Andrew Cunningham - Admiral Andrew Cunningham - World War II - Royal Navy

Andrew Cunningham - Admiral Andrew Cunningham - World War II - Royal Navy Andrew Cunningham - Early Life Career: Andrew Browne Cunningham was born January 7, 1883, outside Dublin, Ireland. The son of anatomy professor Daniel Cunningham and his wife Elizabeth, the Cunninghams family was of Scottish extraction. Largely raised by his mother, he began schooling in Ireland before being sent to Scotland to attend the Edinburgh Academy. At the age of ten, he accepted his fathers offer of pursuing a naval career and left Edinburgh to enter the Naval Preparatory School at Stubbington House. In 1897, Cunningham was accepted as a cadet in the Royal Navy and assigned to the training school aboard HMS Britannia at Dartmouth. Highly interested in seamanship, he proved a strong student and graduated 10th in a class of 68 the following April. Ordered to HMS Doris as a midshipman, Cunningham traveled to the Cape of Good Hope. While there, the Second Boer War began ashore. Believing there to be opportunity for advancement on land, he transferred to the Naval Brigade and saw action in Pretoria and Diamond Hill. Returning to sea, Cunningham moved through several ships before commencing sub-lieutenants courses at Portsmouth and Greenwich. Passing, he was promoted and assigned to HMS Implacable. Andrew Cunningham - World War I: Promoted to lieutenant in 1904, Cunningham passed through several peacetime postings before receiving his first command, HM Torpedo Boat #14 four years later. In 1911, Cunningham was placed in command of the destroyer HMS Scorpion. Aboard at the outbreak of World War I, he took part in the failed pursuit of the German battlecruiser SMS Goeben and cruiser SMS Breslau. Remaining in the Mediterranean, Scorpion participated in the early 1915 attack on the Dardanelles at the beginning of the Gallipoli Campaign. For his performance, Cunningham was promoted to commander and received the Distinguished Service Order. Over the next two years, Cunningham took part in routine patrol and convoy duty in the Mediterranean. Seeking action, he requested a transfer and returned to Britain in January 1918. Given command of HMS Termagent in Vice Admiral Roger Keyes Dover Patrol, he performed well and earned a bar for his DSO. With the end of the war, Cunningham moved to HMS Seafire and in 1919 received orders to sail for the Baltic. Serving under Rear Admiral Walter Cowan, he worked to keep the sea lanes open to newly independent Estonia and Latvia. For this service he was awarded a second bar for his DSO. Andrew Cunningham - Interwar Years: Promoted to captain in 1920, Cunningham moved through a number of senior destroyer commands and later served as Fleet Captain and Chief of Staff to Cowan in the North America and West Indies Squadron. He also attended the Army Senior Officers School and the Imperial Defense College. Upon completing the latter, he received his first major command, the battleship HMS Rodney. In September 1932, Cunningham was elevated to rear admiral and made Aide-de-Camp to King George V. Returning to the Mediterranean Fleet the following year, he oversaw its destroyers which relentlessly trained in ship handling. Raised to vice admiral in 1936, he was made second in command of the Mediterranean Fleet and placed in charge of its battlecruisers. Highly regarded by the Admiralty, Cunningham received orders to return to Britain in 1938 to assume the post of Deputy Chief of the Naval Staff. Taking this position in December, he was knighted the following month. Performing well in London, Cunningham received his dream posting on June 6, 1939, when he was made commander of the Mediterranean Fleet. Hoisting his flag aboard HMS Warspite, he began planning for operations against the Italian Navy in case of war. Andrew Cunningham - World War II: With the beginning of World War II in September 1939, Cunninghams primary focus became protecting the convoys that supplied British forces in Malta and Egypt. With the defeat of France in June 1940, Cunningham was forced to enter into tense negotiations with Admiral Rene-Emile Godfroy regarding the status of the French squadron at Alexandria. These talks were complicated when the French admiral learned of the British attack on Mers-el-Kebir. Through skillful diplomacy, Cunningham succeeded in convincing the French to allow their ships to be interned and their men repatriated. Though his fleet had won several engagements against the Italians, Cunningham sought to dramatically alter the strategic situation and reduce the threat to Allied convoys. Working with the Admiralty, a daring plan was conceived which called for a nighttime air strike against the Italian fleets anchorage at Taranto. Moving forward on November 11-12, 1940, Cunninghams fleet approached the Italian base and launched torpedo planes from HMS Illustrious. A success, the Taranto Raid sank one battleship and badly damaged two more. The raid was extensively studied by the Japanese when planning their attack on Pearl Harbor. In late March 1941, under heavy pressure from Germany to halt the Allied convoys, the Italian fleet sortied under the command of Admiral Angelo Iachino. Informed of enemy movements by Ultra radio intercepts, Cunningham met the Italians and won a decisive victory at the Battle of Cape Matapan on March 27-29. In the battle, three Italian heavy cruisers were sunk and a battleship damaged in exchange for three British killed. That May, following the Allied defeat on Crete, Cunningham successfully rescued over 16,000 men from the island despite taking heavy losses from Axis aircraft. Andrew Cunningham - Later War: In April 1942, with the United States now in the war, Cunningham was appointed to the naval staff mission to Washington, DC and built a strong relationship with the Commander-in-Chief of the US Fleet, Admiral Ernest King. As a result of these meetings, he was given command of the Allied Expeditionary Force, under General Dwight D. Eisenhower, for the Operation Torch landings in North Africa late that fall. Promoted to admiral of the fleet, he returned to the Mediterranean Fleet in February 1943, and worked tirelessly to ensure that no Axis forces would escape from North Africa. With the conclusion of the campaign, he again served under Eisenhower in commanding the naval elements of the invasion of Sicily in July 1943 and the landings in Italy that September. With the collapse of Italy, he was present at Malta on September 10 to witness the formal surrender of the Italian fleet. Following the death of the First Sea Lord, Admiral of the Fleet Sir Dudley Pound, Cunningham was appointed to the post on October 21. Returning to London, he served as a member of the Chiefs of Staff committee and provided overall strategic direction for the Royal Navy. In this role, Cunningham attended the major conferences at Cairo, Tehran, Quebec, Yalta and Potsdam during which plans for the invasion of Normandy and defeat of Japan were formulated. Cunningham remained First Sea Lord through the end of the war until his retirement in May 1946. Andrew Cunningham - Later Life: For his wartime service, Cunningham was created Viscount Cunningham of Hyndhope. Retiring to Bishops Waltham in Hampshire, he lived in a house that he and his wife, Nona Byatt (m. 1929), had purchased before the war. During his retirement, he held several ceremonial titles including Lord High Steward at the coronation of Queen Elizabeth II. Cunningham died at London on June 12, 1963, and was buried at sea off Portsmouth. A bust was unveiled in Trafalgar Square in London on April 2, 1967 by Prince Philip, Duke of Edinburgh in his honor. Selected Sources History of War: Admiral Andrew Cunningham Royal Navy Museum: Andrew Cunningham

6 Creative Job Search Tips You Can Learn From Hacks That Worked

6 Creative Job Search Tips You Can Learn From Hacks That Worked In a job search, it’s hard to go wrong with a solid set of basics: resume, cover letter, firm handshake. But sometimes getting the job you want means getting a little creative, and thinking outside the applicant box. After all, if a hiring manager is going to look at hundreds (and maybe thousands?) of job applications, it can’t hurt to stand out from the crowd if the time and place is right. Let’s look at six daring aspirants who stepped outside the usual- and succeeded. Then, see if you can use some smarts and creativity to adapt their stunts into something that will wow hiring managers in your field. 1. Let them come to you.Frustrated with his post-college job search, Andrew Horner decided to turn the tables and get potential employers to come to him. He created a website listing some pertinent details about himself, and closing with an application for potential employers. His risky gamble ultimately paid off. If you can think of a way to bring people to your r esume, rather than the other way around, go for it.2. Put your face where they can’t miss it.Designer Miguel Rato showcased his skills by putting his face and professional stats on a mocked-up milk carton to grab the attention of potential employers, making sure to include his skills, experience, and bio. Having seen what they were, indeed, â€Å"missing,† a potential employer soon found him and offered him a job. This one is over the top, but the lesson you can take from it is that creativity, when done well, is usually rewarded.3. Tailor your pitch as specifically as possible.Designer Eric Gandhi wanted to work at Google, so he decided to make his resume look like a Google search results page to show how well he could fit in with the Google vibe. Eventually, the graphic made its way to a Google employee, who helped Eric score an interview. If you make sure to let a company know that you’re not simply copy/pasting your application materials and that you really want to work  there, you’re sure to stand out more.4. Think big.While of course you should always reach for the stars and put everything you have into every application, one guy took this very literally. Recent grad Adam Pacitti was frustrated with his job search, and decided to crowdsource the process. He put up a billboard in his native England, saying simply, â€Å"I spent my last  £500 on this billboard. Please give me a job.† The billboard linked to a webpage containing his resume, and ultimately got him hired (not to mention a lot of attention).5. Say it in song.While karaoke in a job interview is usually frowned not the best idea, account executive Arielle LaGuette decided to get attention for her job application by writing a song about the company. After posting her custom song to YouTube and having a friend at the company pass it along to the powers that be, LaGuette followed up with her (more traditional) resume and cover letter. Presumably the song was c atchy, because she got the gig. Don’t go  too out there for more traditional companies, but if you think your dream gig would be open to some kookiness, it just might work in your favor.6. Dress your resume for success.You know the old saying, â€Å"dress for the job you want, not the job you have?† That kind of aspirational dress code can work for resumes, too. Luis Magalhaes was seeking a job that went beyond his experience, so went for the fanciest package possible: a book-like cover, high-quality paper, and a minimalist design. And it worked- his care and attention to his resume made his application stand out, and scored him an interview.

