(Solution) An employee who is hard working and aspires to a higher level in the organization is expressing which type of instrumental value? > Snapessays.com


(Solution) An employee who is hard working and aspires to a higher level in the organization is expressing which type of instrumental value?


An employee who is hard working and aspires to a higher level in the organization is expressing which type of instrumental value?

 

 

A. effectiveness.

 

B. efficiency.

 

C. planning.

 

D. organizing.

 

E. low-cost strategy.

 

 

2. McDonald's decided to add breakfast to its hours of operation in order to increase the number of customers. This was an attempt to improve the organization's:

 

 

A. effectiveness.

 

B. planning.

 

C. leading strategy.

 

D. efficiency.

 

E. none of the above.

 

 

3. A manager who chooses inappropriate goals for the organization but who makes good use of the organization's resources in pursuing these goals is said to have:

 

 

A. low effectiveness/low efficiency.

 

B. low effectiveness/high efficiency.

 

C. high effectiveness/low efficiency.

 

D. high effectiveness/ high efficiency.

 

E. none of the above.

 

 

4. When Wal-Mart builds a distribution warehouse so that it can supply products to its stores within a 200-mile radius on almost a daily basis, we say that Wal-Mart has achieved:

 

 

A. empowerment.

 

B. a competitive advantage.

 

C. increased quality.

 

D. increased innovation.

 

E. none of the above.

 

 

5. By assembling computers only after customers have paid them for, resulting in a lower finished goods inventory, Dell Computer Co. achieved:

 

 

A. increased quality.

 

B. a competitive advantage.

 

C. increased responsiveness.

 

D. increased innovation.

 

E. none of the above.

 

 

6. The CEO of Chrysler Corporation goes on TV to explain what the company is doing to avoid future problems like the ones created by a recent recall of its minivans. This CEO is acting in which type of role?

 

 

A. Liaison

 

B. Figurehead

 

C. Leader

 

D. Disseminator

 

E. Spokesperson

 

 

7. Boeing appoints an engineer to be the "go-between" between the company's Research and Development department and the government contractor that is sponsoring the creation of a new fighter airplane. This is an example of which type of role?

 

 

A. Monitor

 

B. Leader

 

C. Figurehead

 

D. Resource allocator

 

E. Liaison

 

 

8. Dell found that by putting effective control systems in place, it was able to:

 

 

A. reduce costs

 

B. expand internationally

 

C. move into new markets

 

D. insure ethical behavior

 

E. increase diversity

 

 

9. The CEO reviews the performance of her company in the past month's Profit & Loss Statement to determine if the company is "on track" in terms of its sales and profitability goals. This CEO is engaged in which function? A. Planning B. Organizing C. Demonstrating D. Controlling E. Leading 10. When a CEO draws a picture of the reporting relationships that will occur under a management reorganization, this is an example of: A. planning. B. leading. C. organizing. D. demonstrating. E. controlling. 11. When a manager produces a new product that many customers want to purchase and sells it at a price that is attractive to these customers, this manager is said to have: A. high efficiency/low effectiveness. B. low efficiency/high effectiveness. C. high efficiency/high effectiveness. D. low efficiency/low effectiveness. E. none of the above. 12. A manager who makes a low quality product that customers do not want to purchase is said to have: A. high efficiency/low effectiveness. B. high efficiency/high effectiveness. C. low efficiency/high effectiveness. D. low efficiency/low effectiveness. E. none of the above. 13. A manager decides to produce a high quality product and makes good use of the organization's resources in making it. However, not enough customers want to buy the product for the organization to make a reasonable profit. The manager may be said to have: A. high efficiency/low effectiveness. B. low efficiency/low effectiveness. C. low efficiency/high effectiveness. D. high efficiency/high effectiveness. E. none of the above. 14. A manager who chooses the wrong goals for the organization and makes poor use of the organization's resources in pursuing these goals is said to have: A. low effectiveness/low efficiency. B. low effectiveness/high efficiency. C. high effectiveness/low efficiency. D. high effectiveness/ high efficiency. E. none of the above. 15. Most managers face jobs characterized by: A. high variety B. fragmentation C. brevity D. the need to rely on experience E. all of the above 16. One of the negative outcomes of restructuring is that: A. it tends to make organizations less efficient B. it increases the number of middle managers in the organization C. it reduces outsourcing D. it reduces employee morale E. it increases executives' salaries 17. The top managers of an organization must devote more time to ________________ than lower level managers do. A. planning and organizing B. leading C. controlling D. vision E. motivation 18. Which of the following is least likely to be a first line manager? A. a foreman in an auto assembly plant. B. a manager of tellers in a bank. C. a head of a marketing department. D. the head mechanic in a car dealer's service department. E. none of the above. 19. Effective leadership depends on the use of: A. power and influence B. authority and giving orders C. physical resources D. structure E. policies and procedures 20. Which of the following would be considered a "department" of an organization? A. Research and Development B. Manufacturing C. Sales D. Marketing E. All of the above 21. Organizational performance __________ in direct proportion to __________ in efficiency and effectiveness. A. increases; increases

 

B. increases; decreases

 

C. decreases; decreases

 

D. decreases; increases

 

E. none of the above

 

 

22. When uncertainty exists, the probabilities of alternative outcomes __________ be determined and the future outcomes are __________.

 

 

A. can; known

 

B. cannot; known

 

C. can; unknown

 

D. cannot; unknown

 

E. none of the above

 

 

23. A sales manager talks with his subordinates about the way they should all treat customers. The manager is focusing on the _________ of creating a learning organization.

 

 

A. personal mastery

 

B. mental models

 

C. team learning

 

D. shared vision

 

E. systems thinking

 

 

24. Joe, a manager, allows Achmed, his subordinate, to proceed on a work project even though Joe doesn't agree with how Achmed wants to do the work. Joe is attempting to create:

 

 

A. personal mastery

 

B. mental models

 

C. team learning

 

D. shared vision

 

E. systems thinking

 

 

25. When an issue is controversial and when different managers might be expected to champion different courses of action, the preferred technique is:

 

 

A. production blocking

 

B. brainstorming

 

C. team learning

 

D. nominal group

 

E. devils advocacy

 

 

26. Research shows that people are more creative when:

 

 

A. they are all under time pressure

 

B. they are all closely supervised

 

C. they can make mistakes

 

D. negative feedback is withheld

 

E. they are required to work without others' help.

 

 

27. The idea that one level of learning affects other levels is part of that ________ principle of creating a learning organization.

 

 

A. personal mastery

 

B. mental models

 

C. team learning

 

D. shared vision

 

E. systems thinking

 

 

28. A task force manager holds a meeting and encourages members to share the progress of their work. This manager is focusing in the ________ principle of creating a learning organization.

 

 

A. personal mastery

 

B. mental models

 

C. team learning

 

D. shared vision

 

E. systems thinking

 

 

29. Which of the following is not a reason that group decision-making is superior to individual decision-making?

 

 

A. fewer bias's and errors

 

B. more feasible alternatives generated

 

C. groupthink

 

D. correction of each others' errors

 

E. increased probability of successful implementation

 

 

30. Managers who were responsible for the decision to launch the Challenger space shuttle were attempting to balance the conflicting demands for ensuring the safety of the astronauts with the desire to obtain future funding for the U.S. space program. On which two decision-making criteria were these managers focusing?

 

 

A. Legality and practicality

 

B. Ethicalness and legality

 

C. Practicality and ethicalness

 

D. Economic feasibility and ethicalness

 

E. None of the above

 

 

31. A marketing manager wants to budget the advertising for a new product launch. She is trying to determine the amount of money that her company can afford to spend on advertising this new product. On which criterion of decision-making is this marketing manager focusing?

 

 

A. Legality

 

B. Ethicalness

 

C. Economic feasibility

 

D. Practicality

 

E. None of the above

 

 

32. Which of the following is least likely to result in bad managerial decision-making?

 

 

A. Lack of creativity in generating alternatives.

 

B. Failure to balance decision criteria appropriately

 

C. Failure to specify important decision criteria

 

D. Not acting on a decision once it's made.

 

E. Too many possible alternatives.

 

 

33. Which of the following statements about managerial decision-making is false?

 

 

A. Managerial decision-making is fast-paced.

 

B. Managers must use their experience and judgment.

 

C. Managers should wait for complete information before deciding.

 

D. Human judgment is often flawed

 

E. Managerial decision-making is more art than science.

 

 

34. The purchasing manager for Ford Motor Co. decides to call three suppliers of automobile windshields to ask for a bid on an order for 1,000 windshields for a new Ford car, instead of calling 100 possible windshield suppliers for such a bid. What type of decision does this represent for the purchasing manager?

 

 

A. Nonprogrammed

 

B. Illusion of control

 

C. Certainty

 

D. Programmed

 

E. Satisficing

 

 

35. ABC Company is attempting to decide whether or not to launch a new $10 million advertising campaign for a product whose sales have been lagging well below the projected sales for this product. This represents which type of decision for the organization?

 

 

A. Groupthink

 

B. Intuition

 

C. Programmed

 

D. Nonprogrammed

 

E. Satisficing

 

 

36. Which of the following is a programmed decision?

 

 

A. How much to invest in a new product.

 

B. Whether to expand into a new market.

 

C. When to time a new advertising campaign.

 

D. When to bill customers.

 

E. Whether to buy another company.

 

 

37. An organization's finance department decides to go to the company's usual bank and take out a loan because the company's revenues for the month are projected to be less than its expenses. What type of decision does this represent?

 

 

A. Intuition

 

B. Groupthink

 

C. Programmed

 

D. Nonprogrammed

 

E. Satisficing

 

 

38. What do managers do to regulate routine activities?

 

 

A. create a mission statement

 

B. establish rules and guidelines

 

C. create cross-functional teams

 

D. facilitate a strong organizational culture

 

E. train workers in the use of intuition

 

 

39. A plant foreman asks the plant superintendent to hire an additional worker whenever overtime hours for the previous month increase by more than 15 percent over the headcount. This is an example of which type of decision?

 

 

A. Intuition

 

B. Groupthink

 

C. Satisficing

 

D. Programmed

 

E. Nonprogrammed

 

 

40. An organization's accounting department decides to send out a bill to a new customer. What type of decision does this represent?

