This high ROFE exceeds the hurdle rate that the company establishes to accept a project. As a result, from an incremental valuation, the company should accept this project. However, this method has deficiency, because according to Mr. Peters, the assumption for capital spending of this project ($20 million) is inappropriate, since the Chiffon project will use Jell-O buildings and facilities extensively. Then, the allocation of agglomerator and building should be also included in Chiffon project. Therefore, the company should not use the incremental method to value the Chiffon project since Mr. Peters argues that it has the wrong assumption.
I would consider erosion of Jell-o cost as it is significant which is 20% and we have to consider that it is also growing at the same rate as powder market. This 20% erosion and with the growth rate, Jell-O could have got more than 20% even if the super project does not exist. * Allocation charges for excess capacity? * Considering the overall growth in the dessert market in future, there can be easily expected to use the unused capacity of Jell-O either by increase in sales of Jell-O or by another new product. This implies that this capacity is not lost and it has to be allocated to the super project if not the entire remaining capacity, it has to be atleast 80% of the
Separate Transaction reasoning: There are three main reasons why the Veritas shares should be divested in a separate transaction. The first one is to escape tax. Separating the deal in different transactions, and using a tax-free stock swap, implies that stocks are not sold ( if company as a whole were to be sold ) , therefore escaping from a huge tax liability bill. The second one it’s obvious. The value to the separate transitions would be higher than a combined one.
The USO does not have this flexibility and could not operate within their current successful business model. Another concern for Mr. Bailey was that the UOC would not maintain is identity if merged with the USO. The possibility of the UOC becoming a tier-one arts organization with the merger was the only positive possibility initially realized and this would need to out whey the initial concerns (DeLong, 2005). Mr. Bailey could use content theories of motivation to oppose the merger based on his initial reaction to the idea of a merger. Content theories are based on concept that motivation is primarily based on a need.
The expansion would allow for another runway to solve this problem. Capacity would increase dramatically from 480,000 take offs/ landings now, to 605,000 by 2020 and a further increase to 720,000 by 2030. However the greatest cost would be the complete destruction of Greenbelt land and Sipson Village. With the loss of the Village also comes the inevitable loss of the shops, schools and homes. Other arguments for the expansion include jobs and the increase in economy, for example the 3rd runway will boost the economy to a predicted 22 billion.
It cause overstate inventory and understate the cost. Therefore, this has become the key factor of inherent risk. (2) The first risk is Company does not set internal oversight Institutions. In this case, shareholders did not set the relevant oversight institutes, but they firmly believe CEO (Hebding) decision, which led to the failure of internal control environment, in this case, Hebding can create different fictional accounts, aimed at the data meet the requirements of shareholders, but his aim is to deceive shareholders, and to reap more benefits. For example, Hebding instructed his employee to make false account such as understate expense, overstate equipment and inventory and so on.
Approaches of Henry George and Walter Rauschenbusch Henry George offered a single value tax on land property. This tax would be so large that it would give an incentive for the owner to use the land in a productive way. Doing so would create wealth and jobs in response to the ongoing poverty and social problems. Henry George used a more logical and radical approach when coming up with this solution. As economic growth occurred, so did technological advances.
Is the real estate subsidiary a good idea? If the managers buy more stock, what is the appropriate price? There are two major concerns which are gaining competitive advantage and determining comparable valuations. Brazos should allow the company to sell the managers some stock of the business to benefit the managers. But the amount that a manager can hold stocks should be limited because the ownership would be split in this way as it is not good for Brazos itself to decrease its ownership.
Part A: Analysis Business Model Seagate and Deal Rationale #1: Why is Seagate undertaking this transaction? How suitable is an LBO for a technology firm like Seagate, and what are the potential sources of value creation in the transaction? Motivate your answer. The Seagate management believes that the company needs heavy and intensive that are not feasible if Seagate Inc. remains a public company. Other capital re-organizations alternatives involve significant tax liability and considering the present state with Seagate being a public company, tax liability will result in loss of wealth for the shareholders since it involves corporate taxes as well as personal tax liability.
Europe is not a good idea, as St. Gobain will counterfeit and enter Indian market as retaliation, in order to prove its global leadership and avoid similar actions from other players. Therefore the conclusion would be to first establish finishing plant, it would allow Electrosteel to be considered as a local supplier, which is equal to 15% cost discount on local market. They can look into either a 30,000 or 50,000 tonnes plant and use the Vietnamese favorable credit loan. In addition, it would allow them to research the market, and start with either DIP or CIP in order to increase the utilization of the current plant in India. By doing so, Electrosteel will have enough time to get to know the partner CMC, local market, difficulties of transportation due to its current facilities, and start building reputation.