of control claimed Rosemary Harper chief financial officer of Broadway United.  “In particular, I am really concerned about the level of marketing costs, especially for sales force.  With a 235-person sales force, Broadway sells computer hardware and software packages to financial institutions.  Harper supports the recommendations of a sales consulting firm to reduce the sales force by 50% and to hire a new “sales force” consisting of manufacturer’s agents who would be paid on a straight commission basis. The reduction in the sales force would mean that 10 district sales managers would lose their jobs.  The sales training manager position would be eliminated as well since manufactures agents do not need training according to the sales consultant.  Harper intended to keep only the best sales reps and eliminate the others in the 50% reduction process.  “Those experienced sales reps that remain with Broadway will not need enough training to justify keeping Broadway’s training department,” noted Harper.

What are the advantages and disadvantages of the sales consultant’s proposal?

Is it possible for company to cut costs too far?

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