 

 

A. Programmed

 

B. Nonprogrammed

 

C. Intuition

 

D. Groupthink

 

E. Bounded rationality

 

 

41. Having a strong culture is always good for an organization.

 

 

A.True B. False

 

 

42. Organizational culture controls the behaviors of working level employees, but not managers.

 

 

A. True B. False

 

 

43. All of the following are examples of terminal values EXCEPT:

 

 

A. a comfortable life.

 

B. a sense of accomplishment.

 

C. social recognition.

 

D. courage.

 

E. wisdom.

 

 

44. All of the following are examples of terminal values EXCEPT:

 

 

A. inner harmony.

 

B. capability.

 

C. a world of beauty.

 

D. a sense of accomplishment.

 

E. social recognition.

 

 

45. ABC Company puts out newspaper releases announcing employees' promotions. These are rites of:

 

 

A. passage

 

B. integration

 

C. celebration

 

D. ceremony

 

E. enhancement

 

 

46. XYZ Company holds a party at the end of the fiscal year to celebrate its excellent performance. This is a rite of:

 

 

A. passage

 

B. integration

 

C. celebration

 

D. ceremony

 

E. enhancement

 

 

47. Subordinates of managers who experience positive moods at work tend to _________ more than subordinates of managers with negative moods.

 

 

A. perform worse

 

B. be absent more

 

C. resign more

 

D. be more creative, under certain conditions

 

E. be more ethical

 

 

48. Giorgio is very angry with his co-worker Petra, who has made errors in her work that cause Giorgio to have to work late. Giorgio is experiencing a(n):

 

 

A. personality

 

B. emotional intelligence incident

 

C. emotion

 

D. mood

 

E. scruple

 

 

49. A manager who is self-reliant and self-sufficient is expressing which type of instrumental value?

 

 

A. Responsibility

 

B. Independence

 

C. Ambition

 

D. Capability

 

E. Helpfulness

 

 

50. A manager who is hard working and aspires to a higher level of management within the organization is expressing which type of instrumental value?

 

 

A. Independence

 

B. Responsibility

 

C. Helpfulness

 

D. Ambition

 

E. Capability

 

 

51. A manager wants to make a lasting contribution to his or her organization. This manager is expressing which type of terminal value?

 

 

A. Wisdom

 

B. Social recognition

 

C. Inner harmony

 

D. A sense of accomplishment

 

E. A comfortable life

 

 

52. Managers who believe that they are largely responsible for their own fate are said to:

 

 

A. have an external locus of control.

 

B. be conscientious.

 

C. be high in negative affectivity.

 

D. have an internal locus of control.

 

E. be open to experience.

 

 

53. Managers who believe that forces outside of their control are largely responsible for what happens to them are said to be high in:

 

 

A. openness to experience.

 

B. negative affectivity.

 

C. internal locus of control.

 

D. external locus of control.

 

E. need for affiliation.

 

 

54. An organization's culture influences how managers __________.

 

 

A. control

 

B. plan

 

C. lead

 

D. organize

 

E. all of the above

 

 

55. Managers try to cultivate norms that fit other factors. Which of the following is not one of these factors?

 

 

A. the organization's strategy

 

B. the organization's language

 

C. the organization's task environment

 

D. the organization's general environment

 

E. the organization's technology

 

 

56. Recent theorizing and research suggest that managers' emotional intelligence may be especially important in:

 

 

A. increasing employee turnover

 

B. decreasing employee satisfaction

 

C. decreasing employee stress

 

D. increasing employee creativity

 

E. increasing employee resistance to change

 

 

57. Emotional intelligence may help managers perform interpersonal roles such as:

 

 

A. resource allocator

 

B. monitor

 

C. planner

 

D. liaison

 

E. decision maker

 

 

58. The ASA framework suggest that people have become more similar to each other through

 

 

A. attraction of hiring managers to people similar to themselves.

 

B. employees who are dissimilar being more likely to leave the organization.

 

C. attraction of potential employees to firms that exhibit personalities like their own.

 

D. all of the above

 

 

59. Managers maintain and transmit culture through all but one of the following. Which one?

 

 

A. rites

 

B. stories

 

C. language

 

D. technology

 

E. socialization

 

 

60. Customers are stakeholders of an organization, but managers are not.

 

 

A. True B. False

 

 

61. Justin, a Human Resources Manager for XYZ Company, commits 20% of this year's budget to develop a new program for valuing diversity in the company. He is acting in the ________ role.

 

 

A. resource allocator

 

B. entrepreneur

 

C. monitor

 

D. negotiator

 

E. disturbance handler

 

 

62. If a female manager tells a male subordinate that he is in line for a pay raise but that he will get that pay raise only if he becomes sexually involved with her, this manager is exhibiting:

 

 

A. a hostile work environment.

 

B. the similar-to-me effect.

 

C. the salience effect.

 

D. the social status effect.

 

E. quid pro quo sexual harassment.

 

 

63. If a female subordinate is offended by posters in her supervisor's office that she feels are degrading to women, this supervisor has exhibited:

 

 

A. the similar-to-me effect.

 

B. the glass ceiling.

 

C. the salience effect.

 

D. quid pro quo sexual harassment.

 

E. a hostile work environment.

 

 

64. If a male manager makes a remark to a female manager that she considers to be a sexually demeaning remark about her appearance, this male manager has exhibited:

 

 

A. quid pro quo sexual harassment.

 

B. the glass ceiling.

 

C. the similar-to-me effect.

 

D. the salience effect.

 

E. a hostile work environment.

 

 

65. An ethical dilemma is a situation in which a person has to decide is she should act in a way that __________, even though doing so may __________.