Physiology assignment Example | Topics and Well Written Essays - 500 words - 1

Physiology - Assignment Example During the period referred to as the relaxation time, blood flow into the atrioventricular valves that in design makes a separation between the left and right atrium. In this case, the blood flows via the atrioventricular valves that separate the ventricles from atria. Blood is received from the right auricle that comes from the rest of the body parts and is transmitted via the inferior and superior vena cover (Philbrick). Therefore, in the cardiac cycle, the blood will be flowing through the heart during the complete heartbeat process. In this case, the systole stands for contraction and the diastole stands for the relation. Considering cases where pressure on the valves varies from that set on the other side of the valve results into an opening of the valve. The illustration on the diagram represents a cardiac cycle within the cardiac left ventricle. However, in the atrial pressure plot: wave "a" corresponding to atrial contraction. Wave "c" represents an increase in pressure emanating from the closed mitral valve. That is the wave going into the atrium in ventricular systole, as well as "v" standing to inactive atrial filling. In the electrocardiogram: wave "P" resembles the inception of atrial depolarization, waves "QRS" match to the onset of ventricular depolarization, as well as "T" tallies to ventricular repolarization. Therefore, the pressure in the cardiac system forces for relaxation and contraction of the muscles in the heart therefore causing the flow of blood to various parts of the heart and the entire body. One of the reliable mechanisms of stroke volume control is the preload mechanism. Preload mechanism is the point of stretching in cardiac muscle cells before contraction. That has a clear explanation of Franks’ Starling law of the heart (Philbrick). Another most important factor in cardiac stretching is venous return. It considers the amount of blood coming from the rest of the body parts. In this case, slow exercise

Class Learning Log Essay Example | Topics and Well Written Essays - 750 words

Class Learning Log - Essay Example The need of competitive intelligence was identified to develop insight into emerging markets and identify and neutralize the threats so that the affects are minimized. The myths discussed clarified various doubts on the subject. Class 2 The class two was more based on the tools of the intelligence project. The KITS (Key Intelligence Topics) model was described and discussed and its application was explained. The intelligence wheel comprising of planning, analysis, communication, evaluation and collection and collation and distribution of time in each of this phase helped understanding different aspects of decision maker, decision, organizational contacts problems possible to encounter and many others. The focuses on the type of knowledge, prioritization, effective use of intelligence units and others have been explained with great details. The focus of intelligence can be various stakeholders, organizations or events. It can be competitors, customers, regulators or other stakeholders or technology changes, threat of new entrants, opportunities and others. Class 3 This class was for the intelligence and collection of information. The case study was used in this class for the Best Food’s information need like financial information, portfolio studies and the orientation of the senior management. Different types of information, difference of information and knowledge and various other basic concepts were cleared in this class. This class also helped building knowledge about the sources of information and competition of getting right information from right sources at right time. There was detailed information on various aspects of the use of internet sources for information. Class 4 Analysis in intelligence was the key theme for this class. This class was all about making sense of the information collected. The two approaches discussed were the Joe approach and analysis approach. The gap analysis was something covered in detail in the Services Marketing strat egies. This particular aspect was clearer to me from my previous educations. The main aspect of analysis explained were focus on collection, perspective on results, ensures completeness, assists in reducing bias and provides meaning. The analysis instruments covered were software based which help in data mining, checklists or models. The strategic and competitive analysis process as discussed by Fleisher & Bensoussan was covered in detail. This was new and interesting for me. The other interesting aspect was the decision, KIT and analytical approach method. This allowed integrating my previous knowledge to the present learning. Here also I felt as I am studying the things I already know with new approach. Class 5 The last class covered the evaluating capacity in order to develop foresight and intelligence. The four foresight scenarios for 2017 or 2030 were interesting to study. This class provided various strategies and how to understand robustness of strategies, deal with barriers and obstacles and priority action in each of key areas like technology, socio-cultural context, economic and export policy and finance availability. Second Presentation I suggest having presentation on the next course that includes more case study and practical based approach. The presentations so far has been good in developing the awareness and knowledge of what competitive intelligence are, its tool and techniques and many others. However more practice is needed to hone the

Being a global grocery store Essay Example for Free

Being a global grocery store Essay Being a global grocery store and merchandising retail store, Tesco continues to consolidate its position as the worlds number three retailer after Wal-mart and Carrefour of the US and France, respectively. The Tesco company emerged in 1924, with its first store being opened in London, five years later. The same company has continued to grow, after that it opened up in 1956, its first supermarket. From then, the company has continued to realize growth and expansion, growing organically during the second phase of the 20th century. The growth during this epoch reached its apogee when in 1977, the Tesco company decided to reduce the prices of its commodities in lieu of Cohens rather antithetical policies. This resulted in Tesco company realising a 4% growth in its market share after every two months. Strategic directions and development methods that have been adopted by Tesco. Up to the moment, the Tesco company has been focusing on making innovations and facilitating conditions that can encourage the same. This is geared towards making the employees free enough to engage in efforts to come up with innovative ideas. The rationale behind this notion is that the rank and file of an entire organization has the ability to generate productive ideas. To this effect, the Tesco company as organization ensures that there is an open line through which the opinions and views of the employees can be solicited (Humby and Hunt 2007, 75). The effect that this approach has on the returns of the Tesco company is that it has realized a stable base of employees who are loyal. This is because the employees, courtesy of the practice, are left with the feeling of being totally integral to the company and being appreciated by the management board. This has bolstered the cause of Tesco companys growth and expansion, due to low employees turnover. The low employees turnover becomes inevitable for Tesco company since employees take to remain loyal to the company, and thus saving it from needing to recruit new employees. At the same time, the Tesco company takes to target the desired goal by making regular consultations with the clients on the quality of goods produced by the Tesco company. This exercise has been very instrumental in helping the Tesco company channel its synergies towards efficiency and customer satisfaction. Forces that are promoting the food retail industrys globalisation. According to Harris and Dennis (2002, 177) there are several forces that ensure the global adoption of the Tesco company food retail. In the first case, the company makes it its responsibility to ensure that its operations are attune to the indigenous tastes and preference of the local market. To this effect, Tesco company takes it upon itself to tamper its operations with the indigenous culture, regulations and delivery chains. This feat has been instrumental in placing the Tesco company in the map. At the same time, Tesco company builds brands that enable it as a company to forge longterm relationships with its clients. In the same vein, the company maintains its ability to fix its focus on the targeted countries, even in the face of going global. This, the company takes to achieve by establishing brands that are unique and of high standard. In the same wavelength, Tesco company has ensured these prospects by establishing brands that are nation or state- specific. In order to thoroughly entrench itself into the global market, Tesco company ensures that it carries out designs that are multi formatted. According to Baker (2002, 90), this has been important to Tesco company, given the fact that it has been established that there is no single format that has been able to consolidate its position in the global market. How Tesco strategy in the US may help it realize competitive advantage. In the US Context, Tesco company has tried to achieve an edge over its peers by taking to mitigate the extent of the shopping costs. Another feather in Tesco companys cap exists, courtesy of the fact that the deficit does not fall on the shoulders of the suppliers. Rather, the Tesco company sorts out the situation through the enhancement of the efficiency and the adoption of simpler processes in the course of the companys operations. Hooley, Saunders and Piercy (2004, 67) maintain that this means that clients are able to realize relatively less costly shopping expeditions, from the Tesco company. Unlike Tesco company, its peers even after reducing the shopping price, still leave financial weight to fall squarely on the suppliers. The suppliers on the other hand try to settle the deficit by exacting higher prices to the retailers who then impose extra costs on the consumers. This cycle becomes the epitome of the adage, borrowing from Peter to pay Paul. In about the same vein, Tesco company is trying to build a niche for itself in the American context by opening up many stores that support the issuance of hard discount (Tapp 2002, 122). To crown this effort, Tesco company has remained responsible for the invitation of British companies that can bolster the interests of the same. Some of these companies are the Big Kahuna Wine a label of Fresh and Easy. This company has been influential in dragging a huge clients base to Tesco company scores, owing to the quality wine and delicious poultry meat it serves. Conclusion. It is important for any company that seeks to emulate Tesco company to take to stock, the fact that the latter has, apart from the aforementioned practices, ensured that it dabbles its operations with the concept of capability. To this cause, the Tesco company ensures the employment of skills, and not scale. This, for the Tesco company portends ensuring that the skills are elicited from its rank and file and the systems processes. Therefore, even small scale companies are inexcusable when it comes to (under) performance. References. Baker, M. J. Tesco company and marketing mix, New York: Prentice Hall, 2002. Harris, L. and C. Dennis, Tesco company and e business, London, SAGE, 2002. Hooley, G. , J. A. Saunders and Piercy, N. , Tesco company marketing strategies, New York: McGraw Hill, 2004. Humby, C. and P. Hunt, Tesco company and customer loyalty, Harvard, Harvard University Press, 2007. Tapp, A. , The principles of database and direct marketing, Michigan, Michigan University Press, 2002.

