Premium Essay

Case 11 Chicago Valve Company

In: Business and Management

Submitted By zero248
Words 2127
Pages 9
Explain the inputs into
1) The net initial investment outlay at year 0?
The initial investment at year 0 is $200,000 which includes taxes and delivery, and the cost to install the equipment $12,500. Therefore the total net cost of initial investment outlay at year 0 is $212,500. 2) The depreciation tax savings in each year of the projects economic life? The depreciation tax savings in each year of the project’s economic life will show how much the tax savings will be depreciated each year using the MACRS method. 3) The projects incremental cash flows? These cash flows are those that are relevant to the valuation of the project. In this case it is depreciation. Using the MACRS we can determine for how much the project will be depreciated and what the net cash flows will be after tax and after depreciation. This cash flows are the sum of the depreciation tax saving and the after-tax cost saving.
This shows the company’s profit for each of the eight years. 4) What is the project’s NPV? Explain the economic rationale behind the NPV. Could the
NPV of this particular project be different for Lone Star Petroleum Company than for one of Chicago Valve’s other potential customers?
From the calculations, the NPV is ($17301). (revise) The NPV process helps investors determine whether or not projects are profitable. There is a very important concept in finance: time value of money. One dollar today is worth more than 1 dollar in the future.
Since the net cash flows here are future projections, it is necessary to bring the value of the investment to its present value. If the present value is positive, the project will be profitable; therefore, it can be approved. If the NPV is negative, the project should be rejected since the costs of investment exceed the returns.
3. Calculate the proposed project’s IRR. Explain the rationale for…...

Similar Documents

Free Essay

Valve Case Study

...1101IBA – Management Concepts Literature Review and Report Valve Case Study By Muhammad Rabani b. Shamsul Khairil s2834180 Semester 2, 2012 1 583 words Table of Content 1. Introduction 3 2. Problem Identification 3 3. Analysis 4 3.1 Vertical Organisation Structure 4 3.2 Horizontal Organisation Structure 5 4. Recommendations 6 5. Conclusion 7 6. Reference List 8 1. Introduction Organisation can be seen as networks of system perform by a collective effort of people in order to achieve to a common purpose. (Schermerhorn et al. 2011, p.11). An organization can be structured in many different ways, depending on their objectives. The structure of an organization will determine the modes in which it operates and performs (Damraks 2009 p.1). Valve has a unique flat organisation structure where it operates. The purpose of this report is......

Words: 1618 - Pages: 7

Premium Essay

Case 11

...Trueblood case 11-3: Masters of the Universe 1. Statement of the problem: Applying key concepts of the VIE model in ASC 810-10 (Statement 167), in order to perform a consolidation analysis for a Variable Interest Entity (VIE). 2. Summary of relevant (key) facts As the case depicts, ‘Jupiter’ is a joint venture formed by 2 unrelated parties, Saturn Inc. and Venus Inc. Jupiter has been created with the purpose of owning and operating organic clothing manufacturing and design facilities and selling the output to unrelated retailers. The key facts highlighted in the case are as follows: * The proportion of Saturn’s and Venus’s ownership interest( as determined by their capital contribution) in Jupiter is 51 percent and 49 percent respectively; same is the ratio in which Jupiter’s profit and losses are shared between the two parties * From Saturn’s viewpoint, Jupiter fails to qualify for joint venture scope exception stated in ASC 810-10-15-17(d) * In accordance with ASC 810-10-25-42 and 25-43, Saturn and Venus cannot be considered as related parties * As pursued by ASC 810-10-15-14(a), Jupiter is viewed as a Variable Interest Entity due to the entity’s nature and the amount of equity investment at risk * Jupiter’s Articles of Incorporation requires a majority vote for approval of most of the Board’s decisions, with the exception of decisions concerning the CEO’s appointment or removal, mergers or acquisitions, admitting new members into the joint......

