Financial Management

IMBA-622 Financial Management

Assignment 1 –

Financial Management – Theory and Application

Deadline

As per the VLE

Learning Objectives for Course

1. Obtain a comprehensive understanding of the financial environment and adequately

define financial terms

2. Have an ability and readiness to formulate, examine and defend business case

judgments, as well as recognize ethical dilemmas and corporate social responsibility

issues in Finance,

3. Conceptually understand the main theories of Corporate Finance and have a

commitment to their practical mathematical application

4. Compare and appraise theories that underlie current thinking in Corporate Finance

and Investment, demonstrate and evaluate how these theories can be applied in

practical situations,

5. Demonstrate effective oral communication of complex ideas and arguments, possess

developed listening skills.

Guidelines for assignment

ü This is an individual assignment

ü Ground your answer in relevant theory

ü Plagiarism and reproduction of someone else’s work as your own will be penalized

ü Make use of references, where appropriate – Use Harvard or APA referencing

method.

ü Late submission implies a deduction of 10 marks per day

ü Structural elements should include an introduction, main body, and a conclusion

ü Weight – 40%

ü Word count guidance: 2500 words

ü Type of assignment: Excel Assessed Work Folder

ü Start / Finish : as per the VLE

ü Learning Outcome Assessed: 1,2,3,4

FINANCIAL MANAGEMENT – ASSIGNMENT 1 MBA622 www.ucpmarjononline.co.uk

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Part 1

Assume that for a car manufacturer, Chrysler Ford. Your boss, the chief financial officer, has just handed

you the estimated cash flows for two proposed projects. Project L involves adding a new item to the

firm’s ignition line; it would take some time to build up the market for this product, so the cash inflows

would increase over time. Project S involves an add-on to an existing line, and its cash flows would

decrease over time. Both projects have 3-year lives, because Chrysler is planning to introduce entirely

new models after 3 years.

Here are the projects net cash flows (in thousands of dollars):

Expected after-tax

Net cash flows (CFt)

Year Project S Project L

0 ($100) ($100)

1 70 10

2 50 60

3 20 80

Project S

0 1 2 3

Project L

0 1 2 3

-100 70 50 20 -100 10 60 80

Depreciation, salvage values, net working capital requirements, and tax effects are all included in these

cash flows.

The CFO also made subjective risk assessments of each project, and he concluded that both projects have characteristics which are similar to the firm’s average project. Chrysler’s weighted

average cost of capital is 10%. You must no determine whether one or both of the projects should be

accepted.

Required

Evaluate the projects using the 5 key techniques:

(1) payback period,

(2) discounted payback period,

(3) net present value,

(4) internal rate of return,

(5) modified internal rate of return.

Identify those projects that will lead to the maximization of the firm’s stock price.

Part 2

Critically appraise the 5 appraisal techniques above. Discuss their limitations, the social and

ethical factors that should also be considered when making such decisions.

 
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Bond and Stock Valuation

Please discuss the ”Alternatively, find some other case of insider trading (a web search will turn up many current cases) and think how you could defend (or prosecute) that particular case. Post a short summary of your case and your comments.”

 
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FINANCIAL MANAGEMENT – ASSIGNMENT 2 MBA622

MBA-622 Financial Management

Assignment 2

The Greek Exit Plan

Deadline

As per the VLE

Learning Objectives for Course

1. Obtain a comprehensive understanding of the financial environment and adequately define financial terms

2. Have an ability and readiness to formulate, examine and defend business case judgments, as well as recognize ethical dilemmas and corporate social responsibility issues in Finance,

3. Conceptually understand the main theories of Corporate Finance and have a commitment to their practical mathematical application

4. Compare and appraise theories that underlie current thinking in Corporate Finance and Investment, demonstrate and evaluate how these theories can be applied in practical situations,

5. Demonstrate effective oral communication of complex ideas and arguments, possess developed listening skills.

Guidelines for assignment

ü This is an individual assignment

ü Ground your answer in relevant theory

ü Plagiarism and reproduction of someone else’s work as your own will be penalized

ü Make use of references, where appropriate – Use Harvard or APA referencing method.