Benefits of ESL and Bilingual Education Essay -- essays research paper

In order to help those non-native people to be successful in the United Sates, there should have some kind of programs to help them to learn English effectively, but also to maintain their native language. Bilingual Education and ESL programs are systems that developed since the mid 1900s in the United States to reach the goal of helping non-native people with the language. There has been the argument of whether these programs are effective and necessary to maintain to help the non-native speakers. Therefore, it is important to find a way to secure the Bilingual Education and ESL programs are helpful to non-native people to learn English and maintain their native language. According to the overall practice of these programs in the past experiences and my experiences as a bilingual student, the combination of Bilingual Education and ESL programs is the best way to go about. The debate over whether to have the bilingual education maintained in the school system has never stopped since the first practice of the bilingual education in the United States. There were people support the bilingual education, and also have people against the bilingual education. The supporters are argued the bilingual education is necessary to help the non-native students to learn the English while also encourage them to maintain their native language, because the knowledge of two languages will benefited a lot for their future, and they will be more competitive than others. While the others said the bilingual education is not a good way to help the non-native speakers to learn the English effectively because it focuses too much on their native language and failed to teach the English to them. ?Research speaks of increasing numbers of students i... ...glish and can understand very well in class. As a whole, Bilingual Education should not be abolished because immigrants need this program to help them to be successful in the United States. The goal of bilingual education is good because it helps immigrants maintain their native language. This will benefit them a lot, and it also can help new immigrants to adjust into the new culture smoothly. Therefore, Bilingual Education should not be abolish but improves its function to be more applicable to the immigrants to maintain their native language while embracing English. In order to get full individuality in the public, get involved in the society and be socially advantaged, one should focus more on mastering the English skills. Lastly, the combination of Bilingual Education and ESL programs are the best way to go about to reach the goals of both of these programs.

Is Therese Raquin a Naturalist Novel?

Is Therese Raquin a Naturalist novel? Emile  Zola is often considered the chief literary theorist of the Naturalist movement and so one would assume that his creative offspring, including the novel Therese Raquin, would display the traits of the genre. Zola may be responsible for many of the conventions that one would associate with Naturalism and so naturally you could extend this logic to argue that his work defines the genre.To the modern reader, Therese Raquin appears anything but naturalistic with a dramatic, fast moving plot that boasts murder, adultery and revenge that almost becomes synthetic in places. However, for the sake of this essay, I must decide upon a firm definition for Naturalism, in its correct historical context, in order to debate and speculate as to whether Therese Raquin can be read or interpreted as a Naturalist novel.Naturalism may be defined as a scientifically accurate extension of realism characterized by a magnified perspective through which the author displays the primitive nature of humans (using characters with strong animal drives who are â€Å"victims both of glandular secretions within and of sociological pressures†) and adopts an objective and emotionally detached approach to the characters in order to demonstrate the weaknesses and tragedies of 19th Century society, particularly amongst the lower classes.Zola’s prefaces to his novels at as essays on Naturalism and much of the deterministic and scientific philosophy behind the movement may be found, for example in the preface to Therese Raquin, Zola writes that he sees himself as a â€Å"mere analyst, who may have turned his attention to human corruption, but in the same way as a doctor becomes absorbed in an operating theatre† and comments that â€Å"the return to nature, the naturalistic evolution which marks the century, drives little by little all the manifestation of human intelligence to the same path†.Firstly I will explore the common con ventions of Naturalism that are present in Therese Raquin. For example is the typical Naturalistic characterisation through the use of the four temperaments (stemming from Galen’s four humours) that the author regards in higher importance than the actual characterisation as he states that he proposed to â€Å"study temperaments and not characters†. Zola assigns certain temperaments to his characters to establish inter-character relations in the plot and demonstrate the animalistic nature of humans.Laurent may be associated with sanguine (â€Å"handsome, full blooded†), Therese with melancholy and Camille with phlegmatic qualities. By using this device, Zola adds a certain amount of reality and human nature to the pot which is, of course, an essential aspect to the genre of Naturalism. Also by using these temperaments to define the psychology of his characters, Zola incorporates scientific elements, as if he is conducting a sociological study of background in rel ation to the  milieu and subsequently the psychological study of individual characters in particular circumstances.Naturalism, as a movement, is in debt to the scientific enlightenment with scientists, such as Darwin, who popularised new ways of thinking that evolved around the concept of biological determinism and the author adopted these views in response, stating that Naturalists are â€Å"men of science†. Biological determinism may be thought of as a melting pot of biology and philosophy, suggesting that humans merely respond to the surrounding  environmental forces  and  internal drives,  none of which they can control or understand, in essence we are little more than a â€Å"human brute†.In essence we are driven by the very primitive urges and instincts of hunger, sex and fear. Within Therese Raquin we see these attributes materialise throughout the book and become particularly prevalent in the sexual undertones of Therese’s affair with Laurent, something that disgusted many of Zola’s critics. However it is more obvious to the modern reader that Zola, through his dramatic plot, is demonstrating a level of determinism in the sense that life makes its conclusions, and the Naturalistic novelist's task is to represent those conclusions, rather than contribute his own.Controversy may be viewed as another defining characteristic of the Naturalistic genre and if we are to consider Therese Raquin in its correct historical context (1867), it is not difficult to understand why it caused much scandal due to Zola’s honest and uncompromising exploration of the darkest aspects of human existence. One critic, Louis Ulbach, wrote in Le Figaro  in January 1868 that the novel was â€Å"a pool of mud and blood† and was a perfect example of â€Å"the utter filth that is contemporary literature†.It is the disposition of the Naturalist writer that assumes an amoral attitude to the plot and acts somewhat as a voyeur rather than a judge. Personally I view Francois, the same cat over which many critics and scholars speculate as to whether it is the cat in Manet’s portrait Olympia, as somewhat of a metaphor for the Naturalist author. Francois is present in many of the most climatic and socking scenes, most notably the passionate scene of Camille’s murder, and remains detached but also demands some sort of presence so much so that Laurent becomes frightened and wants to â€Å"kill the beast† as he remarks how â€Å"human† it looks.The fact that Laurent almost personifies the cat may suggest that animal and man are alike in the very basic sense of instinct. I think that the Naturalist author assumes a similar stance to this cat as he remains a quiet and unbiased third party, recording the events without judgment, acting as a journalistic voyeur, which is relevant to this novel as Zola discloses that he is â€Å"simply an observer, who states the facts†.On its publi shing, Therese Raquin was accused of immortality and if the critics were not accusing Zola of an â€Å"alleged perversion of public morality† then it would be for the novel’s â€Å"unsound philosophic and aesthetic assumptions†. Despite these accusations of immorality, Zola defends himself saying that it was, in fact, immoral to refrain from including such behaviour as the lack of obvious moral material was corrupting and that â€Å"the process of honest examination purifies everything, just as fire does. Another aspect of this novel that argues in favour of Therese Raquin being a Naturalist novel is the sense of pessimism that one feels when reading it. This negative atmosphere is created by deliberately making the novel feel claustrophobic with the author using a number of devices such as an omniscient third person narrative, a limited number of characters and settings as well as a prevalent theme of imprisonment.For example, Zola’s displays Laurentâ⠂¬â„¢s captivity within his own guilt through describing his â€Å"hallucinations† of paranoia which reinforces the theme of claustrophobia and imprisonment. There is also much imagery that could be associated with hell with reference to vaults and holes, for example Therese admits she feels like she is â€Å"going down into the clammy earth of a pit† and that she is buried â€Å"in a vault†. The presentation of Laurent and Therese in relation to such pessimism and claustrophobia demonstrates their remorse and shows great burden of murder.Zola uses the setting to suggest that any world beyond the working class community provides a sense of claustrophobia and stresses the difficulties of escaping this life, thus creating a social trap. The relevance of such pessimism in relation to a Naturalist novel is found in the absence of ideology; life is not ideal and so to create an accurate portrait humanity, the author must make the plot realistic which means that negat ivity is sometimes exaggerated.Charles Child Walcutt states that Zola seizes reality through his use of the characters’ temperaments and â€Å"transforms that temperament into a work of art†. Indeed the aspect of art is important in arguing that Therese Raquin is not in fact a Naturalist novel as however fiercely the author claimed to be scientific and methodical in his approach to the composition process, he never believed that the naturalist author was solely functioning on a mechanical level any more than he considered that artists, such as Manet, were replicating reality.It is no secret that Zola was heavily influenced by such artists who were straying from the previous Romantic Movement into a more Naturalistic style and consequently there is an innate correlation between the Movement in particularly French art and literature. In both cases the author or artist strives to symbolize the truth of nature, avoiding purely mimicking nature itself in order to obtain a c ertain amount of artistic individuality and a sense of poeticism to the work.In conclusion, I believe that one must approach analysing Therese Raquin outside of its historical context with caution as it can distort a modern day reader’s opinion as to whether this is a true Naturalist work due to the fact that a modern reader has been exposed to far more scandalous materials that may strike us a more gritty than Zola’s novel.However, from the extensive criticism and scandal that Therese Raquin stirred when it was first published, we can imagine that it was the one of most openly human and frank portrayals of life that the Victorians had been exposed to and so if we are to make a judgment in relation to its context, I believe it is a Naturalist novel. It also feels slightly awkward to debate the genre of Therese Raquin because its author was one of the most prolific and pioneering writers in Naturalism.Therefore I think it is valid to suggest that Therese Raquin may be t hought of as a defining work for the genre of Naturalism and we should, instead, speculate over other supposed Naturalist materials in relation to Zola’s novels. Rather that comparing Zola’s writing to a set of Naturalist criteria to the reinforce this novel’s validity as a member of the Naturalist genre, I am able to see the scaffolding that Zola created, allowing many Naturalist successors to build on to add more substance in order to write the more edgy literature we are familiar with today.Therese Raquin is a Naturalist novel that is not an imitation of reality but a scientific study of humanity. The author successfully presents the primitive and uncontrolled nature of humans in relation to their setting or circumstance with uncompromising and bold attention to detail. The novel displays the simple â€Å"application of the experimental method to the study of nature and of man†, which in itself is a definition of Naturalism. Select Bibliography 1.Emile Zola, Therese Raquin (1868) 2. Ferragus. La litterature putride , (Le Figaro. 23 January 1868) 3. Clarence R. Decker The Aesthetic Revolt against Naturalism in Victorian Criticism, p 845, Vol. 53, No. 3 (Sep. , 1938) 4. Charles Child Walcutt, American literary naturalism: a divided stream ( Minnesota, 1956) ——————————————– [ 2 ]. , M. H Abrams, A Glossary of Literary Terms, 5th Edition (published ,San Francisco, 1988) [ 3 ].Emile Zola, Therese Raquin Preface de la deuxieme edition (1868) [ 4 ]. Emile Zola, Therese Raquin Preface de la deuxieme edition (1868). The author calls both Therese and Laurent â€Å"human brutes, [ 5 ]. Ferragus. La litterature putride , (Le Figaro. 23 January 1868) [ 6 ]. Clarence R. Decker The Aesthetic Revolt against Naturalism in Victorian Criticism, p 845, Vol. 53, No. 3 (Sep. , 1938) [ 7 ]. Charles Child Walcutt, American literary naturalism: a div ided stream ( Minnesota, 1956)

