Premium Essay

Chapter 11. Ch 11-18 Build a Model

In: Business and Management

Submitted By arnitaetsitty
Words 1111
Pages 5
Chapter 11. Ch 11-18 Build a Model

Click Link Below To Buy: http://hwaid.com/shop/chapter-11-ch-11-18-build-a-model/ Webmasters.com has developed a powerful new server that would be used for corporations’ Internet activities. It would cost $10 million at Year 0 to buy the equipment necessary to manufacture the server. The project would require net working capital at the beginning of each year in an amount equal to 10% of the year's projected sales; for example, NWC0 = 10%(Sales1). The servers would sell for $24,000 per unit, and Webmasters believes that variable costs would amount to $17,500 per unit. After Year 1, the sales price and variable costs will increase at the inflation rate of 3%. The company’s nonvariable costs would be $1 million at Year 1 and would increase with inflation.

The server project would have a life of 4 years. If the project is undertaken, it must be continued for the entire 4 years. Also, the project's returns are expected to be highly correlated with returns on the firm's other assets. The firm believes it could sell 1,000 units per year.

The equipment would be depreciated over a 5-year period, using MACRS rates. The estimated market value of the equipment at the end of the project’s 4-year life is $500,000. Webmasters’ federal-plus-state tax rate is 40%. Its cost of capital is 10% for average-risk projects, defined as projects with a coefficient of variation of NPV between 0.8 and 1.2. Low-risk projects are evaluated with a WACC of 8%, and high-risk projects at 13%.

a. Develop a spreadsheet model, and use it to find the project’s NPV, IRR, and payback. Key Output: NPV =
Part 1. Input Data (in thousands of dollars) IRR = MIRR =
Equipment cost $10,000
Net WC/Sales 10% Market value

Similar Documents

Premium Essay

Mis 301

...MIS 301 Introduction to Information Technology Management FALL 2010 - Unique Numbers: 03905, 03910, 03915 Instructor tructorBin Gu – bin.gu@mccombs.utexas.edu Dr. Information, Risk, & Operations Management (IROM) Dept. Office CBA 5.228 Office Hours MW 4:00-5:00 pm or by appointment Qian Tang - qian.tang@phd.mccombs.utexas.edu Teaching Assistant CBA 1.308B Office TBD Office Hours Course Description Information technology (IT) has transformed all aspects of 21st century business and everyday life. New IT investments continue to be staggering. Worldwide, over $2.5 trillion is invested in IT. In the U.S., over 50% of capital expenditures are related to IT. Information systems influence business processes, organizational structures, and the ways people do business, work, and communicate. Emerging technologies have triggered new forms of organization and business process innovation; they have also impacted organizational structure, culture, politics, decision making, and society as a whole. IT is transforming how physical products are designed, how services are bundled with products, and how individuals interact with businesses and with other individuals. A silent transformation is occurring as more and more physical products use embedded IT to improve customer experience and product performance. The pervasiveness of IT is expanding global trade and changing how and where work is performed. It is vital that future managers—in every area of business—have a...

Words: 3229 - Pages: 13

Free Essay

Assessment

...Administrative queries | Email: bsb119@qut.edu.au | Tutor contact details | Available in Contact Us section of Blackboard | Lecture Schedule Date: Week Beginning | Lecture Topic | Readings from textbook | Week 129 February | Introduction * Overview of Australian Business Environment * Globalisation and interdependencies * Drivers of internationalisation | Ch 1(pp19 to 28 & 43 to 63) | Week 27 March | Introduction to IB Theories and Databases * Models/theories of internationalisation * Country analysis * EIU, GMID Databases | Ch 2 (pp90-108) | Week 314 March | Business environments – Socio-economic characteristics * Country profile and macro-segmentation * Levels of economic and social development * Determinants of market potential | Ch 7 | Week 421 March | Business environments – cultural diversity * Elements of culture * Dimensions of culture * Doing business across cultures | Ch 5 | Midsemester Break | Week 54 April | Business environments – trade and investment * Instruments of trade policy * Costs and benefits of FDI * Regulation of FDI | Ch 3 (pp.116-145) | Week 611 April | Business environment – Political * Political systems * Political ideology *...