 

 

A. fosters her own self-interest; favor another's self-interest

 

B. is the "right" thing to do; go against her own self-interest

 

C. is the "wrong" thing to do; go against her own self-interest

 

D. may help another person; favor her own self-interest

 

E. go against her own self-interests; is the "wrong" thing to do

 

 

66. Which of the following is a stakeholder for an organization?

 

 

A. Customers

 

B. Employees

 

C. Suppliers

 

D. The local community

 

E. All of the above

 

 

67. People or groups who supply a company with its productive resources are called:

 

 

A. suppliers

 

B. top management

 

C. shareholders

 

D. stockholders

 

E. stakeholders

 

 

68. Stockholders are interested in the way a company operates because they:

 

 

A. use the company's products.

 

B. believe in being ethical.

 

C. want to maximize dividends.

 

D. want to avoid all risks.

 

E. like to be in control.

 

 

69. The stakeholder group with the most responsibility for deciding the goals of the organization is:

 

 

A. stockholders

 

B. customers

 

C. managers

 

D. working-level employees

 

E. consultants

 

 

70. A manager who is effectively managing diversity in the disseminator role would:

 

 

A. develop new ways to manage diversity

 

B. take quick actions to manage conflict arising from diversity

 

C. evaluate how fairly employees are being treated

 

D. communicate to employees about diversity policies

 

E. none of the above

 

 

71. All of the following are principle corporate-level strategies that managers can use to help their organization increase its sales and profits EXCEPT:

 

 

A. concentration on a single business.

 

B. diversification.

 

C. international expansion.

 

D. vertical integration.

 

E. focus.

 

 

72. Firestone Tire and Rubber Company purchases rubber plantations in Africa so that it will have a source of supply for its tire manufacturing plants in Akron, Ohio. This is an example of:

 

 

A. forward vertical integration.

 

B. a global strategy.

 

C. a multidomestic strategy.

 

D. backward vertical integration.

 

E. a focused-differentiation strategy.

 

 

73. Firestone Tire and Rubber Company set up a chain of Firestone retail stores to sell its tires to American consumers. This is an example of:

 

 

A. forward vertical integration.

 

B. a global strategy.

 

C. a focused-differentiation strategy.

 

D. a multidomestic strategy.

 

E. backward vertical integration.

 

 

74. PepsiCo purchased KFC so that it could replace Coke products with Pepsi products in KFC restaurants. This was an example of:

 

 

A. horizontal integration.

 

B. vertical integration.

 

C. a low-cost strategy.

 

D. a global strategy.

 

E. a diversification strategy.

 

 

75. GE Financial Services is an example of which level of management operations for General Electric Company?

 

 

A. Functional

 

B. Corporate

 

C. Divisional

 

D. Departmental

 

E. None of the above

 

 

76. The first step in implementing strategy is to:

 

 

A. establish the mission

 

B. allocate responsibility

 

C. hold people responsible

 

D. establish a timetable

 

E. allocate resources

 

 

77. Which of the following is NOT a step in implementing strategy?

 

 

A. SWOT analysis

 

B. allocating responsibilities

 

C. holding people responsible

 

D. establishing a timetable

 

E. allocating resources

 

 

78. BMW produces cars exclusively for high-income customers. BMW is pursuing a _________ strategy

 

 

A. focused differentiation

 

B. focused low–cost

 

C. differentiation

 

D. low-cost

 

E. a combination of the above

 

 

79. BIC, makers of ballpoint pens and razors, concentrates on making its products more cheaply than its rivals. BIC is pursuing a ________ strategy.

 

 

A. focused differentiation

 

B. focused low–cost

 

C. differentiation

 

D. low-cost

 

E. a combination of the above

 

 

80. When Matsushita sells its TVs and VCRs using the same basic marketing approach in various countries. This is an example of:

 

 

A. a multidomestic strategy.

 

B. a focused low-cost strategy.

 

C. a global strategy.

 

D. vertical integration.

 

E. a differentiation strategy.

 

 

81. When Procter & Gamble uses the same distribution system to deliver its oral care products and its hair care products to drugstore chains, this is an example of: A. synergy. B. a focused-differentiation strategy. C. a diversification strategy. D. an unrelated diversification strategy. E. a differentiation strategy. 82. Two divisions of a company decide to use the same distribution channels for their products to reduce the overlap of their marketing efforts. This is an example of: A. a low-cost strategy. B. a focused-differentiation strategy. C. synergy. D. a differentiation strategy. E. diversification. 83. When General Electric Company expanded its operations by acquiring NBC television. This was an example of: A. Vertical integration B. Diversification C. International expansion D. Low-cost strategy E. Concentration on a single business 84. In which step of SWOT analysis would "slower market growth" be most likely to arise? A. S B. W C. O D. T E. Either S or W 85. In which step of SWOT analysis would "obsolete, narrow product line" be most likely to arise? A. S B. W C. O D. T E. Both O and T 86. To determine an organization's mission, managers must first define its __________. A. vision B. strategy C. tactics D. business E. competition 87. IBM has a written set of guidelines for its managers in terms of behavior, which IBM considers to be either ethical or unethical. This set of written guidelines is called: A. a policy. B. rules. C. a standard operating procedure. D. a single-use plan. E. a mission statement. 88. A functional-level plan spells out the goals of the __________ that are intended to assist the organization to achieve its __________ goals. A. division; corporate