Case Solutions for Corporate Finance Ross, Westerfield, and Jaffe 9th Edition

Case Solutions Corporate Finance Ross, Westerfield, and Jaffe 9th edition CHAPTER 2 CASH FLOWS AT WARF COMPUTERS The operating cash flow for the company is: (NOTE: All numbers are in thousands of dollars) OCF = EBIT + Depreciation – Current taxes OCF = $1,332 + 159 – 386 OCF = $1,105 To calculate the cash flow from assets, we need to find the capital spending and change in net working capital. The capital spending for the year was: | |Capital spending | | |   |Ending net fixed assets |$2,280 | |   |– Beginning net fixed assets |1,792 | |   |+ Depreciation | 159 | |   | Net capital spending |$ 647 | And the change in net working capital was: |   |Change in net working capital | |   |Ending NWC |$728 | |   |– Beginning NWC | 586 | |   | Change in NWC |$142 | So, the cash flow from assets was:    |Cash flow from assets | | |   |Operating cash flow |$1,105 | |   |– Net capital spending |647 | |   |– Change in NWC | 142 | |   | Cash flow from assets |$316 | The cash flow to creditors was: |   |Cash flow to creditors |   | |   |Interest paid | $95 | |   |– Net New Borrowing | 20 | |   | Cash flow to Creditors | $75 | The cash flow to stockholders was:    |Cash flow to stockholders |   | |   |Dividends paid | $212 | |   |– Net new equity raised | –29 | |   | Cash flow to Stockholders | $241 | The accounting cash flow statement of cash flows for the year was:    |Statement of Cash Flows | |   |Operations | | |   |Net income |$742 | |   |Depreciation |159 | |   |Deferred taxes |109 | |   |Changes in assets and liabilities | | |   | Accounts receivable |(31) | |   | Inventories |14 |   | Accounts payable |17 | |   | Accrued expenses |(99) | |   | Other |(9) | |   |Total cash flow from operations |$902 | |   |   | | |   |Investing activities | | |   | Acquisition of fixed assets |$(786) | |   | Sale of fixed assets |139 | |   |Total cash flow from investing acti vities |$(547) | |   |   | | |   |Financing activities | | |   | Retirement of debt |$(98) | |   | Proceeds of long-term debt |118 | |   | Notes payable |5 | |   | Dividends |(212) | |   | Repurchase of stock |(40) | |   | Proceeds from new stock issues |11 | |   |Total cash flow from financing activities |$(216) | |   |   | | |   |Change in cash (on balance sheet) |$39 | Answers to questions 1. The firm had positive earnings in an accounting sense (NI > 0) and had positive cash flow from operations and a positive cash flow from assets. The firm invested $142 in new net working capital and $647 in new fixed assets. The firm was able to return $241 to its stockholders and $75 to creditors. 2. The financial cash flows present a more accurate picture of the company since it accurately reflects interest cash flows as a financing decision rather than an operating decision. 3. The expansion plans look like they are probably a good idea. The company was able to return a significant amount of cash to its shareholders during the year, but a better use of these cash flows may have been to retain them for the expansion. This decision will be discussed in more detail later in the book. CHAPTER 3 RATIOS AND FINANCIAL PLANNING AT EAST COAST YACHTS 1. The calculations for the ratios listed are: Current ratio = $14,651,000 / $19,539,000 Current ratio = 0. 75 times Quick ratio = ($14,651,000 – 6,136,000) / $19,539,000 Quick ratio = 0. 44 times Total asset turnover = $167,310,000 / $108,615,000 Total asset turnover = 1. 54 times Inventory turnover = $117,910,000 / $6,136,000 Inventory turnover = 19. 22 times Receivables turnover = $167,310,000 / $5,473,000 Receivables turnover = 30. 57 times Total debt ratio = ($108,615,000 – 55,341,000) / $108,615,000 Total debt ratio = 0. 49 times Debt-equity ratio = ($19,539,000 + 33,735,000) / $55,341,000 Debt-equity ratio = 0. 96 times Equity multiplier = $108,615,000 / $55,341,000 Equity multiplier = 1. 96 times Interest coverage = $23,946,000 / $3,009,000 Interest coverage = 7. 96 times Profit margin = $12,562,200 / $167,310,000 Profit margin = 7. 51% Return on assets = $12,562,200 / $108,615,000 Return on assets = 11. 57% Return on equity = $12,562,000 / $55,341,000 Return on equity = 22. 70% 2. Regarding the liquidity ratios, East Coast Yachts current ratio is below the median industry ratio. This implies the company has less liquidity than the industry in general. However, the current ratio is above the lower quartile, so there are companies in the industry with lower liquidity than East Coast Yachts. The company may have more predictable cash flows, or more access to short-term borrowing. The turnover ratios are all higher than the industry median; in fact, all three turnover ratios are above the upper quartile. This may mean that East Coast Yachts is more efficient than the industry in using its assets to generate sales. The financial leverage ratios are all below the industry median, but above the lower quartile. East Coast Yachts generally has less debt than comparable companies, but is still within the normal range. The profit margin for the company is about the same as the industry median, the ROA is slightly higher than the industry median, and the ROE is well above the industry median. East Coast Yachts seems to be performing well in the profitability area. Overall, East Coast Yachts’ performance seems good, although the liquidity ratios indicate that a closer look may be needed in this area. Below is a list of possible reasons it may be good or bad that each ratio is higher or lower than the industry. Note that the list is not exhaustive, but merely one possible explanation for each ratio. | |Ratio |Good |Bad | | |Current ratio |Better at managing current accounts. |May be having liquidity problems. | | |Quick ratio |Better at managing current accounts. May be having liquidity problems. | | |Total asset turnover |Better at utilizing assets. |Assets may be older and depreciated, requiring | | | | |extensive investment soon. | | |Inventory turnover |Better at inventory management, possibly due to |Could be experiencing inventory shortages. | | | |better procedures. | | | |Receivables turnover |Better at collecting receivables. |May have credit terms that are too strict. | | | |Decreasing receivables turnover may increase | | | | | sales. | | |Total debt ratio |Less debt than industry median means the company|Increasing the amount of debt can increase | | | |is less likely to experience credit problems. |shareholder returns. Especially notice that it | | | | |will increase ROE. | | |Debt-equity ratio |Less debt than industry median means the company|Increasing the amount of debt can increase | | | |is less likely to experience credit problems. |shareholder returns. Especially notice that it | | | | |will increase ROE. | | |Equity multiplier |Less debt than industry median means the company|Increasing the amount of debt can increase | | | |is less likely to experience credit problems. |shareholder returns. Especially notice that it | | | | |will increase ROE. | | |Interest coverage |Less debt than industry median means the company|Increasing the amount of debt can increase | | | |is less likely to experience credit problems. |shareholder returns. Especially notice that it | | | | |will increase ROE. | | |Profit margin |The PM is slightly above the industry median, so|May be able to better control costs. | | | |it is performing better than many peers. | | | |ROA |Company is performing above many of its peers. |Assets may be old and depreciated relative to | | | | |industry. | | |ROE |Company is performing above many of its peers. Profit margin and EM could still be increased, | | | | |which would further increase ROE. | If you created an Inventory to Current liabilities ratio, East Coast Yachts would have a ratio that is lower than the industry median. The current ratio is below the industry median, while the quick ratio is above the industry median. This implies that East Coast Yachts has less inventory to current liabilities than the industry median. Because the cash ratio is lower than the industry median, East Coast Yachts has less inventory than the industry median, but more accounts receivable. 3. To calculate the internal growth rate, we first need to find the ROE and the retention ratio, so: ROE = NI / TE ROE = $12,562,200 / $55,341,000 ROE = . 2270 or 22. 70% b = Addition to RE / NI b = $5,024,800 / $12,562,200 b = 0. 40 or 40% So, the sustainable growth rate is: Sustainable growth rate = (ROE ? b) / [1 – (ROE ? b)] Sustainable growth rate = [0. 2270(. 40)] / [1 – 0. 2270(. 40)] Sustainable growth rate = . 0999 or 9. 