Words: 877 - Pages: 4

Free Essay

Final Review

...Biblical faith to Social issues * Housing and immigration are public policy issues * Daniel devotes a chapter to this question, using “Caesar vs. God” image from New Testament * Micah Shows up in both books (see below) * Differences? * Is immigration more of a “hot button” issue than housing? * If so, do we find different kinds of rhetoric? * Phil comment in class: Does Reckford focus more on system or structures or root causes (next slide) and Daniel more on individuals? * If so, do we have different kinds of solidarity in these two approaches? * Root Causes (“cycle”) of Poverty (structural analysis) (52-53) * Rhetorical device? * Cites 5 of them * “social capital” (56-58) is a rich illustration * Solidarity involves “learning” and “sensitivity” and “collaboration” (60) * Corresponding interventions/Solutions * E.g. “not charity but capital” (Clarence Jordan, cited 54) * 62-63: justice = level playing field (Sen. M. Fenwick, grandmother) * Housing is one of several interventions, but foundational (59) * Note structural components (infrastructure) of this intervention * E.g. ONE Campaign (http://www.one.org/us/) : 1% of US budget against extreme poverty * Immigration as “spiritual pilgrimage” * Religion/Public Square (ch.4) * “Do I believe in the moral teaching of my faith more than...

Words: 2923 - Pages: 12

Premium Essay

Wongxiaoming

...finance Focuses on technologies that can be used in practice – Based on real world examples Adopts activist point of view to investing – The market may be inefficient 0-1 What Will You Learn from the Course Part I Financial statements and valuation Ch. 1-7 • How intrinsic values are calculated • What determines a firm’s value • How businesses are analyzed to assess the value they create • How financial analysis is developed for strategy and planning • The role of financial statements in determining firms’ values • How to pull apart the financial statements to get at the relevant information • How ratio analysis is employed in valuation • How growth is analyzed and valued • How to calculate the P/E and P/B ratio and what they should be • The value of operations • How to make forecasts and develop valuations • How to assess the quality of the accounting 0-2 _c I- By the end of the course, students should be able to develop earnings forecasts and then use the forecasts to value equity and form investment recommendations, much the same as what financial analysts do in the market. Microsoft Corporation MSI-T lNa=d~1l |*** mlllum 310009 album “mum Median Wb A AM Sdtvme-Irfraslarrxrn Strong Start to 20 11 for Microsoft...

Words: 2057 - Pages: 9

Premium Essay

Market

...LOVELY PROFESSIONAL UNIVERSITY INSTRUCTION PLAN (for Lectures) Term: 3rd Course No. COM604 Course Title: STRATEGIC MANAGEMENT L: 4 T: 1 P: 0 Textbook: 1. Hunger J. D. and Wheelen T. L. , Strategic Management & Business Policy, Pearson Education, New Delhi, 8th Ed., 2006 Other Specific Books: 2. Kazmi, A. Business Policy and Strategic Management, Tata McGraw Hill, New Delhi, 2nd Ed. 2007 3. Jauch, R. Lawrence, R. Gupta and W.F.Glueck, Business Policy and Strategic Management, Frank Bros.&Co., 7th Ed.,2007 Other readings: |S. No |Journal articles as compulsory reading | |. |Camillus, J. C. Strategy as a wicked problem, Harvard Business Review, May 2008 | | |Hirotaka, The contradictions that Drive Toyota’s success, Harvard Business Review, June, 2008 | | |C.K. Prahalad’s Plan: India @75, Business Today, August 24, 2008 | | |McAfee, A. and Brynjolfsson, E., Investing in IT that makes a competitive Difference, Harvard Business Review, July-August, 2008, PP.98-107 | | |Collis, D.J. and Montgomery, C.A., Competing on Resource, Harvard Business Review, July-August, 1995 ...

Words: 2548 - Pages: 11

Premium Essay

Montessori

...Ch.7 Incredible results; parents now wanted kids of age 5 to be introduced to writing and reading. *Believes it is best to write 1st then learn to read. Ch.8 Schools started to spread and Montessori materials were widespread -held training classes for teachers -Wrote 1st book: The Montessori Method Ch.9 -new school opened at a convert for orphaned children -1st introduced to America in literature in 1909 -1913 Maria came to US; 1st Montessori school in US was in Tarrytown, NY -Montessori society formed. Ch.10 Magazine, newspaper, and general media were popular -Alexander Graham Bell’s wife became a big follower -Her book was 2nd place in 1912 and was on the best seller’s list -International Montessori Training in Rome -Problems of others misinterpreting her ideas; many took the method light heartedly Ch.11 -Mother died in 1912, wore black for almost the rest of her life. -Maria got very upset if anyone but her attempted to give a Montessori course -after her mother died, Maria brought Mario to live with her Ch.12 * When arrived in NY, she was swarmed by reporters * Travelled the US and was always polite * Returned home January 5th * Her materials have stood the test of time Ch.13 * 1915 visited California; meeting of National Education Association and 15,000 teachers. * Lived in LA for 2 months * Maria introduced as nephew then adopted son (17 years old) * Parkurst would be like a daughter to Maria * Her biggest flaw...