 

B. department; corporate

 

C. business; divisional

 

D. division; business

 

E. none of the above

 

 

89. Which level of management of a large organization contains the organization's marketing department, R&D department, and human resources department for that level of the organization? A. Divisional B. First-line C. Vertical D. Scenario level E. Multidomestic level 90. People in negative moods tend to: A. be more assertive in judgments B. be poorer critical thinkers C. be less effective at devils advocacy D. be more satisfied with their bosses E. none of the above 91. When Bernie Goldhirsch helped entrepreneurs, he was using his: A. positive moods B. organizational commitment C. emotional intelligence D. planning and organizing skills E. negative affectivity 92. Bill Gates, Microsoft's founder, insisted on __________, which became a competitive advantage for this firm. A. business attire B. customer service C. being an individual D. low wages E. centralized control 93. All of the following are examples of "input resources" for an organization EXCEPT: A. labor. B. raw materials. 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Support your answer https://www.coursehero.com/tutors-problems/Business/8107348 8107348 Worker 1 2 3 A 5 6 4 JOB B 8 7 5 C 6 9 3 Use the assignment method to determine the best way to assign workers to jobs, given the following cost information. Compute the total cost for your assignment plan.JOB A B C Worker 1 5 8 6 2 6 7 9 3 4 5 3 https://www.coursehero.com/tutors-problems/Business/8107354 8107354 Recommend a list of financial Strategies for Couples if you were a financial advisor. Recommend a list of financial Strategies for Couples if you were a financial advisor. https://www.coursehero.com/tutors-problems/Business/8107358 8107358 Inter-temporal Price Discrimination Suppose that technophiles are willing to pay $400 now for the latest iPhone, but only $300 if they have to wait a... Inter-temporal Price Discrimination Suppose that technophiles are willing to pay $400 now for the latest iPhone, but only $300 if they have to wait a year. Normal people are willing to pay $250, and their desire to purchase does not vary with time. Ignore the time value of money and compute the optimal pricing scheme of the iPhone. Assume that there are equal numbers of each customer type, and that the MC of the iPhone is $100. https://www.coursehero.com/tutors-problems/Business/8107372 8107372 Question 1. Answer the problem #9-8 on pages 347-348 of the TM textbook. TERMINAL VALUE REFERS TO THE VALUATION ATTACHED TO THE END OF THE PLANNING... Question 1. Answer the problem #9-8 on pages 347-348 of the TM textbook. TERMINAL VALUE REFERS TO THE VALUATION ATTACHED TO THE END OF THE PLANNING PERIOD AND THAT CAPTURES THE VALUE OF ALL SUBSEQUENT CASH FLOWS. ESTIMATE THE VALUE TODAY FOR EACH OF THE FOLLOWING SETS OF FUTURE CASH FLOW FORECASTS : YEAR CASH FOWS 1 1,200,000 2 1,260,000 3 4 5 1,323,000 1,389,150 1,458,608 A. CLAYMORE MINING COMPANY ANTICIPATES THAT IT WILL EARN FIRM FREE CASH FLOWS FCFs OF 4 MILLION PER YEARS FOR EACH OF THE NEXT FIVE YEARS. MOREOVER, BEGINING IN YEAR 6, THE FIRM WILL EARN FCF OF 5 MILLION PER YEAR FOR THE INDEFINITE FUTURE. IF CLAYMORE’S COST OF CAPITAL IS 10%, WHAT IS THE VALUE OF THE FIRM’S FUTURE CASH FLOWS ? B. SHAMELESS COMMERCE INC. HAS NO OUTSTANDING DEBT AND IS BEING EVALUATED AS A POSSIBLE ACQUISITION. SHAMELESS’S FCFs FOR THE NEXT YEARS ARE PROJECTED TO BE 1 MILLION PER YEAR, AND, BEGINNING IN YEAR 6, THE CASH FLOWS ARE EXPECTED TO BEGIN GROWING AT THE ANTICIPATED RATE OF INFLATION WHICH IS CURRENTLY 3% PER ANNUM. IF THE COST OF CAPITAL FOR SHAMELESS IS 10%, WHAT IS YOUR ESTIMATE OF THE PRESENT VALUE OF THE FCFs ? C. DUSTIN ELECTRIC INC. IS ABOUT TO BE ACQUIRED BY THE FIRM’S MANAGEMENT FROM THE FIRM’S FOUNDER FOR 15 MILLION IN CASH. THE PURCHASE PRICE WILL BE FINANCED WITH 10 MILLIOM IN NOTES THAT ARE TO BE REPAID IN 2 MILLION INCREMENTS OVER THE NEXT FIVE YEARS. AT THE END OF THIS FIVE YEAR PERIOD. THE FIRM WILL HAVE NO REMAINING DEBT. THE FCFS ARE EXPECTED TO BE 3 MILLION A YEAR FOR THE NEXT FIVE YEARS. BEGINING IN YEAR 6, THE FCFS ARE EXPECTED TO GROW AT A RATE FO 2% PER YEAR INTO THE INDEFINITE FUTURE. IF THE UNLEVERED COST OF EQUITY FOR DUSTIN IS APPROXIMATELY 15% AND THE FIRM’S BORROWING RATE ON THE BUYOUT DEBT IS 10% (BEFORE TAXES AT A RATE OF 10%), WHAT IS YOUR ESTIATE OF THE VALUE OF THE FIRM ? Question 2. Answer the problem #10-8 on pages 390-391 of the TM textbook. In 2008, Dub Tarun founded a firm using $200,000 of his own money, $200,000 I senior (bank) debt, and an additional $100,000 in subordinated debt borrowed from a family friend. The senior debt pays 10% interest, while the sub debt pays 12% interest and is convertible into 10% of the firm’s