Words: 1959 - Pages: 8

Premium Essay

Case Study on September 11

...Juan Marín Insurance and Risk Management Professor Valladares Monday, August 27th, 2012 Case Study on September 11 1. What was the immediate impact of the horrific events of the September 11 on the insurance markets? The heart of America was struck hard. New York, the capital of the world, the capital of global trade and commerce; the market indeed went down hard and fast especially because it was an already troubled market. As for insurance, the effect was the following…“rate hikes in every line of insurance, lower coverage limits, elimination of terrorism coverage, and tightness in the reinsurance markets. Reinsurers experienced their greatest losses ever.” 2. Why is the federal government involved in providing terrorism coverage? George Bush signed a terrorism bill in 2002 from the federal government because after the tragic event of 9/11, insurance companies eliminated insurance coverage. The plan behind President Bush was to maintain the economic activity even though the insurance industry was no longer able to provide catastrophic coverage. 3. Why do estimate of liability losses from September 11 have such a large range? Timing was the reason behind the wide range of liability on September 11. It all depended if the liabilities were reported at the moment the claim was accepted or at the moment the claims were paid off. 4. What are the main benefits under the Social Security? A mandatory program of retirement plan and it also includes......

Words: 901 - Pages: 4

Premium Essay

7- 11 Case Study

...Supply Chain Management Case Study 1 Seven-Eleven Japan Co. Background Seven-Eleven is a famous convenience store. And it is set up its first store in Tokyo in May 1974, it was found by Masatoshi Ito, the company was first listed on the Tokyo Stock Exchange in October 1979 It had increased its share of the convenience shore market since it opened. It success is greatly contributed to its careful planning, and its information system as well as distribution system. Q1 A convenience store chain attempts to be responsive and provide customers what they need, when they need it, where they need it. What are some different ways that a convenience store supply chain can be responsive? What are some risk in each case? Q3. What has Seven-Eleven done in its choice of facility location, inventory management, transportation, and information infrastructure to develop capabilities that support its supply chain strategy in Japan? Facility location Seven-Eleven Japan based on its fundamental network expansion policy to increase efficiency to customers. Seven-Eleven opened the majority of its new stores in areas with existing cluster of stores. There are so many stores in a particular area. Around 50 to 60 stores are supported by only one distribution centre(DC), and this DC keep no inventory. This strategy can lower the inventory handling cost, and to develop capabilities that support its supply chain strategy in Japan. Inventory management Seven-Eleven offer its stores a choice......

Words: 1230 - Pages: 5

Free Essay

Case 11

...The Case for Open Heart Surgery at Cabarrus Memorial Hospital Due Week 6 and worth 280 points Read “The Case for Open Heart Surgery at Cabarrus Memorial Hospital” case. Write a 4-6 page paper in which you: 1. Discuss ways the program does or does not comply with the hospital’s mission. 2. Analyze whether or not CMH has sufficient infrastructure and financial resources / leverage necessary to add the program. 3. Describe the competitive situation among other area hospitals that could impact the decision. 4. Describe the change in the service area required for the cardiovascular surgery service. 5. Discuss alternative strategies the Board should consider before making a “go / no-go” decision on the possible addition of the open heart program. Your assignment must: Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions. Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required page length. The specific course learning outcomes associated with this assignment are: Apply analytic skills to define strategic problems, generate and evaluate strategic alternatives, and develop implementation tactics. Use technology and information resources to research issues in the......

Words: 263 - Pages: 2

Premium Essay

Budget Case 11-3

...Budget Case 11-3 Kenneth Stoneback INF 336 Project Procurement Management Lori Deere June 17, 2013 Based on this information and the increases from the previous quarters should be around $3104.00. This budget will allow for any sudden increases in the different supplies and materials that may occur throughout the quarter or the year. Each organization should emphasize the importance of material supply budget. A comprehensive budget is very important part to the success of any organization. A supply budget is normally set after a forecast of actions and the resourcing needed in the upcoming goals set by the company. Supply budgets are normally separated into 4 separate budgets Materials (operations) purchase budget which is based on estimates of expected operations, sales forecasts and plans. The advantages of this are it identifies cash flow designations, and isolates or separates issues or problems well in advance. MRO Budget, this covers a purchase plan that normally runs in a 12 month periods. These are normally set up for maintenance, repair, and operating supplies. Since there are so many line items on this set up it is difficult to budget each item. In capital expenditure they are planned over many for 1 year or our 3-4 years as well based on the strategic plan of the product lines and production needs. The companies projected capital purchases, obsolescence equipment, equipment replacements needs, expansion plans and new......