99% The sustainable growth rate is the growth rate the company can achieve with no external financing while maintaining a constant debt-equity ratio. At the sustainable growth rate, the pro forma statements next year will be:    |Income statement |   |   |   | |   |Sales |$184,018,615 |   |   |   | |   |COGS |129,685,224 |   |   |   | |   |Other expenses |21,990,725 |   |   |   | |   |Depreciation |5,460,000 |   |   |   | |   |EBIT |$26,882,666 |   |   |   | |   |Interest 3,009,000 |   |   |   | |   |Taxable income |$23,873,666 |   |   |   | |   |Taxes (40%) |9,549,466 |   |   |   | |   |Net income |$14,324,199 |   |   |   | |   |   | |   |   |   | |   |Dividends |$8,594,520 |   |   |   | |   |Add to RE |5,729,680 |   |   |   | |   |Balance sheet | |   |Assets |   |Liabilities & Equity | |   |Current Assets | |   |Current Liabilities | | |   | Cash |$3,345,793 |   | Accounts Payable |$7,106,236 | |   | Accounts rec. 6,019,568 |   | Notes Payable |14,384,050 | |   | Inventory |6,748,779 |   | Total CL |$21,490,286 | |   | Total CA |$16,114,140 |   |   | | |   |   | |   |Long-term debt |$33,735,000 | |   | | |   |   | | |   | | |   |Shareholder Equity | | |   | |   | Common stock |$5,200,000 | |   |Fixed assets | |   | Retained earnings |55,870,680 | |   | Net PP&E |$103,347,828 |   | Total Equity |$61,070,680 | |   |   | |   |   | | |   |Total Assets |$ 119,461,968 |   |Total L&E |$116,295,966 | So, the EFN is: EFN = Total assets – Total liabilities and equity EFN = $119,461,968 – 116,295,966 EFN = $3,166,002 The ratios with these pro forma statements are: Current ratio = $16,114,140 / $21,490,286 Current ratio = 0. 75 times Quick ratio = ($16,114,140 – 6,748,779) / $21,490,286 Quick ratio = 0. 44 times Total asset turnover = $184,018,615 / $119,461,968 Total asset turnover = 1. 54 times Inventory turnover = $129,685,224 / $6,748,779 Inventory turnover = 19. 22 times Receivables turnover = $184,018,615 / $6,019,568 Receivables turnover = 30. 57 times Total debt ratio = ($116,295,966 – 61,070,680) / $116,295,966 Total debt ratio = 0. 49 times Debt-equity ratio = ($21,490,286 + 33,735,000) / $61,070,680 Debt-equity ratio = 0. 90 times Equity multiplier = $119,460,968 / $61,070,680 Equity multiplier = 1. 96 times Interest coverage = $26,882,666 / $3,009,000 Interest coverage = 8. 93 times Profit margin = $14,324,199 / $184,018,615 Profit margin = 7. 78% Return on assets = $14,324,199 / $119,461,968 Return on assets = 11. 99% Return on equity = $14,324,199 / $61,070,680 Return on equity = 23. 45% The only ratios that changed are the debt ratio, the interest coverage ratio, profit margin, return on assets, and return on equity. The debt ratio changes because long-term debt is assumed to remain fixed in the pro forma statements. The other ratios change slightly because interest and depreciation are also assumed to remain constant as well. 4. Pro forma financial statements for next year at a 20 percent growth rate are: |   |Income statement |   |   |   | |   |Sales |$200,772,000 |   |   |   | |   |COGS |141,492,000 |   |   |   | |   |Other xpenses |23,992,800 |   |   |   | |   |Depreciation |5,460,000 |   |   |   | |   |EBIT |$29,827,200 |   |   |   | |   |Interest |3,009,000 |   |   |   | |   |Taxable income |$26,818,200 |   |   |   | |   |Taxes (40%) |10,727,280 |   |   |   | |   |Net income |$16,090,920 |   |   |   | |   |   | |   |   |   | |   |Dividends |$9,654,552 |   |   |   | |   |Add to RE |6,436,368 |   |   |   |    |Balance sheet | |   |Assets |   |Liabilities & Equity | |   |Curren t Assets | |   |Current Liabilities | | |   | Cash |$3,650,400 |   | Accounts Payable |$7,753,200 | |   | Accounts rec. |6,567,600 |   | Notes Payable |15,693,600 | |   | Inventory |7,363,200 |   | Total CL |$23,446,800 | |   | Total CA |$17,581,200 |   |   | | |   | |   |Long-term debt |$33,735,000 | |   | | |   |   | | |   | | |   |Shareholder Equity | | |   |   | |   | Common stock |$5,200,000 | |   |Fixed assets | |   | Retained earnings |56,577,368 | |   | Net PP&E |$112,756,800 |   | Total Equity |$61,777,368 | |   |   | |   |   | | |   |Total Assets |$130,338,000 |   |Total L&E |$118,959,168 | So, the EFN is: EFN = Total assets – Total liabilities and equity EFN = $130,338,000 – 118,959,168 EFN = $8,753,040 5. Now we are assuming the company can only build in amounts of $30 million. We will assume that the company will go ahead with the fixed asset acquisition. In this case, the pro forma financial stat ement calculation will change slightly. Before, we made the assumption that depreciation increased proportionally with sales, which makes sense if fixed assets increase proportionally with sales. This is not the case now. To estimate the new depreciation charge, we will find the current depreciation as a percentage of fixed assets, then, apply this percentage to the new fixed assets. The depreciation as a percentage of assets this year was: Depreciation percentage = $5,460,000 / $93,964,000 Depreciation percentage = . 0581 or 5. 81% The new level of fixed assets with the $30 million purchase will be: New fixed assets = $93,964,000 + 30,000,000 = $123,964,000 So, the pro forma depreciation as a percentage of sales will be: Pro forma depreciation = . 0581($123,964,000) Pro forma depreciation = $7,203,221 We will use this amount in the pro form income statement. So, the pro forma income statement will be:    |Income statement |   |   |   | |   |Sales |$200,772,000 |   |   |   | |   |COGS |141,492,000 |   |   |   | |   |Other expenses |23,992,800 |   |   |   | |   |Depreciation |7,203,221 |   |   |   | |   |EBIT |$28,083,979 |   |   |   | |   |Interest |3 ,009,000 |   |   |   | |   |Taxable income |$25,074,979 |   |   |   | |   |Taxes (40%) |10,029,992 |   |   |   | |   |Net income |$15,044,988 |   |   |   | |   |   | |   |   |   | |   |Dividends |$9,026,993 |   |   |   | |   |Add to RE |6,017,995 |   |   |   | The pro forma balance sheet will remain the same except for the fixed asset and equity accounts. The fixed asset account will increase by $30 million, rather than the growth rate of sales. |   |Balance sheet | |   |Assets |   |Liabilities & Equity | |   |Current Assets | |   |Current Liabilities | | |   | Cash |$3,650,400 |   | Accounts Payable |$7,753,200 | |   | Accounts rec. 6,567,600 |   | Notes Payable |15,693,600 | |   | Inventory |7,363,200 |   | Total CL |$23,446,800 | |   | Total CA |$17,581,200 |   |   | | |   |   | |   |Long-term debt |$33,735,000 | |   | | |   |   | | |   | | |   |Shareholder Equity | | |   |   | |   | Common stock |$5,200,000 | |   |Fixed assets | |   | Retained earnings |56,158,995 | |   | Net PP&E |$123,964,000 |   | Total Equity |$61,358,995 | |   | |   |   | | |   |Total Assets |$141,545,200 |   |Total L&E |$118,540,795 | So, the EFN is: EFN = Total assets – Total liabilities and equity EFN = $141,545,200 – 118,540,795 EFN = $23,004,405 Since the fixed assets ha ve increased at a faster percentage than sales, the capacity utilization for next year will decrease. CHAPTER 4 THE MBA DECISION 1. Age is obviously an important factor. The younger an individual is, the more time there is for the (hopefully) increased salary to offset the cost of the decision to return to school for an MBA. The cost includes both the explicit costs such as tuition, as well as the opportunity cost of the lost salary. 2. Perhaps the most important nonquantifiable factors would be whether or not he is married and if he has any children. With a spouse and/or children, he may be less inclined to return for an MBA since his family may be less amenable to the time and money constraints imposed by classes. Other factors would include his willingness and desire to pursue an MBA, job satisfaction, and how important the prestige of a job is to him, regardless of the salary. 3. He has three choices: remain at his current job, pursue a Wilton MBA, or pursue a Mt. Perry MBA. In this analysis, room and board costs are irrelevant since presumably they will be the same whether he attends college or keeps his current job. We need to find the aftertax value of each, so: Remain at current job: Aftertax salary = $60,000(1 – . 26) = $44,400 His salary will grow at 3 percent per year, so the present value of his aftertax salary is: PV = C {[1/(r – g)] – [1/(r – g)] ? [(1 + g)/(1 + r)]t} PV = $44,400{[1/(. 065 – . 03)] – [1/(. 065 – . 03)] ? [(1 + . 03)/(1 + . 065)]40} PV = $935,283. 49 Wilton MBA: Costs: The direct costs will occur today and in one year and include tuition, books and supplies, health insurance, and the room and board increase. So the total direct costs are: PV of direct expenses = ($65,000 + 3,000 + 3,000 + 2,000) + ($65,000 + 3,000 + 3,000 + 2,500) / 1. 065 PV of direct expenses = $141,544. 60 The indirect costs are the lost salary, so the value of the indirect costs are: PV of indirect costs (lost salary) = $44,400 / (1. 065) + $44,400(1 + . 03) / (1 + . 065)2 PV of indirect costs (lost salary) = $82,010. 18 The financial benefits are the bonus to be paid in 2 years and the future salary. PV of aftertax bonus paid in 2 years = $20,000(1 – . 31) / 1. 0652 = $12,166. 90 Aftertax salary = $10,000(1 – . 31) = $75,900 His salary will grow at 4 percent per year. We must also remember that he will now only work for 38 years, so the present value of his aftertax salary is: PV = C {[1/(r – g)] – [1/(r – g)] ? [(1 + g)/(1 + r)]t} PV = $75,900{[1/(. 065 – . 04)] – [1/(. 065 – . 04)] ? [(1 + . 04)/(1 + . 065)]38} PV = $1,804,927. 