equity ownership at the option of the investor, J Martin Capital. Both debt issues have 10-year maturities. In March 2009, the firm’s financial structure appeared as follows: DUB TARUN INC., MARCH 2009 ACCOUNTS PAYABLE $100,000 SHORT-TERM NOTES 150,000 TOTAL SHORT-TERM DEBT 250,000 SENIOR DEBT (10% INTEREST RATE) 200,000 SUB DEBT (12% INTEREST RATE, CONVERTIBLE INTO 10% STOCK) 100,000 EQUITY (DUB TARUN) 200,000 TOTAL DEBT AND EQUITY 750,000 Dub has determined that he needs an additional $250,000 if he is going to continue to grow his business. To raise the necessary funds, he intends to use an 8% convertible preferred stock issue. Dub projects that the firm’s EBITDA (earnings before interest, taxes, depreciation, and amortization) in five years will be 650,000. Although Dub isn’t interested in selling his firm, his banker recently told him that businesses like his typically sell for five to seven times their EBITDA. Moreover, by March 2014, Dub expects that the firm will have 300,000 in cash and that the firm’s pro forma debt and equity will be as follows: DUB TARUN INC. PRO FORMA FINANCIAL STRUCTURE, MARCH 2014 ACCOUNTS PAYABLE 200,000 SHORT-TERM NOTES 250,000 TOTAL SHORT-TERM DEBT 450,000 SENIOR DEBT (10%) 400,000 SEB DEBT (12%, CONVERTIBLE INTO 10% OF THE FIRM’S STOCK) 100,000 EQUITY (DUB TARUN) 800,000 ADDITIONAL FINANCING NEEDED 250,000 TOTAL DEBT AND EQUITY 2,000,000 A. What would you estimate the enterprise value of Dub Tarun Inc. to be on March 2014? (HINT: ENTERPRISE VALUE IS TYPICALLY ESTIMATED FOR PRIVATE COMPANIES USING A MULTIPLE OF EBITDA PLUS THE FIRMS CASH BALANCE.) IF THE SUB DEBT CONVERTS TO COMMON IN 2014, WHAT IS YOUR ESTMATE OF THE VALUE OF THE EQUITY OF DUB TARUN IN 2014? B. IF THE ESTIMATED ENTERPRISE VALUE OF THE FIRM EQUALS YOUR ESTIMATE IN QUESTIONS A, WHAT RATE OF RETURN DOES THE SUB DEBT HOLDER REALIZE IF HE CONVERTS IN 2014? WOULD YOU EXPECT THE SUB DEBT HOLDER TO CONVERT TO COMMON STOCK? C. IF THE NEW INVESTOR WERE TO REQUIRE A 45% RATE OF RETURN ON HIS 250,000 PURCHASE OF CONVERTIBLE PREFERRED STOCK, WHAT SHARE OF THE COMPANY WOULD HE NNED, BASED ON YOUR ESTIMATE OF THE VALUE OF THE FIRM’S EQUITY IN 2014, WHAT IS YOUR ESTIMATE OF THE OWNERSHIP DISTRIBUTION OF DUB TARUN’S EQUITY IN 2014, ASSUMING THAT THE NEW INVESTOR GETS WHAT HE REQUIRES (TO EARN HIS 45% REQUIRED RATE OF RETURN) AND THE SUB DEBT HOLDER CONVERTS TO CMMON? WHAT RATES OF RETURN DO EACH OF THE EQUITY HOLDERS IN THE FIRM EXPECT TO REALIZE BY 2014, BASED ON YOUR ESTIMATE OF EQUITY VALUE? DOES THE PLAN SEEM REASONABLE FORM THE PRESPECTIVE OF EAH OF THE INVESTORS? D. WHAT WOULD BE DUB TARUN’S EXPECTD RATE OF RETURN IF THE EBITDA MULTIPLE WERE FIVE OR SEVEN? E. WHAT WAS THE POST-INVESTMENT AND PRE-INVESTMENT VALUE OF DUB TARUN’S EQUITY IN 2009, BASED ON THE INVESTMENT OF THE NEW INVESTOR? Question 3. Answer the problem #12-7 on pages 478 of the TM textbook. Conceptual analysis of real options: Highland properties owns two adjacent four-unit apartment buildings that are both on 20,000 square feet of land near downtown Portland, Oregon. One of the properties is in very good condition, and the apartments can be rented or $2,000 per month. The units in the other property require some refurbishing and in their current condition can be rented for only about $1,500 per month. Recent zoning changes, combined with changes in market demand, suggest that both lots can be redeveloped. If they are redeveloped, the existing units would be torn down and new luxury apartment buildings would be built on the site, each with 10 apartment units. The cost of the 10-unit buildings is estimated to be about $1.5 million, and each of the 10-apartment unit can be rented for 2,500 per month under current market conditions. Similar properties that have been refurbished are selling for 10 times their annual rentals. a. Identify the real option(s) in this example. b. What are the basic elements of the option(s) (i.e., the underlying asset on which the option is based, the expiration date, and the exercise price)? c. Estimate the value of the option to develop the property. (Hint: make any assumptions you must to arrive at an estimate.)Question 1. Answer the problem #9-8 on pages 347-348 of the TM textbook. TERMINAL VALUE REFERS TO THE VALUATION ATTACHED TO THE END OF THE PLANNING PERIOD AND THAT CAPTURES THE VALUE OF ALL SUBSEQUENT CASH FLOWS. ESTIMATE THE VALUE TODAY FOR EACH OF THE FOLLOWING SETS OF FUTURE CASH FLOW FORECASTS : YEAR CASH FOWS 1 1,200,000 2 1,260,000 3 4 5 1,323,000 1,389,150 1,458,608 A. CLAYMORE MINING COMPANY ANTICIPATES THAT IT WILL EARN FIRM FREE CASH FLOWS FCFs OF 4 MILLION PER YEARS FOR EACH OF THE NEXT FIVE YEARS. MOREOVER, BEGINING IN YEAR 6, THE FIRM WILL EARN FCF OF 5 MILLION PER YEAR FOR THE INDEFINITE FUTURE. IF CLAYMORE’S