Words: 410 - Pages: 2

Free Essay

Case 11

...Case 11 1. In your own words, can you describe the Wise concept of “public service culture”? What does the author mean by that term? What assumptions about human nature does her motivational concept rest on? Do you believe these are valid assumptions? a. Public service culture is a human need. Unfortunately, these days that means where the money is, employees will go. People use to be satisfied with helping the public, but now without appropriate compensation it is hard to keep some employees. Healy’s assumptions are that people will do no wrong and what is best for their community, I think, but I do not agree that is always true. People, especially in the political world, usually have ulterior motives if they are not going to be financially reimbursed. 2. Why does Wise argue that public service motivation is found more often in government than business or elsewhere? Do you agree or disagree? Why or why not? b. Wise thinks that public service motivation is found more in the government than business because it focuses on serving the people. I do agree because the government is here to help and protect the public. 3. Regarding the foregoing case study, “Who Brought Bernadine Healy Down?”, describe the various cross-pressures and multiple responsibilities that Healy faced. Why do these persisting cross-pressures and responsibilities make it so difficult to frame a clear, consistent motivational system in government or nonprofits? c. Healy faced a...

Words: 716 - Pages: 3

Premium Essay

Chapter 11 Case Study

...Chapter 11 Case Finding customers used to be an arduous and tedious manual task. Because of technology, there is a list of names that will allow a business to locate its specific target customers, no matter how “niche.” Today, a company by the name of infoUSA Inc. maintains one of the nation’s largest databases, including 14 million businesses and 220 million consumers. The company started in Nebraska in 1972 when a man by the name of Vinod Gupta created an RV list compiled from 4,500 Yellow Pages phone books. This list was highly coveted at the time simply because nothing similar to it had existed at the time. Such a database makes it extremely easy for customers. Even though it doesn’t do the whole job for them, it allows a target for publicity word-of-mouth recommendations, or “buzz” to be used, making it the core of finding customers. Customer relationship management (CRM) is a system for managing a company's interactions with current and future customers. It often involves using technology to organize, automate and synchronize sales, marketing, customer service, and technical support. There are two different types of CRM system, operational and analytical. Operational CRM is focused on the automation of the customer-facing parts of businesses. Various CRM software applications enable the marketing, selling and service functions to be automated. Analytical CRM is concerned with exploiting customer data to enhance both customer and company value. Analytical......

Words: 586 - Pages: 3

Premium Essay

Chicago Prime vs Northam Case

...Chicago Prime Packers Inc. v. Northam Food Trading Co. Case Summary Brief summary In the case of Chicago Prime Packers, Inc, v. Northam Food Trading Co., the main dispute is between an American company (Chicago Prime Packers) and a Canadian company (Northam Food Trading). Both firms are wholesalers of meat products. In this particular case, Chicago Prime sold Northam ribs worth of $178,200.00. Later on, it was discovered that the ribs were spoiled and Northam did not pay Chicago Prime. There was a bench trial conducted on December 15, 16 and 17, 2003. The court examined the testimonies and the evidence presented by the parties and found that Chicago Prime is entitled to $178,200.00 for damages plus pre-judgment interest of $27,242.63. Facts Chicago Prime signed a contract with Northam to sell them pork ribs, which he acquired from another American company, Brookfield that actually processed the ribs. Northam sold the acquired goods to another company Beacon Premium Meats. The goods were delivered by Brown Brothers Trucking Company from a warehousing company that Brookfield uses, B & B Pullmann Cold Storage. The date of the pick-up of the goods was April 24, and Brown Brothers signed the First Bill of Lading stating that the ribs were “in apparent good order”, also mentioning that the content and quality of the content was unknown at the time of receipt. The next day, Brown Brothers delivered the ribs to Beacon where the Second Bill of Lading was signed. This......