68 Since the first salary payment will be received three years from today, so we need to discount this for two years to find the value today, which will be: PV = $1,804,927. 68 / 1. 0652 PV = $1,591,331. 25 So, the total value of a Wilton MBA is: Value = –$141,544. 60 – 82,010. 18 + 12,166. 90 + 1,591,331. 25 = $1,379,943. 36 Mount Perry MBA: The direct costs will occur today and include tuition, books and supplies, health insurance, and the room and board increase. So the total direct costs are: Total direct costs = $80,000 + 4,500 + 3,000 + 2,000 = $89,500. Note, this is also the PV of the direct costs since they are all paid today. The indirect costs are the lost salary, so the value of the indirect costs are: PV of indirect costs (lost salary) = $44,400 / (1. 065) = $41,690. 14 The financial benefits are the bonus to be paid in 1 year and the future salary. PV of aftertax bonus paid in 1 year = $18,000(1 – . 29) / 1. 065 = $12,000 His aftertax salary at his new job will be: Aftertax salary = $80,000(1 – . 29) = $65,320 His salary will grow at 3. 5 percent per year. We must also remember that he will now only work for 39 years, so the present value of his aftertax salary is: PV = C {[1/(r – g)] – [1/(r – g)] ? [(1 + g)/(1 + r)]t} PV = $65,320{[1/(. 065 – . 035)] – [1/(. 065 – . 035)] ? [(1 + . 035)/(1 + . 065)]35} PV = $1,462,896. 46 Since the first salary payment will be received two years from today, so we need to discount this for one year to find the value today, which will be: PV = $1,462,896. 46 / 1. 065 PV = $1,373,611. 70 So, the total value of a Mount Perry MBA is: Value = –$89,500 – 41,690. 14 + 12,000 + 1,373,611. 70 = $1,254,421. 56 4. He is somewhat correct. Calculating the future value of each decision will result in the option with the highest present value having the highest future value. Thus, a future value analysis will result in the same decision. However, his statement that a future value analysis is the correct method is wrong since a present value analysis will give the correct answer as well. 5. To find the salary offer he would need to make the Wilton MBA as financially attractive as the as the current job, we need to take the PV of his current job, add the costs of attending Wilton, and the PV of the bonus on an aftertax basis. Note, this assumes that the singing bonus is constant. So, the necessary PV to make the Wilton MBA the same as his current job will be: PV = $935,283. 49 + 1414,544. 60 + 82,010. 18 – 12,166. 90 = $1,146,671. 37 This PV will make his current job exactly equal to the Wilton MBA on a financial basis. Since the salary will not start for 3 years, we need to find the value in 2 years so that it is the present value of growing annuity. So: Value in 2 years = $1,146,671. 37(1. 0652) = $1,300,583. 34 Since his salary will still be a growing annuity, the aftertax salary needed is: PV = C {[1/(r – g)] – [1/(r – g)] ? [(1 + g)/(1 + r)]t} $1,300,583. 34 = C {[1/(. 065 – . 04)] – [1/(. 065 – . 04)] ? [(1 + . 04)/(1 + . 065)]38} C = $54,691. 54 This is the aftertax salary. So, the pretax salary must be: Pretax salary = $54,691. 54 / (1 – . 31) = $76,263. 10 6. The cost (interest rate) of the decision depends on the riskiness of the use of funds, not the source of the funds. Therefore, whether he can pay cash or must borrow is irrelevant. This is an important concept which will be discussed further in capital budgeting and the cost of capital in later chapters. CHAPTER 5 BULLOCK GOLD MINING 1. An example spreadsheet is: [pic] 2. Since the NPV of the mine is positive, the company should open the mine. We should note, it may be advantageous to delay the mine opening because of real options, a topic covered in more detail in a later chapter. 3. There are many possible variations on the VBA code to calculate the payback period. Below is a VBA program from http://www. vbaexpress. com/kb/getarticle. php? kb_id=252. Function PAYBACK(invest, finflow) Dim x As Double, v As Double Dim c As Integer, i As Integer x = Abs(invest) i = 1 c = finflow. Count Do x = x – v v = finflow. Cells(i). Value If x = v Then PAYBACK = i Exit Function ElseIf x < v Then P = i – 1 Z = x / v PAYBACK = P + Z Exit Function End If i = i + 1 Loop Until i > c PAYBACK = â€Å"no payback† End Function CHAPTER 6, Case #1 BETHESDA MINING To analyze this project, we must calculate the incremental cash flows generated by the project. Since net working capital is built up ahead of sales, the initial cash flow depends in part on this cash outflow. So, we will begin by calculating sales. Each year, the company will sell 500,000 tons under contract, and the rest on the spot market. The total sales revenue is the price per ton under contract times 500,000 tons, plus the spot market sales times the spot market price. The sales per year will be:    | |Year 1 |Year 2 |Year 3 |Year 4 | |   |Contract |$47,500,000 |$47,500,000 |$47,500,000 |$47,500,000 | |   |Spot |10,800,000 |16,200,000 |20,700,000 |8,100,000 | |   |Total |$58,300,000 |$63,700,000 |$68,200,000 |$55,600,000 | The current aftertax value of the land is an opportunity cost. The initial outlay for net wor king capital is the percentage required net working capital times Year 1 sales, or: Initial net working capital = . 05($58,300,000) = $2,915,000 So, the cash flow today is:    |Equipment |–$85,000,000 | |   |Land |–7,000,000 | |   |NWC |–2,915,000 | |   |Total |–$94,915,000 | Now we can calculate the OCF each year. The OCF is: | | |Year 1 |Year 2 |Year 3 |Year 4 |Year 5 |Year 6 | |   |Sales |$58,300,000 |$63,700,000 |$68,200,000 |$55,600,000 | | | |   |VC |19,220,000 |21,080,000 |22,630,000 |18,290,000 | | | |   |FC |4,300,000 |4,300,000 |4,300,000 |4,300,000 |$2,800,000 |$7,500,000 | |   |Dep. 12,155,000 |20,825,000 |14,875,000 |10,625,000 | | | |   |EBT |$22,625,000 |$17,495,000 |$26,395,000 |$22,385,000 |–$2,800,000 |–$7,500,000 | |   |Tax |8,597,500 |6,648,100 |10,030,100 |8,506,300 |1,064,000 |2,850,000 | |   |NI |$14,027,500 |$10,846,900 |$16,364,900 |$13,878,700 |–$1,736,000 |–$4,650,000 | |   |+ Dep. |12,155,000 |20,825,000 |14,875,000 |10,625,000 |0 |0 | |   |OCF |$26,182,500 |$31,671,900 |$31,239,900 |$24,503,700 |–$1,736,000 |–$4,650,000 | Years 5 and 6 are of particular interest. Year 5 has an expense of $2. 8 million to reclaim the land, and it is the only expense for the year. Taxes that year are a credit, an assumption given in the case. In Year 6, the charitable donation of the land is an expense, again resulting in a tax credit. The land does have an opportunity cost, but no information on the aftertax salvage value of the land is provided. The implicit assumption in this calculation is that the aftertax salvage value of the land in Year 6 is equal to the $7. 5 million charitable expense. Next, we need to calculate the net working capital cash flow each year. NWC is 5 percent of next year’s sales, so the NWC requirement each year is: |   | |Year 1 |Year 2 |Year 3 |Year 4 | |   |Beg. NWC |$2,915,000 |$3,185,000 |$3,410,000 |$2,780,000 | |   |End NWC |3,185,000 |3,410,000 |2,780,000 | | |   |NWC CF |–$270,000 |–$225,000 |$630,000 |$2,780,000 | The last cash flow we need to account for is the salvage value. The fact that the company is keeping the equipment for another project is irrelevant. The aftertax salvage value of the equipment should be used as the cost of equipment for the new project. In other words, the equipment could be sold after this project. Keeping the equipment is an opportunity cost associated with that project. The book value of the equipment is the original cost, minus the accumulated depreciation, or: Book value of equipment = $85,000,000 – 12,155,000 – 20,825,000 – 14,875,000 – 10,625,000 Book value of equipment = $26,520,000 Since the market value of the equipment is $51 million, the equipment is sold at a gain to book value, so the sale will incur the taxes of: Taxes on sale of equipment = ($26,520,000 – 51,000,000)(. 38) = –$9,302,400 And the aftertax salvage value of the equipment is: Aftertax salvage value = $51,000,000 – 9,302,400 Aftertax salvage value = $41,697,600 So, the net cash flows each year, including the operating cash flow, net working capital, and aftertax salvage value, are: |   |Time |Cash flow | |   |0 |–$94,915,000 | |   |1 |25,912,500 | |   |2 |31,446,900 |    |3 |31,869,900 | |   |4 |68,981,300 | |   |5 |–1,736,000 | |   |6 |–4,650,000 | So, the capital budgeting analysis for the project is: Payback period = 3 + $5,685,700/$68,981,300 Payback period = 3. 08 years Profitability index = ($25,912,500/1. 12 + $31,446,900/1. 122 + $31,869,900/1. 123 + $68,981,300/1. 124 – $1,736,000/1. 125 – $4,650,000/1. 126) / $94 ,915,000 Profitability index = 1. 174 To calculate the AAR, we divide the average net income by the average book value. Since the cash flows from the project extend for two years past the end of mining operation, we will include an average book value of zero for the last two years. So, the AAR is: AAR = [($14,027,500 + 10,846,900 + 16,364,900 + 13,878,000 – 1,736,000 – 4,650,000) / 6] / [(85,000,000 + 72,845,000 + 52,020,000 + 37,145,000 + 26,520,000 + 0) / 7] AAR = . 1485 or 14. 