Words: 4915 - Pages: 20

Premium Essay

Course Description

...|Area: Core |BADM 321: Business Research Methods | |Credit Hours: 3 |Prerequisites: NONE | |Instructor: Chansoo Park |Effective Date: 2. April 2013 | |Contact Info: |Class Hours: Tuesdays, 1:30-5:00 pm (3 and ½ hours) | |chansoo.park@ubc.ca | | |chansoop@sprott-shaw.com | | COURSE DESCRIPTION In today’s information-oriented environment, a manager cannot succeed a thorough understanding of the research process. A manger should understand that adequate and timely information supports business decision making. The student should be able to discuss and explain the basic kinds of research design (exploratory, descriptive, causal / longitudinal, cross-sectional) and their major sources of error; explain database marketing and how it makes use of secondary data; identify the advantages and disadvantages of the major types of qualitative research; discuss how survey and observational methods...

Words: 1557 - Pages: 7

Free Essay

Alkanes of Chem

...C H (a) H (b) Figure 2 Two representations of the methane molecule: (a) the structural formula and (b) the ball-and-stick model 8 Chapter 1 • Organic Compounds Alkanes Organic chemistry is the study of carbon compounds. As a general definition, an organic compound is a molecular compound containing carbon with the exception of carbon monoxide, CO(g), carbon dioxide, CO2(g), and hydrogen cyanide, HCN(g). Since carbon has 4 valence electrons, its atoms tend to form 4 covalent bonds. Carbon atoms ofen bond with one another to form chains. Tese chain struc- tures become the backbones of a range of molecules, some of them very complex. Carbon-based molecules are the building blocks for life on Earth. Most fuels are hydrocarbons, whose molecules consist only of carbon atoms and hydrogen atoms connected by covalent bonds. Hydrocarbon fuels include natural gas, gasoline, fuel oil, and diesel fuel. NASCAR racing cars burn an unleaded fuel similar to that used in most cars on the street (Figure 1). Natural gas, which is pri- marily methane, is a major fuel for electric power plants. Butane and propane are used to heat homes and to fuel tools such as soldering torches. Figure 1 Hydrocarbons are sources of fuel all over the world. Burning carbon-based fuels is a major contributor to global warming, according to most scientific models, due to the release of carbon dioxide into the atmosphere. Other environmental problems have also been associated with the release of...

Words: 5068 - Pages: 21

Premium Essay

Modeling

............................................................................ xiii  The Excel Modeling and Estimation Series .................................................. xiii  Suggestions for Faculty Members ..................................................................xiv  Acknowledgements ........................................................................................... xv  About The Author ................................................................. xvi  PART 1 TIME VALUE OF MONEY ..... 1  Chapter 1 Single Cash Flow ....................................................1  1.1 Present Value ............................................................................................... 1  1.2 Future Value ................................................................................................ 2  Problems .............................................................................................................. 3  Chapter 2 Annuity ...................................................................4  2.1 Present Value...

Words: 33587 - Pages: 135

Premium Essay

Marketing

...with cases and exhibits from all parts of the world, including Europe, the Middle East, Africa, the Far East, North and South America. It provides a complete and concentrated overview of the total international marketing planning process, along with many new, up-to-date exhibits and cases, which illustrate the theory by showing practical applications. • Extensive coverage of hot topics such as glocalization, born globals, value creation, value net, celebrity branding, brand piracy, and viral marketing, as well as a comprehensive new section on integrated marketing communication through social networking. • Brand new case studies focus on globally recognized brands and companies operating in a number of countries, including Build-A-Bear Workshop, Hello Kitty, Ralph Lauren and Sony Music Entertainment. • Global Marketing ‘Svend Hollensen writes with real authority and insight having been involved in global marketing both as a manager and academic. His book provides a framework within which managers can develop their own approach to overseas markets, and is illustrated with cases and insights that aid understanding.’ Fifth Edition Global Marketing A decision-oriented approach Svend Hollensen Video cases featuring firms such as Nivea, Reebok, Starbucks, Hasbro...

Words: 33515 - Pages: 135

Premium Essay

Chapter 2

...Chapter 2 Quiz 1.Which of the following is a component of Porter's competitive environment? Suppliers 2.Why is understanding an organization's environment important? Without this understanding, organizations tend to miss opportunities or make poor decisions. 3.Differences in the way people dress and act, their interactions with each other and with customers, and what qualities are expected and appreciated by their managers and company are examples of the _____. organization culture 4. Which of the following is a controllable environmental factor that can affect an organization? Cost leadership strategy 5. Pluto Inc. is computer technology corporation that has been manufacturing laptops for the last five years. Recently, in the face of sinking market share, Pluto reduced its dependency on laptops by venturing into tablets and smartphones. This is an example of _____. diversification 6. In competition, a substitute is best described as a(n): alternative to a product. . 7. Which of the following is a demographic factor of an organization's macroenvironment? Employees' age 8.Complexity and dynamism in the environment result in: environmental uncertainty. 9. Raw materials, services, equipment, capital, and information are _____ for an organization. inputs 10. Which of the following is a dominant attribute of a hierarchical culture? Rules and regulations 11. Which of the following refers to the immediate environment...