Words: 1625 - Pages: 7

Free Essay

Valve

...TABLE OF CONTENTS PATCH 3: CASE STUDY REPORT 1 REFERENCES 9 SELF-ASSESSMENT 11 PATCH 3: CASE STUDY REPORT 1. Introduction Valve Corporation was formed by two former Microsoft employees who are Gabe Newell and Mike Harrington in 1996. At the beginning, they were based in Kirkland, Washington and were a Limited Liable Company (L.L.C) (Giantbomb, 2013). Valve is an American video game development and digital distribution that allocated in Bellevue, Washington. Valve had created six games series in the future years which are Half-Life (1998), Team Fortress (1999), Portal (2007), Counter-Strike (1999), Left 4 Dead (2008) and Day of Defeat (2005). Since Valve Corporation is found, it has expanded both in scope and commercial value. Valve Corporation had been received few award since 2008. On 2008, Valve Corporation announced the acquisition of Turtle Rock Studios. While on 2010, Valve won The Escapist Magazine’s March Mayhem tournament for the best developer of 2010. In 2012, the company acquired Star Filled Studios, a two-man gaming company to open a San Francisco office. In 2013, Valve decides to stop the operation as it was decided to make some benefit for future arrangement. Valve is formed as a company which have around 300 employees but no managers or bosses at all to operate whole company (Suddath, 2012). Hence, this report is written to discuss the organisational culture and organisational structure of valve. The two discussion topic is to be......

Words: 2179 - Pages: 9

Premium Essay

Case 11

...The Misguided Bond Case 11 Prepared by for Professor C.E. Reese in partial fulfillment of the requirements for ACC 541- FORENSIC ACCOUNTING School of Business/ Graduate Studies St. Thomas University Miami Gardens, Fla. Term A1/Spring, 2015 March 25, 2015 Table of Contents Issues………………………………………………………………. 1 Facts……………………………………………………………….. 1 Analysis/ Authority………………………………………………... 6 Conclusions/ Recommendation……………………………………. 8 Issues 1. What is Martin’s actually return for 2000, 2001, and 2002? 2. What would have been Martin’s return for years 2000, 2001, and 2002 if his portfolio had remained with its initial holdings? 3. How do STRIDEs contrast with conventional bonds? 4. How appropriate were these STRIDEs for a 78 year-old with Martin’s stated investment objectives? 5. Considering that the prospectus and accompanying supplemental prospectus exceeded 300 pages, is this reasonable to expect “Joe Investor” to digest this volume of information? 6. How does Blink’s representation of the STRIDE as reported in the statement of claims contrast with the actual nature of this product, as reported in the supplemental prospectus? 7. Assume you are an arbitrator panel member. Would you order the brokerage firm to awards Ralph any damages? If so, how much? Why? Facts Late in 2001, Ralph Martin, a former clothes salesman, sat on his patio evaluating his current retirement portfolio. Ralph, a 78 year-old retiree, had little interest in investment and had......

Words: 2106 - Pages: 9

Free Essay

Hr Case Study 11

...JH Date: September 25, 2013 Case 11: Investigating a Sexual Harassment Case Step 1: HR Problem Identification Mary Booth, a SenGlas Company Shipping Coordinator, came to the HR Manager James Tilden and said she wanted to file a formal complaint against one of her coworkers for his harassing behavior. The coworker, Bob Simonsky, had made false accusations about Mary to Ginny Miller, revved his forklift engine and drove straight at Mary while laughing and slammed the metal forks of his fork-lift on the ground in an intimidating manner. In addition, he continuously refused to take directions from Mary about which trucks to load or unload, twice had thrown a cigarette butt at her and regularly tore up instructions she left for him. Two other fork lift drivers, John Griffin and Henry Jackson, had overheard Simonsky say that women did not belong in the warehouse area and that he preferred working with men and the he had told another worker, Henry Mueller, that “Booth had f***** with the wrong person and that when he got through with her not even Jesus Christ himself would be able to save her.” When Mary first started in the position as Shipping Coordinator, Simonsky had told her, “I hate that maggot”, referring to Sally Jenkins, the previous Shipping Coordinator, “I should have killed her when I had the chance.” Step 2: Identify Cause(s) of HR Problem First, James Tilden reads up on the current Sexual Harassment Policy. It states “all employees are entitled to work......