85% The equation for IRR is: 0 = –$94,915,000 + $25,912,500/(1 + IRR) + $31,446,900/(1 + IRR)2 + $31,869,900/(1 + IRR)3 + $68,981,300/(1 + IRR)4 – $1,736,000/(1 + IRR)5 – $4,650,000/(1 + IRR)6 Using a spreadsheet or financial calculator, the IRRs for the project are: IRR = 19. 1%, –74. 64% MIRR = 12. 94% NPV = –$94,915,000 + $25,912,500/1. 12 + $31,446,900/1. 122 + $31,869,900/1. 123 + $68,981,300/1. 124 – $1,736,000/1. 125 – $4,650,000/1. 126 NPV = $16,472,777. 67 In the final analysis, the company should accept the project since the NPV is positive. CHAPTER 6, C ase #2 GOODWEEK TIRES, INC. The cash flow to start the project is the $120 million equipment cost and the $11 million required for net working capital, yielding a total cash outflow today of $131 million. The research and development costs and the marketing test are sunk costs. We can calculate the future cash flows on a nominal basis or a real basis. Since the depreciation is given in nominal values, we will calculate the cash flows in nominal terms. The same solution can be found using real cash flows. Since the price and variable costs increase by 1 percent, and the inflation rate is 3. 5 percent, the nominal growth in both variables is: (1 + R) = (1 + r)(1 + h) R = [(1. 01)(1. 0325)] – 1 R = . 0428 or 4. 28% To analyze this project, we must calculate the incremental cash flows generated by the project. We will calculate the real cash flows, although using nominal cash flows will result in the same NPV. The sales of new automobiles will grow by 2. 5 percent per year, and there are four tires per car. Since the company expects to capture 11 percent of the market, the number of tires sold in the OEM market will be: |   | |Year 1 |Year 2 |Year 3 |Year 4 | | |Automobiles sold |5,600,000 |5,740,000 |5,883,500 |6,030,588 | |   |Tires for automobiles sold |22,400,000 |22,960,000 |23,534,000 |24,122,350 | |   |SuperTread tires sold |2,464,000 |2,525,600 |2,588,740 |2,653,459 | The number of tires sold in the replacement market will grow at 2 percent per year, and Goodweek will capture 8 percent of the market. So, the number of tires sold in the replacement market will be: |   | |Year 1 |Year 2 |Year 3 |Year 4 | |   |Total tires sold in market |14,000,000 |14,280,000 |14,565,600 |14,856,912 | |   |SuperTread tires sold |1,120,000 |1,142,400 |1,165,248 |1,188,553 | The tires will be sold in each market at a different price. The price will increase each year at the inflation rate, so the price each year will be:    | |Year 1 |Year 2 |Year 3 |Year 4 | |   |OEM |$38. 00 |$39. 24 |$40. 51 |$41. 83 | |   |Replacement |$59. 00 |$60. 92 |$62. 90 |$64. 94 | Multiplying the number of tires sold in each market by the respective price in that market, the revenue each year will be: |   | |Year 1 |Year 2 |Year 3 |Year 4 | |   |OEM market |$93,632,000 |$99,091,916 $104,870,213 |$110,985,458 | |   |Replacement market |66,080,000 |69,592,152 |73,290,975 |7 7,186,390 | |   |Total |$159,712,000 |$168,684,068 |$178,161,188 |$188,171,848 | Now we can calculate the incremental cash flows each year. We will calculate the nominal cash flows. Doing so, we find: |   | |Year 1 |Year 2 |Year 3 |Year 4 | |   |Revenue |$159,712,000 |$168,684,068 |$178,161,188 |$188,171,848 | |   |Variable costs |78,848,000 |84,151,806 |85,026,717 |87,024,208 | |   |Mkt. nd general costs |26,000,000 |26,845,000 |27,717,463 |28,618,280 | |   |Depreciation |20,020,000 |34,300,000 |24,500,000 |17,500,000 | |   |EBT |$34,844,000 |$23,387,262 |$40,917,008 |$55,029,360 | |   |Tax |13,937,600 |9,354,905 |16,366,803 |22,011,744 | |   |Net income |$20,906,400 |$14,032,357 |$24,550,205 |$33,017,616 | |   |OCF |$40,926,400 |$48,332,357 |$49,050,205 |$50,517,616 | Net working capital is a percentage of sales, so the net working capital requirements will change every year. The net working capital cash flows will be:    | |Year 1 |Year 2 |Year 3 |Year 4 | |    |Beginning |$9,000,000 |$23,956,800 |$25,302,610 |$26,724,178 | |   |Ending |23,956,800 |25,302,610 |26,724,178 |0 | |   |NWC cash flow |–$14,956,800 |–$1,345,810 |–$1,421,568 |$26,724,178 | The book value of the equipment is the original cost minus the accumulated depreciation. The book value of equipment each year will be:    |   |Year 1 |Year 2 |Year 3 |Year 4 | |   |Book value of equipment |$119,980,000 |$85,680,000 |$61,180,000 |$43,680,000 | Since the market value of the equipment is $54 million, the equipment is sold at a gain to book value, so the sale will incur the taxes of: Taxes on sale of equipment = ($46,680,000 – 54,000,000)(. 40) = $4,128,000 And the aftertax salvage value of the equipment is: Aftertax salvage value = $54,000,000 – 4,128,000 Aftertax salvage value = $89,872,000 So, the net cash flows each year, including the operating cash flow, net working capital, and aftertax salvage value, are:    |Time |Cash fl ow | | |   |0 |–$149,000,000 | | |   |1 |25,969,600 | | |   |2 |49,986,547 | | |   |3 |47,628,637 | | |   |4 |127,113,794 | | So, the capital budgeting analysis for the project is: Payback period = 3 + $28,415,213 / $127,113,794 Payback period = 3. 22 years The discounted cash flows are:    |Time |Discounted cash flow | |   |0 |–$149,000,000 | |   |1 |22,406,903 | |   |2 |34,978,941 | |   |3 |30,592,703 | |   |4 |70,446,422 | Discounted payback period = 3 + $61,021,454 / $70,446,422 Discounted payback period = 3. 27 years The required return for the project is in nominal terms, so the profitability index is: Profitability index = ($25,969,600/1. 15 + $49,986,547/1. 152 + $47,628,637/1. 153 + $96,714,733/1. 154) / $149,000,000 Profitability index = 1. 63 The equation for IRR is: 0 = –$149,000,000 + $25,969,600/(1 + IRR) + $49,986,547/(1 + IRR)2 + $47,628,637/(1 + IRR)3 + $96,714,733/(1 + IRR)4 Using a spreadsheet or financial calculator, the IRR for the project is: IRR = 18. 35% AAR = [(20,926,400 + 14,032,357 + 24,550,205 + 33,017,606)/4] / [($140,000,000 + 119,980,000 + 85,860,000 + 61,1180,000 + 43,680,000)/5} AAR = 25. 67% NPV = –$149,000,000 + $25,696,600/(1. 15) + $46,986,547/(1. 15)2 + $47,628,637/(1. 15)3 + $127,113,794/(1. 15)4 NPV = $9,424,967. 81 In the final analysis, the company should accept the project since the NPV is positive. CHAPTER 7 BUNYAN LUMBER, LLC The company is faced with the option of when to harvest the lumber. Whatever harvest cycle the company chooses, it will follow that cycle in perpetuity. Since the forest was planted 20 years ago, the options available in the case are 40-, 45-, 50, and 55-year harvest cycles. No matter what harvest cycle the company chooses, it will always thin the timber 20 years after harvests and replants. The cash flows will grow at the inflation rate, so we can use the real or nominal cash flows. In this case, it is simpler to use real cash flows, although nominal cash flows would yield the same result. So, the real required return on the project is: (1 + R) = (1 + r)(1 + h) 1. 10 = (1 + r)(1. 37) r = . 0608 or 6. 08% The conservation funds are expected to grow at a slower rate than inflation, so the real return for the conservation fund will be: (1 + R) = (1 + r)(1 + h) 1. 10 = (1 + r)(1. 032) r = . 0659 or 6. 59% The company will thin the forest today regardless of the harvest schedule, so this first thinning is not an incremental cash flow, but future thinning is part of the analysis since the thinning schedule is determined by the harvest schedule. The cash flow from the thinning process is: Cash flow from thinning = Acres thinned ? Cash flow per acre Cash flow from thinning = 5,000($1,000) Cash flow from thinning = $5,000,000 The real cost of the conservation fund is constant, but the expense will be tax deductible, so the aftertax cost of the conservation fund will be: Aftertax conservation fund cost = (1 – . 35)($250,000) Aftertax conservation fund cost = $162,500 For each analysis, the revenue and costs are: Revenue = [? (% of grade)(harvest per acre)(value of board grade)](acres harvested)(1 – defect rate) Tractor cost = (Cost MBF)(MBF per acre)(acres) Road cost = (Cost MBF)(MBF per acre)(acres) Sale preparation and administration = (Cost MBF)(MBF acre)(acres) Excavator piling, broadcast burning, site preparation, and planting costs are the cost of each per acre times the number of acres. These costs are the same no matter what the harvest schedule since they are based on acres, not MBF. Now we can calculate the cash flow for each harvest schedule. One important note is that no depreciation is given in the case. Since the harvest time is likely to be short, the assumption is that no depreciation is attributable to the harvest. This implies that operating cash flow is equal to net income. Now we can calculate the NPV of each harvest schedule. The NPV of each harvest schedule is the NPV of the first harvest, the NPV of the thinning, the NPV of all future harvests, minus the present value of the conservation fund costs. 