Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Management Expert

Attempt all the problems.

Section-A

problem1) Intergalactic Software Company went public three months ago.  You are a sophisticated investor who devotes time to fundamental analysis as a way of identifying mispriced stocks.  Which of the following characteristics will you focus on in deciding whether to follow this stock?

• The market capitalization

• The average number of shares traded per day

• The bid-ask spread for the stock

• Whether the underpreparer that brought the firm public is a Top Five investment banking firm

• Whether its audit company is a Big Four firm

• Whether there are analysts from major brokerage firms following the company

• Whether the stock is held mostly by retail or institutional investors

problem2)a) What are likely to be the long-term critical success factors for the following types of  firms?

• a high technology company such as Microsoft’s take-over of Nokia mobile phone business.

• A large low-cost retailer such as Reliance Fresh.

b) How useful is financial accounting data for evaluating how well these two companies are managing their critical success factors?  What other types of information will be useful in your evaluation?  What are costs and benefits to these companies from disclosing this type of information to investors?

SECTION B

Case Study

Senior executives of Laxmi Rice Mill Ltd have been considering proposal to replace existing coal-fired furnace in the paddy boiling section by a new furnace is cyclone type husk-fired furnace. Capital cost of new furnace is expected to be Rs 1 lakh. It would have useful life of 10 years at the end of which period its residual value would be negligible. The current furnace has the book value of Rs 15,000 and could be used for another 10 years with only minor repairs. If scrapped now, it can fetch Rs 10,000 but it could not fetch any amount if scrapped after ten more years of use.

Basic advantage of new furnace is that it does not depend on coal whose supplies are becoming increasingly erratic in recent years. On a conservative estimate, the new furnace would result in the saving of Rs 25,000 per annum on account of eliminated coal cost. Though, the cost of electricity and other operating expenses are likely to go up by Rs 8,000 and Rs 4,000 per annum respectively.

The husk that results as a by-product during normal milling operations at 3,000 metric ton of paddy milled per year is considered adequate for operating the new furnace. On an average, for every metric ton of paddy milled, husk content is 20 per cent. At present, the husk resulting during milling operations is sold at a price of Rs 50 per metric ton. Once the new furnace is installed, the husk would be diverted for own use. ‘White Ash’ that constitutes about 5 percent of the husk burnt in the new furnace, would be collected in a separate ash-pit as it has considerable demand in the refractory industry. It could be sold very easily at a price of Rs 1,500 per metric ton.

The new furnace would require a motor of 15 HP, whose cost is not included in Rs 1 lakh, the capital cost of the furnace. A 15 HP motor is lying idle with the polishing section of the Mill which could fetch the amount of Rs 3,000 on sale. It has the net book value of Rs 5,000. The motor could be used for the new furnace. At the end of the ten years, it could be scrapped at zero residual value.

All the assets of the company are in the same block. Depreciation would be on straight-line basis and same is assumed to be acceptable for tax purpose as well. Applicable tax rate is 35 per cent and cost of capital is 12 per cent.

problems:

(i) Formulate incremental net after-tax cash flows associated with the replacement project.

(ii) Also compute the project’s NPV.

(iii) Give your recommendation

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M93150
  • Price:- $70

Priced at Now at $70, Verified Solution

Have any Question? 


Related Questions in Business Management

1 the structure that manages projects within the existing

1) The structure that manages projects within the existing organizational structure is __________ organization. Project Balanced matrix Functional Strong matrix Weak matrix 2) A series of coordinated, related, multiple p ...

What is the underlying premise behind the trait theory of

What is the underlying premise behind the Trait Theory of Leadership?

Social media tools encourage people to share information

Social media tools encourage people to share information, collaborate, and interact. These tools reinforce and personalize health messages, reach new audiences, and build a communication infrastructure based on open info ...

Question 1select one of the ethical scenarios listed below

QUESTION 1 Select one of the ethical scenarios listed below: A company uses patient DNA for research without the patient's knowledge or consent A nonprofit organization sells fetal tissue for research Management invites ...

Knowing the public keys to the rsa public-key encryption

Knowing the public keys to the RSA public-key encryption are n = 77 and e = 7, what are the private keys.

Can you manage share and ntfs permissions on a server

Can you manage share and NTFS permissions on a server running Windows Server 2012? What tab is used to manage share permissions and what tab is used to manage NTFS permission?

As the company examines various methods to assess its

As the company examines various methods to assess its performance and design processes, it is looking for an analysis of the existing workflow production process and the factors that most directly impact such measurement ...

Workplace analysisa explain actual workplace organizational

Workplace Analysis a) Explain actual workplace organizational issues drawing from your own experience. b) Analyze root causes from a human behavior perspective and validate the analysis with supportive research evidence.

Now that we have nearly reached the end of our course it is

Now that we have nearly reached the end of our course, it is time to answer a very important question: Are leaders born or are they made? Based on your studies and personal experiences, take a side in this question and d ...

Will tip well depending on the grade receivedethics and

Will tip well depending on the grade received. Ethics and Culture Take one of the following scenarios and evaluate the possible approaches. Also, consider whether they would be handled differently on a collocated team or ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen