We created the following examples to show how WACC could potentially influence Marriott’s financial decisions: Suppose Marriott is taking on a project that requires a $100,000 initial investment, which produces cash inflows of $20,000 per year for 10 years. If we use Marriott’s current WACC of 9.29% the project would produce an NPV of $26,730. If we use the Target WACC, 10.24% for Marriott the NPV would be $21,634. Deciding based on the assumption of an NPV of $26K but it will actually achieve a NPV of $21K. Management will have to explain to shareholders why they were unsuccessful in achieving increased shareholder value.
First we will determine how long it takes to finish processing all the berries that arrive on a day and estimate the resulting overtime and truck waiting costs. Breakup of the 20 day peak season (Exhibit 2): No of barrels | Days | <12000 | 1 | 12000-14000 | 4 | 14000-16000 | 6 | 16000-18000 | 9 | | | Total | 20 | | | We will assume that the same demand pattern will continue for 1971. From Table A: From 1967-1970 % increase in yield = [(95.1-66.2)/66.2]*100 = 44%. So CAGR = 13%. For 1971, yield = 95.1 * 1.13 = 107.463 barrels/acre.
This includes the purchase of 15 high-speed locomotives and 20 train sets of $750 million, of which Amtrak needs financing for six locomotives and seven train sets of $267.9 million. Amtrak presents three options for financing the Acela purchases and becoming a profitable entity by 2002: • Borrow money to fund the purchases • Lease equipment from BNYCF or other financial institution • Continue to rely on federal funding Amtrak was offered a 20-year bond at a 6.75% annual interest rate with semiannual payments starting December 1999. The equipment would be the collateral for the loan, which is beneficial to Amtrak, as they had no other current assets. Amtrak had previously issued bonds, which would increase the amount
GSCM-206: Managing Supply Operations Angela M. Meeks Inventory Control at Wheeled Coach Week 6 Case Study June 14, 2015 Dr. Albert Lapierre Inventory Control at Wheeled Coach Q1: Explain how Wheeled Coach implemented ABC analysis Wheeled Coach Implements ABC analysis through categorization by identifying and classifying different items within their inventory based on annual dollar amounts. For example, they classify the high-dollar amounts items as being A. The A category, represents some 15% of the total inventory, but only 70%-80% of the total cost. The B category, represents those items that are mid-level or medium value which represents 30% of the items and 12%-25% of the value. The C category, the low dollar items, which represents 5% of the annual dollar volume, but only about 55% of the total items.
Assumption 1: The trucks load an average of 75 barrels per truck. The demand is equal to the average daily deliveries (16,380/12=1,365 barrels per hour). Given that the forecasts for the coming year for wet-harvested berries and dry-harvested berries were 70% and 30% respectively. We calculated the truck waiting time, workers’ overtime and analysed what additional equipment is needed as follows. Demand: Dry barrels per hour= 1,365*30%=410 (roundup) Wet barrels per hour= 1,365*70%=956 (roundup) Total: 1365 barrels per hour Capacity list: | |capacity(barrels per hour) | |Dumper |3,000 | |Dry bin |4,000 | |wet bin |1,200 | |flexible bin |2,000 | |destoning |4,500 | |dechaffing |4,500 | |drying |600 | |seperating |1,200 |
Compass has a portfolio consisting of nearly 50 artists and averages 20 releases per year. Recently, Brown has shown interest in a new folk musician named Adair Roscommon. Brown needs to decide whether to produce and own the recording or just license it. Each decision will require different monetary investments in the artist and carries different risks. Analysis/Assumption ● Producing cost: $20,000 ● Licensing Advance: $3,000 ● Sale Projections: 10,000 units ● Mechanical Royalty (MR): $0.85 per unit ● Recording Artist Royalty (RAR): $1.45 per unit ● Marketing/promotional costs the same for both licensing and owning/production ● No changes in net working capital (NWC) ● No capital expenditures ● Marginal tax rate: 40% ● Discount rate: 12% Recommendation With Compass projecting sales of 10,000 units, we recommend the company licensing the rights rather that owning and producing.
Quiett Truck manufactures part WB23 used in several of its truck models. 10,000 units are produced each year with production costs as follows: Direct materials $ 45,000 Direct manufacturing labor 15,000 Variable support costs 35,000 Fixed support costs 25,000 Total costs $120,000 Quiett Truck has the option of purchasing part WB23 from an outside supplier at $11.20 per unit. If WB23 is outsourced, 40% of the fixed costs cannot be immediately converted to other uses. Required: a. What amount of the WB23 production costs are avoidable?
This meant that the risk was issued at investment grade but now was not backed by valuable assets of the companies which were to be spun off to MI which was to be backed by equity. The value of the bonds would decline substantially and the bond holders would loose a lot of their investment. c) Management(The Mariott brothers) The management gains from the spin off since it is able to split its distressed assets from the profit driving assets and there was a new company which was not under distress thus helping them retain their management positions and start from scratch. They can concentrate on core businesses thus improving efficiency and value. d) The value of the
Kristin Trulli December 5, 2013 Marketing Fundamentals 62.501 Natureview Farm SUMMARY Natureview Farm, Inc. is a small yogurt manufacturer in Cabot, Vermont. Christine Walker, Vice President of Marketing, is faced with the challenge of finding a way to grow revenues by over 50% before the end of 2011. Much of the Natureview’s equity is from a venture capital firm, which now needs to cash out of its investment. The company needs to either find another investor or position itself for acquisition by increasing its revenues to obtain the highest possible valuation. The goal for Natureview is to increase revenues to $20 million before the end of 2011.
Assignment from the Readings Roberta Willis ACC 400 November, 2014 Kylene Smith ● Case 13-4 Application of SFAC No. 13 a. What is the theoretical basis for the accounting standard that requires certain long-term leases to be capitalized by the lessee? Do not discuss the specific criteria for classifying a specific lease as a capital lease. When there is a transfer in a lease, all benefits along with risk are transferred to the lessee and will be capitalized by the lessee as well.