40-year harvest schedule:    |Revenue |$42,194,250 | |   |Tractor cost |9,870,000 | |   |Road |3,525,000 | |   |Sale preparation & admin |1,269,000 | |   |Excavator piling |750,000 | |   |Broadcast burning |1,500,000 | |   |Site preparation |725,000 | |   |Planting costs |1,125,000 | |   |EBIT |$23,430,250 | |   |Taxes |8,200,588 | |   |Net income (OCF) |$15,229,663 | The PV of the first harvest in 20 years is: PVFirst = $15,229,663/(1 + . 0608)20 PVFirst = $4,681,788 Thinning will also occur on a 40-year schedule, with the next thinning 40 years from today. The effective 40-year interest rate for the project is: 40-year project interest rate = [(1 + . 0608)40] – 1 40-year project interest rate = 958. 17% We also need the 40-year interest rate for the conservation fund, which will be: 40-year conservation interest rate = [(1 + . 0659)40] – 1 40-year conservation interest rate = 1,183. 87% Since we have the cash flows from each thinning, and the next thinning will occur in 40 years, we can find the present value of future thinning on this schedule, which will be: PVThinning = $5,000,000/9. 5817 PVThinning = $521,825. 80 The operating cash flow from each harvest on the 40-year schedule is $15,229,663, so the present value of the cash flows from the harvest are: PVHarvest = [($15,229,663/9. 5817)] / (1 + . 0608)20 PVHarvest = $488,615. 51 Now we can find the present value of the conservation fund deposits. The present value of these deposits is at Year 20 is: PVConservation = –$162,500 – $162,500/11. 8387 PVConservation = –$176,226. 22 And the value today is: PVConservation = –$175,226. 22/(1 + . 0659)20 PVConservation = –$49,182. 52 So, the NPV of a 40-year harvest schedule is: NPV = $4,681,788 + 521,825. 80 + 488,615. 51 – 49,182. 52 NPV = $5,643,046. 36 45-year harvest schedule:    |Revenue |$49,232,800 | |   |Tractor cost |11,480,000 | |   |Road |4,100,000 | |   |Sale preparation & admin |1,476,000 | |   |Excavator piling |750,000 | |   |Broadcast burning |1,500,000 | |   |Site preparation |725,000 | |   |Planting costs |1,125,000 | |   | EBIT |$28,076,800 | |   |Taxes |9,826,880 | | |Net income (OCF) |$18,249,920 | The PV of the first harvest in 25 years is: PVFirst = $18,249,920/(1 + . 0608)25 PVFirst = $4,177,464 Thinning will also occur on a 45-year schedule, with the next thinning 45 years from today. The effective 45-year interest rate for the project is: 45-year project interest rate = [(1 + . 0608)45] – 1 45-year project interest rate = 1,321. 11% We also need the 45-year interest rate for the conservation fund, which will be: 45-year conservation interest rate = [(1 + . 0659)45] – 1 45-year conservation interest rate = 1,666. 38% Since we have the cash flows from each thinning, and the next thinning will occur in 45 years, we can find the present value of future thinning on this schedule, which will be: PVThinning = $5,000,000/13. 2111 PVThinning = $378,470. 46 The operating cash flow from each harvest on the 45-year schedule is $18,249,920, so the present value of the cash flows from the harvest are: PVHarvest = [($18,249,920/13. 21111)] / (1 + . 0608)25 PVHarvest = $316,209. 37 Now we can find the present value of the conservation fund deposits. The present value of these deposits is at Year 25 is: PVConservation = –$162,500 – $162,500/16. 6638 PVConservation = –$174,800. 29 And the value today is: PVConservation = –$174,800. 29/(1 + . 0659)25 PVConservation = –$35,458. 26 So, the NPV of a 45-year harvest schedule is: NPV = $4,177,464 + 378,470. 46 + 316,209. 37 – 35,458. 26 NPV = $4,836,685. 86 50-year harvest schedule:    |Revenue |$52,024,993 | |   |Tractor cost |12,110,000 | |   |Road |4,325,000 | |   |Sale preparation & admin |1,557,000 | |   |Excavator piling |750,000 | |   |Broadcast burning |1,500,000 | |   |Site preparation |725,000 | |   |Planting costs |1,125,000 | |   |EBIT |$29,932,993 | |   |Taxes |10,476,547 | |   |Net income (OCF) |$19,456,445 | The PV of the first harvest in 30 years is: PVFirst = $19,456,445/(1 + . 0608)30 PVFirst = $3,316,238 Thinning will also occur on a 50-year schedule, with the next thinning 50 years from today. The effective 50-year interest rate for the project is: 50-year project interest rate = [(1 + . 0608)50] – 1 50-year project interest rate = 1,808. 52% We also need the 50-year interest rate for the conservation fund, which will be: 50-year conservation interest rate = [(1 + . 0659)50] – 1 50-year conservation interest rate = 2,330. 24% Since we have the cash flows from each thinning, and the next thinning will occur in 50 years, we can find the present value of future thinning on this schedule, which will be: PVThinning = $5,000,000/18. 0852 PVThinning = $276,468. 34 The operating cash flow from each harvest on the 50-year schedule is $19,456,445, so the present value of the cash flows from the harvest are: PVHarvest = [($19,456,445/18. 0852] / (1 + . 0608)30 PVHarvest = $183,367. 60 Now we can find the present value of the conservation fund deposits. The present value of these deposits is at Year 30 is: PVConservation = –$162,500 – $162,500/23. 3024 PVConservation = –$171,485. 25 And the value today is: PVConservation = –$171,485. 25/(1 + . 0659)30 PVConservation = –$25,283. 50 So, the NPV of a 50-year harvest schedule is: NPV = $3,316,238 + 276,469. 34 + 183,367. 60 – 25,283. 50 NPV = $3,750,790. 98 55-year harvest schedule:    |Revenue |$54,516,748 | |   |Tractor cost |12,670,000 | |   |Road |4,525,000 | |   |Sale preparation & admin |1,629,000 | |   |Excavator piling |750,000 | |   |Broadcast burning |1,500,000 | |   |Site preparation |725,000 | |   |Planting costs |1,125,000 | |   | EBIT |$31,592,748 | |   |Taxes |11,057,462 | |   |Net income (OCF) |$20,535,286 | The PV of the first harvest in 35 years is: PVFirst = $20,535,286/(1 + . 0608)35 PVFirst = $2,606,233 Thinning will also occur on a 55-year schedule, with the next thinning 55 years from today. The effective 55-year interest rate for the project is: 55-year project interest rate = [(1 + . 0608)55] – 1 55-year project interest rate = 2,463. 10 We also need the 55-year interest rate for the conservation fund, which will be: 55-year conservation interest rate = [(1 + . 0659)55] – 1 55-year conservation interest rate = 3,243. 60% Since we have the cash flows from each thinning, and the next thinning will occur in 55 years, we can find the present value of future thinning on this schedule, which will be: PVThinning = $5,000,000/24. 6310 PVThinning = $202,995. 97 The operating cash flow from each harvest on the 55-year schedule is $20,535,286, so the present value of the cash flows from the harvest are: PVHarvest = [($20,535,286/24. 6310] / (1 + . 0608)35 PVHarvest = $105,810. 96 Now we can find the present value of the conservation fund deposits. The present value of these deposits is at Year 35 is: PVConservation = –$162,500 – $162,500/32. 4360 PVConservation = –$169,097. 37 And the value today is: PVConservation = –$169,097. 37/(1 + . 0659)35 PVConservation = –$18,121. 00 So, the NPV of a 55-year harvest schedule is: NPV = $2,606,233 + 202,995. 97 + 105,810. 96 – 18,121. 00 NPV = $2,896,918. 96 The company should use a 40-year harvest schedule since it has the highest NPV. Notice that when the NPV began to decline, it continued declining. This is expected since the growth in the trees increases at a decreasing rate. So, once we reach a point where the increased growth cannot overcome the increased effects of compounding, harvesting should take place. There is no point further in the future which will provide a higher NPV. CHAPTER 8 FINANCING EAST COAST YACHT’S EXPANSION PLANS WITH A BOND ISSUE 1. A rule of thumb with bond provisions is to determine who the provisions benefit. If the company benefits, the bond will have a higher coupon rate. If the bondholders benefit, the bond will have a lower coupon rate. a. A bond with collateral will have a lower coupon rate. Bondholders have the claim on the collateral, even in bankruptcy. Collateral provides an asset that bondholders can claim, which lowers their risk in default. The downside of collateral is that the company generally cannot sell the asset used as collateral, and they will generally have to keep the asset in good working order. b. The more senior the bond is, the lower the coupon rate. Senior bonds get full payment in bankruptcy proceedings before subordinated bonds receive any payment. A potential problem may arise in that the bond covenant may restrict the company from issuing any future bonds senior to the current bonds. c. A sinking fund will reduce the coupon rate because it is a partial guarantee to bondholders. The problem with a sinking fund is that the company must make the interim payments into a sinking fund or face default. This means the company must be able to generate these cash flows. d. A provision with a specific call date and prices would increase the coupon rate. The call provision would only be used when it is to the company’s advantage, thus the bondholder’s disadvantage. The downside is the higher coupon rate. The company b

Avoid these Overused Resume Phrases

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Baskin Robins Research Paper Example | Topics and Well Written Essays - 250 words

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