ü Late submission implies a deduction of 10 marks per day

ü Structural elements should include an introduction, main body, and a conclusion

ü Weight – 45%

ü Word count guidance: 2500 words

ü Type of assignment: Business Report / Essay

ü Start / Finish : Week 6

ü Learning Outcome Assessed: 1,2,3,4,5

FINANCIAL MANAGEMENT – ASSIGNMENT 2 MBA622

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2

Questions

Each day there is speculation in the news about what could happen to Greece and its economy. Your assignment is to research the Greek crisis and draw your own conclusions on what the outcome will be for survival. Will they exit the Euro? Or rebuild their economy? This is a broad and open assignment that should be supported with theory learnt.

Please write a report on your findings and prepare a short 5 minute summary to present to your tutor by skype of video recording. Please email this to your tutor by the end of the course

 
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Accounting

Fire Corp is considering the purchase of a new piece of equipment. The equipment costs $50,800, and will have a salvage value of $5,080 after nine years. Using the new piece of equipment will increase Fire’s annual cash flows by $6,080.
a. What is the payback period for the new piece of equipment? (Round your answer to 2 decimal places.)
b. Suppose that the increase in cash flows were $10,080 in the first year, then decreased by $1,000 each year over the life of the equipment. What is the payback period for the equipment? (Round your answer to 2 decimal places.)  
   
Dobson Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income of $50,000. The equipment will have an initial cost of $516,000 and have an eight year life. There is no salvage value of the equipment. The hurdle rate is 10%. Ignore income taxes.
a. Calculate accounting rate of return. (Round your answer to 2 decimal places.)
b. Calculate payback period. (Round your answer to one decimal place.)
Bayshore, Inc., has collected the following cost data for various levels of activity:
  Month Clients Served Total Cost
  April 2,100           $ 35,000  
  May 1,750           $ 31,200  
  June 1,100           $ 24,000  
  July 1,500           $ 28,500  
Using the high-low method, determine the variable cost per client served and the total fixed cost. (Round your variable cost to 2 decimal places.)

Variable cost per client

Fixed Cost Per Month

Chipman Inc. produces water pumps. Overhead costs have been identified as follows:
  Activity Pool    Cost  
  Material handling $ 74,632.50  
  Material maintenance $ 73,400.00  
  Setups $ 77,128.00  
  Activity Driver  Activity  
  Number of moves 465  
  Number of machine hours 36,700  
  Number of production runs 62  
Chipman makes 3 models of pumps with the following details:
  Economy Standard Premium  
  Units produced 10,180 21,200 3,560  
 
  Number of moves 160 135 170  
  Machine hours 9,250 20,500 6,950  
  Production runs 15 17 30  
a. Calculate the activity rate for each activity. (Round your answers to 2 decimal places.)
   

Material Handling

Material Maintenance

Setups

b. Determine the amount of indirect costs assigned to each of the products. (Do not round your intermediate calculations. Round your answers to 2 decimal places.)
   

Economy

Standard

Premium

Chill Out Novelties sells ice cream bars from a kiosk near campus. Fixed costs are $360 per week and the variable cost is $1.00 per ice cream bar. Complete the following table for the levels of ice cream bars sold.(Round your cost per bar answers to 2 decimal places.)
 

Number of ice cream bars        460                950                 1340

Total fixed cost

Fixed cost per bar

Variable cost per bar

Total variable cost

Total cost

Cost per bar

Magnolia Company has identified seven activities as part of its manufacturing process and chosen corresponding activity drivers for each activity. The chart below lists the total cost of each activity, the amount of activity driver used for each of Magnolia’s two products, the activity rate, and the activity cost assigned to each product.
Fill in the blanks below:
 
 
Acme Company sold 1,020 units for $118 each. Variable costs were $60 per unit and total fixed expenses were $22,900.
Prepare a contribution margin income statement.
 