COST OF CAPITAL IS 10%, WHAT IS THE VALUE OF THE FIRM’S FUTURE CASH FLOWS ? B. SHAMELESS COMMERCE INC. HAS NO OUTSTANDING DEBT AND IS BEING EVALUATED AS A POSSIBLE ACQUISITION. SHAMELESS’S FCFs FOR THE NEXT YEARS ARE PROJECTED TO BE 1 MILLION PER YEAR, AND, BEGINNING IN YEAR 6, THE CASH FLOWS ARE EXPECTED TO BEGIN GROWING AT THE ANTICIPATED RATE OF INFLATION WHICH IS CURRENTLY 3% PER ANNUM. IF THE COST OF CAPITAL FOR SHAMELESS IS 10%, WHAT IS YOUR ESTIMATE OF THE PRESENT VALUE OF THE FCFs ? C. DUSTIN ELECTRIC INC. IS ABOUT TO BE ACQUIRED BY THE FIRM’S MANAGEMENT FROM THE FIRM’S FOUNDER FOR 15 MILLION IN CASH. THE PURCHASE PRICE WILL BE FINANCED WITH 10 MILLIOM IN NOTES THAT ARE TO BE REPAID IN 2 MILLION INCREMENTS OVER THE NEXT FIVE YEARS. AT THE END OF THIS FIVE YEAR PERIOD. THE FIRM WILL HAVE NO REMAINING DEBT. THE FCFS ARE EXPECTED TO BE 3 MILLION A YEAR FOR THE NEXT FIVE YEARS. BEGINING IN YEAR 6, THE FCFS ARE EXPECTED TO GROW AT A RATE FO 2% PER YEAR INTO THE INDEFINITE FUTURE. IF THE UNLEVERED COST OF EQUITY FOR DUSTIN IS APPROXIMATELY 15% AND THE FIRM’S BORROWING RATE ON THE BUYOUT DEBT IS 10% (BEFORE TAXES AT A RATE OF 10%), WHAT IS YOUR ESTIATE OF THE VALUE OF THE FIRM ? Question 2. Answer the problem #10-8 on pages 390-391 of the TM textbook. In 2008, Dub Tarun founded a firm using $200,000 of his own money, $200,000 I senior (bank) debt, and an additional $100,000 in subordinated debt borrowed from a family friend. The senior debt pays 10% interest, while the sub debt pays 12% interest and is convertible into 10% of the firm’s equity ownership at the option of the investor, J Martin https://www.coursehero.com/tutors-problems/Business/8107378 8107378 How will a partner's distributive share be determined if the partner sells one half of his or hers beginning of the year partnership interest at the How will a partner's distributive share be determined if the partner sells one half of his or hers beginning of the year partnership interest at the beginning of the tenth month of the partnership's tax year? https://www.coursehero.com/tutors-problems/Business/8107388 8107388 An existing partner wants to contribute property having a basis less than its FMV for an additional interest in a partnership. Explain the tax An existing partner wants to contribute property having a basis less than its FMV for an additional interest in a partnership. Explain the tax implications for the partner of these other options? https://www.coursehero.com/tutors-problems/Business/8107392 8107392 Read the chapter Opening Vignette - "The Fall of Enron: Did Anyone Understand Their Business? Read the chapter Opening Vignette – “The Fall of Enron: Did Anyone Understand Their Business?" and discuss what you know about Enron, and how an auditor could evaluate the risks from new markets and related party transactions. https://www.coursehero.com/tutors-problems/Business/8107400 8107400 During her speech on malpractice insurance, the head of the local branch of the American Medical Association consistently avoided making eye contact... During her speech on malpractice insurance, the head of the local branch of the American Medical Association consistently avoided making eye contact with her audience. According to research on the role of nonverbal communication in public speaking, the audience was likely to perceive her as https://www.coursehero.com/tutors-problems/Business/8107414 8107414 In your opinion what are the major issues facing the auditing profession today? In your opinion what are the major issues facing the auditing profession today? https://www.coursehero.com/tutors-problems/Business/8107416 8107416 MANAGERIAL ACCOUNTING CASE - PREPARATION OF A MASTER BUDGET Point Value - 70 points Required: Based on the following information, prepare the... MANAGERIAL ACCOUNTING CASE - PREPARATION OF A MASTER BUDGET Point Value – 70 points Required: Based on the following information, prepare the following budgets for each month and the quarter ending March 31, 2011: (Hint: First quarter consists of January, February and March.) • Sales Budget, including a schedule of expected cash collections • Production Budget (in units) • Manufacturing Overhead Budget • Selling and Administrative Expenses Budget • Cash Budget (Note: Even though you are not required to prepare Direct Materials and Direct Labor budgets, direct materials and direct labor information is necessary to prepare the Cash Budget.) Information: 1. Sales forecast: January: 2,000 units; February: 1,700 units; March: 1,600 units; April: 1,500 units. The unit sales price is $16. All sales are on credit and collections are 40% in the month of sale and 60% the following month. Accounts receivable as of December 31, 2010 is $17,200 and this amount is expected to be collected in January 2011.