Words: 6552 - Pages: 27

Premium Essay

Little

...PSYCHOLOGICAL SCIENCE This course aims at preparing students for a professional journey in the growing field of psychology by creating interest and developing an understanding of basic concepts of the discipline. Its major concerns include fostering capability to meet the challenges of self-discovery and effective participation in responding to the needs of society. With a vision to create a balance between society and the individual, the course intends to enable students in developing abilities needed for meeting the challenges and needs of the real world effectively. Along with it, students would also be encouraged to build a relationship with oneself, requisite for self discovery. To this end, the course emphasizes on building the conceptual foundations and acquiring psychological skills through classroom teaching/learning consisting of reflective as well as creative engagement in exercises, projects and hands on experiences. The teaching-learning of the programme would be organized through lectures, group discussions, experiential exercises, group projects, presentations, workshops and seminars. Students would be encouraged to connect to real life issues and participate in the programs and practices in the different social context. To this end practicum is incorporated as an important component in most of the papers with hands on training in the use of various research methods such as: laboratory experiments, field experiments, observation, testing, survey, interview, case...

Words: 8279 - Pages: 34

Premium Essay

Business and Finance

...Business Strategy ST3S03A Module Workbook: 2015 CONTENTS 1. Module Introduction 2. Module Aims and Learning Outcomes 3. Teaching methods 4. Lecture/Tutorial Programme 5. Unit Descriptors 6. Reading 7. Assessment Please note that information contained in this document may be subject to amendment. This workbook is the copyright of Dan Taylor, Simon Brooks & Paul Davies. The material contained in it may only be used for teaching purposes in association with the Business School of the University of South Wales, and with the explicit permission of the authors. 1. Module Introduction – What is this module about? Welcome to the workbook for Business Strategy. This book contains all the background information you need for the whole course, together with the lecture and tutorial programme. Use this book as your key reference for information on the course. Most of the frequently asked questions you are likely to raise are answered here. Please note that while this information is correct at the time of going to press, we reserve the right to alter the programme and other course details from time to time. This will be done through announcements in lectures and on Blackboard, the web-based learning environment. It is imperative that students access Blackboard regularly to ensure they are aware of any changes. This course is intended to be an informative and interesting introduction to strategic...

Words: 4077 - Pages: 17

Premium Essay

Kindlefire Marketing

...Contents Models.............................................................................Page No. Executive Summary................................................................................3 Boston Consulting Group; Chapter 2......................................................4 SWOT-Opportunities and Threats; Chapter 2........................................5 SWOT-Strengths and Weaknesses; Chapter 2........................................6 Product-Market Combination; Chapter 2................................................7 Five Stages of Consumer Decision Making; Chapter 4 Evaluation of Alternatives.............................................................8 Five Stages of Consumer Decision Making; Chapter 4 Purchase Choice Decision..........................................................9 Demographics Segmentation; Chapter 6...............................................10 Perceptual Map; Chapter 6....................................................................11 AIDA Model; Chapter 12.......................................................................12 Promotion Strategy/Themes/Appeal; Chapter 12 and 13.........................13 Recommendations.................................................................................14 Appendix A......................................................................................15-17 Appendix B...........................................................................................18 Executive...

Words: 3629 - Pages: 15

Premium Essay

American Politcs 010

...● 01. 6 generalizations about institutions 1. People use institutions to serve specific ends. 2. They divide labor .3. Institutions save everyone's time and energy; in technical language, they reduce transaction costs. 4. Institutions exist independently of the particular people participating in them. 5. Institutions distribute authority. More power inheres in some roles than in others. 6. Participants will attempt to adapt it to their own purposes; but they are difficult to change. ● 02.How do institutions check tyranny? - checks and balances:Social pluralism, we divide government up between three institutions with all the same amount of power, ● 03.Why are institutions difficult to change? Path dependency: reliance on experience, constrained by status quo; solutions based on familiar institutions. Some participants are content with current arrangements and not willing to change. ● 04.Framers consciously designed a set of institutions for making it possible to do politics of this kind. The point is to design a set of institutions that control the effects of factions--by setting them against one another, but dividing authority among institutions ● Problems with the Articles of confederation No ability to tax , No central currency, No way to negotiate treaties ,No executive capacity, difficult to maintain public order, nation security. ● 06.Deals addressed by the constitution Path dependency: reliance on experience, constrained by status quo; solutions based on familiar...

Words: 7682 - Pages: 31