Contribution Margin Income Statement


  • Cost of Goods Sold   Dollar Amount
  • Fixed Costs                     |
  • Gross Margin                  \/
  • Interest Expense
  • Net Income After Taxes
  • Net Operating Income
  • Sales Revenue
  • Variable Cost

Contribution Margin

  • Cost of Goods Sold
  • Fixed Costs
  • Gross Margin
  • Interest Expense
  • Net Income After Taxes
  • Net Operating Income
  • Sales Revenue

Variable Cost

Carter, Inc. produces two different products, Product A and Product B. Carter uses a traditional volume-based costing system in which direct labor hours are the allocation base. Carter is considering switching to an ABC system by splitting its manufacturing overhead cost of $1,168,000 across three activities: Design, Production, and Inspection. Under the traditional volume-based costing system, the predetermined overhead rate is $2.92/direct labor hour. Under the ABC system, the rate for each activity and usage of the activity drivers are as follows:
Activity Rate Usage by
Product A
Usage by
Product B
  Design (Engineering Hours) $ 800/hour   150      250     
  Production (Direct Labor Hours) $ 1.50/hour   100,000      300,000     
  Inspection (Batches) $ 620/batch   300      100     
Required:
a. Calculate the indirect manufacturing costs assigned to Product A under the traditional costing system.
   

Indirect Manufacturing Cost

Calculate the indirect manufacturing costs assigned to Product B under the traditional costing system.

Indirect Manufacturing Cost

Calculate the indirect manufacturing costs assigned to Product A under the ABC system.

Indirect Manufacturing Cost

  Units  
  July 6,200  
  August 6,800  
  September 7,300  
  October 8,200  
  November 9,000  
Gertrude desires an ending finished goods inventory to be equal to 20% of the next month’s sales needs. July 1 inventory is projected to be 1,240 units. Each unit requires 10 pounds of Chemical A and 18 pounds of Chemical B. July 1 materials inventory includes 12,640 pounds of Chemical A and 113,760 pounds of Chemical B. Gertrude desires to maintain a Chemical A inventory equal to 20% of next month’s production needs and a Chemical B inventory equal to 100% of next month’s production needs.
a. Prepare a production budget for Gertrude for as many months as is possible.

              July            August          September           October               November

Sales

Ending Inv

Beg Inv

Production

. Prepare a raw materials purchases budget for both Chemical A and Chemical B for the months of July through September.

Chemical A               July                August              September             October

Production

Raw Material/unit (pounds)

Chemical A Needs

Ending Inv

Beginning Inv

Purchases of A

Chemical B Chart setup identical to chemical A

 
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Information Systems Design and Management

Ethical consideration: Who should be allowed to “know”?

Consider that you work in the human resources management department of a local business and that many of your friends work there.  Although you don’t personally generate payroll checks, you still have the ability to look up anyone’s salary.  Would you check on your friends’ records to see if they’re earning more money than you?  For that matter, would you look up their salary just out of simple curiosity, knowing that you would never do anything with the information or share it with anyone else?  Why or why not?  People working at the Internal Revenue Service (IRS) were caught just curiously looking up the reported incomes of movie stars and other high-profile public figures.  Is this acceptable?  Why or why not?

Two to three paragraphs required.  APA requirements

 
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Managerial Economics

Find one or more articles about a good/service the United States exports and a good/service the United States imports. In a well-written paper, explain the following:

  • Discuss what this suggests about the United States’ absolute and comparative advantage when it comes to this good/service.
  • Using the concepts of supply and demand, discuss what effect a “Buy American” campaign might have in the market for the imported good. 
  • Given what economists have to say about comparative advantage, would such a campaign be good or bad?

Adhere to the following standards:

  • Your paper should be three pages in length, not including the title or references pages.
  • Be sure to follow the APA Requirements.

Each paper should include an introduction, a body with fully developed paragraphs, and a conclusion.

 
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Managerial Economics

How do government policies and/or regulations factor into changes in economic activity on both a domestic and global scale?

  • Give a specific example of a policy or regulation that has helped economic activity.
  • Give a specific example of a policy or regulation that has hindered economic activity.
  • If you were an economist who was tasked with evaluating this policy or regulation, what are some ideas you would suggest for changing it in a way that would achieve the same goal but not hinder economic activity?
  • Finally, state whether or not you enjoy these types of evaluations and if you would consider these types of responsibilities in a future career.