 

 

2. End of month inventory must equal 70% of next month’s sales. The inventory at the end of December 2010 was 1,400 units.

 

 

3. The following are the expected costs for direct materials, direct labor and manufacturing overhead:

 

DM DL Overhead

 

January $14,800 $6,300 $5,610 + $1.50 per unit produced

 

February 8,600 5,700 $5,610 + $1.50 per unit produced

 

March 8,400 5,300 $5,610 + $1.50 per unit produced

 

 

A. Direct materials are paid 25% in the month incurred and 75% in the following month.

 

Account payable for materials as of December 31, 2010 is $5,400; this amount will be paid in January 2011.

 

 

B. Direct labor is paid in the month incurred.

 

 

C. Overhead costs are paid in the month incurred. Fixed overhead includes depreciation of $1,500 per month.

 

 

4. Selling costs are sales commissions: $.30 per unit sold; shipping costs: $.14 per unit sold. Administrative costs per month are: salaries: $1,200; rent: $400; depreciation: $800. All costs are paid in month incurred.

 

 

 

5. The company plans to buy equipment costing $10,000 in January.

 

 

6. The cash balance as of December 31, 2010 is $10,200. The company borrows money only if

 

the cash balance falls below $2,000 at the end of the month.MANAGERIAL ACCOUNTING

 

CASE - PREPARATION OF A MASTER BUDGET

 

Point Value – 70 points

 

Required:

 

Based on the following information, prepare the following budgets for

 

each month

 

and the

 

quarter

 

ending March 31, 2011

 

:

 

(Hint:

 

First quarter consists of January, February and

 

March.)

 

 

Sales Budget,

 

including a schedule of expected cash collections

 

 

Production Budget (in units)

 

 

Manufacturing Overhead Budget

 

 

Selling and Administrative Expenses Budget

 

 

Cash Budget

 

(Note

 

:

 

Even though you are not required to prepare Direct Materials and Direct Labor budgets,

 

direct materials and direct labor information is necessary to prepare the Cash Budget.)

 

Information:

 

1.

 

Sales forecast:

 

January: 2,000 units; February: 1,700 units; March: 1,600 units; April: 1,500

 

units.

 

The unit sales price is $16.

 

All sales are on credit and collections are 40% in the

 

month of sale and 60% the following month.

 

Accounts receivable as of December 31, 2010

 

is $17,200 and this amount is expected to be collected in January 2011.

 

2.

 

End of month inventory must equal 70% of next month’s sales.

 

The inventory at the end of

 

December 2010 was 1,400 units.

 

3.

 

The following are the expected costs for direct materials, direct labor and manufacturing

 

overhead:

 

DM

 

DL

 

Overhead

 

January

 

$14,800

 

$6,300

 

$5,610 + $1.50 per unit produced

 

February

 

8,600

 

5,700

 

$5,610 + $1.50 per unit produced

 

March

 

8,400

 

5,300

 

$5,610 + $1.50 per unit produced

 

A.

 

Direct materials are paid 25% in the month incurred and 75% in the following month.

 

Account payable for materials as of December 31, 2010 is $5,400; this amount will

 

be paid in January 2011.

 

B.

 

Direct labor is paid in the month incurred.

 

C.

 

Overhead costs are paid in the month incurred.

 

Fixed overhead includes

 

depreciation of $1,500 per month.

 

4.

 

Selling costs are sales commissions: $.30 per unit sold; shipping costs: $.14 per unit sold.

 

Administrative costs per month are: salaries: $1,200; rent: $400; depreciation: $800.

 

All

 

costs are paid in month incurred.

 

5.

 

The company plans to buy equipment costing $10,000 in January.

 

6.

 

The cash balance as of December 31, 2010 is $10,200.

 

The company borrows money only

 


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