Words: 525 - Pages: 3

Premium Essay

Company Case

...COMPANY Case Target: From “Expect More” to “Pay Less” When you hear the term discount retail, two names usually come to mind: Walmart and Target. The two have been compared so much that the press rarely covers one without at least mentioning the other. The reasons for the comparison are fairly obvious. These corporations are two of the largest discount retailers in the United States. Category for category, they offer very similar merchandise. They tend to build their stores in close proximity to one another, even facing each other across major boulevards. But even with such strong similarities, ask consumers if there’s a difference between the two, and they won’t even hesitate. Walmart is all about low prices; Target is about style and fashion. The “cheap chic” label applied by consumers and the media over the years perfectly captures the long-standing company positioning: “Expect More. Pay Less.” With its numerous designer product lines, Target has been so successful with its brand positioning that for a number of years it has slowly chipped away at Walmart’s massive market share. Granted, the difference in the scale for the two companies has always been huge. Walmart’s most recent annual revenues of $408 billion are more than six times those of Target. But for many years, Target’s business grew at a much faster pace than Walmart’s. In fact, as Walmart’s same-store sales began to lag in the mid-2000s, the world’s largest retailer unabashedly attempted to become more......

Words: 2051 - Pages: 9

Premium Essay

Case 11

...one interpret a 14% increase in FedEx’s market value of equity? Since the talks of a transportation agreement between China and the Us began in mid Feb both UPS and FedEx stock began a steady incline. Fedex had the largest share of the Chinese market with 11 weekly flights, almost twice UPS with 6 weekly flights, and served 220 Chinese cities. Their volumes in China had grown more than 50% bt 2003 and 2004. FedEx had the reputation of being innovative, and an operational leader, whereas UPS was know as the industry follower. UPS had problems with unionization, and FedEx did not. FedEx set a goal of producing “superior financial returns” meaning increasing earnings and maximizing value to shareholders. I also believe the lower price to earnings ratio of FedEx, 22.93 vs 29.01 and a higher EPS made FedEx a much more attractive stock to investors. With FedEx’s already strong position in China, expected to be the worlds largest economy in 2009, it would potentially be much easier for them to continue to capture the growing Chinese market that UPS, with much less of a presence. I believe the 14% increase in FedEx vs 3% increase in UPS is largely due to the position FedEx had in the Chinese market with 11 weekly flights almost twice UPS with 6 only weekly flights. Also FedEx’s volumes in China had grown more than 50% between 2003 and 2004. FedEx had also had the reputation of being innovative, and an operational leader, whereas UPS was know as the industry......

Words: 426 - Pages: 2

Premium Essay

Flinder Valve Case Study

...W.B. “Bill” Flinder, the president of Flinder Valves and Controls Inc. (FVC), and Tom Eliot, the Chairman and CEO of RSE International are currently in the midst of negotiating a merger of FVC and RSE. Both companies are aware of the benefits, but also remain apprehensive due to the risks of completing an acquisition in the struggling economy. Prior to 2008, the U.S. manufacturing industry had experience a decrease in consumer demand because of tighter borrowing standards and a weak housing sector in the past year, according to a recent analyst. However, before May 2008, the U.S. began to experience better economic conditions, which provided FVC a better environment to introduce its new, hydraulic-controls system called the “widening gyre,” which can be used in the military industry. With this expensive program still under development, Bill Flinder realized the importance of merging with another company that was financially stable. Other factors contributed the negotiation. In addition to nearing retirement, Flinder also believe a merger with RSE would help the transition years for his employees. FVC and RSE should follow-through and complete the negotiation because one company’s strengths make up for the other’s weaknesses. Tom Eliot had recently proposed to the board of RSE to focus on diversification. FVC would help diversify RSE; they had the reputation of opening up opportunities for companies looking to diversify, plant capacity, management efficiency, financial......

Words: 724 - Pages: 3