One paragraph to three paragraphs are required. APA requirements.

 
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TARGET CORPORATION

Select a company in which you have an interest.  For that company, examine its working capital (remember, working capital is current assets in contrast to net working capital, which is current assets minus current liabilities).l

1. Explain why might a business not want to hold too much or too little working capital( CURRENT ASSETS ONLY)? 

2. Explain if the company that you selected for Assignment 1 has too much, too little, or just the right amount of working capital?  This determination should be based on comparisons to competitors, industry standards, etc. (COMPARE WC OF TARGET WITH WAL-MART STORES CORPORATION)

3. Calculate the company’s Cash Conversion Cycle – what is it (measured in days)?(ALREADY DONE IN THE EXCEL) – JUST STATE WHAT IT IMPLIES

4. What are two (2) practical actions that the firm you selected can take to shorten its cash conversion cycle? 

5. What working capital financing strategy is used by the company that you selected?  It is an aggressive strategy if current liabilities exceed current assets; it is a maturity matching strategy is current assets are approximately equal to current liabilities; it is a conservative if current liabilities are less than current asset.  What actual financial data support the conclusion?  Make sure that you complete the analysis using the Excel model that examines a firm’s working capital financing strategy.

 
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FINANCIAL RESEARCH PROJECT – EXPLANATION & INSTRUCTIONS

The Research Project Assignment is worth 20% of the course grade.

Due date is stated in the Class & Assignment Schedule (End of Week 7).

THE PROJECT IS DESIGNED TO BE COMPLETED INDIVIDUALLY BY EACH STUDENT.

OBJECTIVE:

The specific objective of this graded written research exercise is to prepare an “executive level financial report” to a potential investor. This report will involve the financial evaluation of a real, publicly-traded, company. It will require independent research (web-based and library), careful financial analysis, and the proper application of key financial theories and formulas.

The companies that may be analyzed for this project are Yahoo (YHOO), IBM (IBM), Target (TGT), Oracle (ORCL), or Deere (DE).

 SITUATION

You are a financial analyst with a large investment banking firm.  Your work involves preparing financial research reports and recommendations for clients of the firm.  This project represents such a report.

YOUR SPECIFIC ASSIGNMENT    

Your specific assignment is to research, analyze, and prepare a report for the clients on the actual financial performance of THE COMPANY THAT IS TO BE ANALYZED FOR THIS PROJECT.  In addition to reviewing the traditional financial performance indicators, you are also to review THE COMPANY’S past and current stock performance. Your report includes three parts:

(1)        A comprehensive review of THE COMPANY’S financial performance for the last 3 years.   A DuPont analysis is also required. (See detailed description below) 

(2)        An evaluation of THE COMPANY’S stock performance for the last year.

(3)        Finally, a specific recommendation, with supporting rationale, as to whether or not THE COMPANY’S recent trends in financial and stock performance are of sufficient financial strength to warrant entering into a long-term investment commitment.

To assist you in the task, the CFO has provided the following general guidance.

It is very important to comparatively evaluate THE COMPANY’S financial and stock performance trends against its Industry and/or principal competitors.

You should include all necessary and relevant financial performance and stock information, trends, and projections in supporting your recommendation. This information may include, financial ratio trends and industry comparisons, capital spending, stock growth, Beta values, credit rating service valuations, bond rating valuations, and management and investment reports – when these documents are available.

REPORT REQUIREMENTS – YOUR SPECIFIC ASSIGNMENT

Research and analyze the following information for THE COMPANY (SELECTED BY INSTRUCTOR).

–Annual Balance Sheets for THE COMPANY for the last three years.

–The Income Statements and Statements of Cash Flows for THE COMPANY the last three years.

— Annual reports, Form 10K Reports

 –Industry norms

—Analysts’ reports on performance

— Management reports or press releases, investor conference calls  

Using this information students will develop the evaluation of the financial performance for THE COMPANY. (85% of the assignment grade) 

1. Required Subheading: Background Information

Background and Industry (one short paragraph). 

2. Required Subheading: Financial Performance Results

Select the most significant financial performance results for the company: Compare Revenue, net income, cash flows, working capital, total assets for the last three years and other results for the company against the industry or main competitors. Present a table with this information in the report. Write about 1 page of analysis for these financial performance results. (15% of the project grade)

3. Required Subheading: Financial Ratio Analysis

Evaluate financial ratios for the company (the Mergent database available through the Library is a good source).  Write about 1-2 pages of analysis of the ratio data. (15% of the project grade). Compare the ratio results against the industry or main competitors.

4. Required Subheading : Return on Equity

 Evaluate Return on Equity for the company for the last three years using the DuPont analysis. (10% of the project grade). Compare the company’s results to a major competitor.  This involves taking the information from the Income statements and the Balance sheets to calculate the company’s return on equity using the DuPont formula. Show your calculations!  Write about 1 page of analysis of the results that you prepared. Compare the results to main competitors. If the management of the company would like to improve its return on equity, what should the management do? 

5. Required Subheading: Other Financial Indicators

Evaluate other significant financial performance indicators including: capital spending, stock growth, Beta values, credit rating service valuations (if possible), bond rating valuations (if possible), etc. Present an overall conclusion about the financial performance of the company during the last 3 years based on these indicators. Compare the results that you developed against the industry or main competitors.  Summarize the results in 1 page by explaining the firm’s financial strengths and weaknesses? (10% of the project grade).

6. Required Subheading: Stock Performance

Collect and evaluate the data about stock performance of the assigned company for the last year. Compare the results against the industry or main competitors.  Write about 1-2 pages of analysis of the results. (20% of the project grade).

7. Required Subheading: Investment Recommendation

Develop a specific recommendation, with supporting rationale, as to whether or not the assigned company’s recent trends in financial and stock performance, and projected performance, are of sufficient financial strength to warrant entering into a long-term investment commitment (write about 1 page) (15% of the project grade)

PRESENTATION OF PAPER AND WRITING (15%) of the project grade):

Organization, Format and Presentation of Paper including the Title page, Introduction, Body, and Summary (4% of the project grade).

Use of Tables, Figures and Other Graphics to Summarize and Support Analysis Presented in the Paper (3% of the project grade).

Logical and Smooth Flowing Transitions and Relationships among Sections of the Written Report (3% of the project grade).

Research Sources and Significance of Research Information and Data, Use of APA Citation Methodology (5% of the project grade).

The final report is to be an executive-level financial report, directed to the client. The report should be about 6 – 8 double-spaced typewritten pages (not counting the tables and graphs).

Essential research data, financial calculations and other documentation that is necessary to support the recommendation should be referred to in summary form in the report and included in the report as attachments.  All major references sources must be referenced. 

The Individual Research Report must be posted to the LEO Student Assignments.  Attachments are limited to a maximum two files in doc, docx., xls. xlsx., or rtf. formats. OTHER FORMATS ARE NOT ACCEPTABLE and will not be reviewed and graded.

 Pdf. files will not be accepted or graded.

All work must be Word processed. Handwritten and scanned work will not be accepted and graded.

The report is an individual effort and must be researched, developed and prepared by you. 

*****************************************************

Evaluation Rubric for the Research Project.

An evaluation rubric is available for the research project. The evaluation rubric outlines the specific requirements and elements of the project. It is suggested that the rubric be used as a guideline for the content, preparation, and completion of the project.  The rubric will be used for the evaluation and grading of the final research project.

 
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Short Management Theory

-All you need is to watch the video and answer 3 questions about the videoi in one written page.

-Also, I attached the chapter related to the lesson if you need to get through something you need.

– Make sure to have the assignment on time.

– The time zone here is the centeral time zone “Dallas” USA, which is 6 hours remaining until the due time.

The video link:

http://www.cengage.com/management/webtutor/daft_mgt10e/video/ojt/ch18.html

The questions are:

1- What type of team did Nikki Brush participate in when she was a freelancer?What type of team does she participate in as a full-time employee at Holden?

2- What are the advantages and disadvantages of using teams at Holden? What can managers do to help avoid the disadvantages?

3- What steps do the leaders of Holden take to insure that their workgroups have high levels of cohesion?

 
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