SCOM305 Week 4 Homework Problems

Solution is available here for U$25.00

1. Click on the "Problems tab" to review the 5 homework problems.  These are due on Saturday. 

2. Create a new work sheet tab for each problem.

3. Solve your problem on the worksheet.  Some problems have auxiliary questions to be answered.

Highlight your answers in RED. 

4. Post to your Assignments Link. 

1. An analysis of customer complaints at a large mail order house revealed the following data:
Billing Errors	4500
Picking Errors	9800
Long Delays	1353
Unclear Charges	1800
Delivery Errors	900
Shipping Errors	7300
Out of Stock	2700
Construct a Pareto Diagram in Excel to show this data.  What area(s) should the focus be on?

Capital budgeting analysis - Gibson Company invests in Brazil

Solution is available here for U$2.00

The Gibson Company is a United States (US) firm that is considering a joint venture with Brasilia, DF, a Brazilian firm that grows and processes coffee beans. Gibson has a patent for a new coffee processing method. This intellectual property is motivating Gibson to expand beyond importing coffee to engaging in a joint venture to process the coffee. Gibson will invest $8 million in the proposed joint venture project, which will help to finance Brasilia 's production using the newly patented process.
 

The Brazilian government has guaranteed that the after-tax profits (denominated in Reals, the Brazilian currency) can be converted to US dollars at the current exchange rate and sent to the Gibson Company each year. Current exchange rates can be found at http://www.oanda.com.

For each of the first five years, 60 percent of the total profits will be distributed to Brasilia, while the remaining 40 percent will be converted to dollars to be sent to Gibson. The income tax rate for the joint venture will be 10%. However, the Brazilian government is considering raising the income tax rate to 30%. At the present time, the Brazilian government doe not impose a separate income tax on profits sent out of the country.

Weighted Cost of Capital - Harley Davidson

Solution is available here for U$2.00

stimate Harley Davidson’s cost of capital.  Can you show your work for the solution with the answer underlined in word (not Excel)? Below is the data, which is relevant to the task:

The firm’s tax rate is 40%.

The current price of Harley Davidson’s 12% coupon, semi-annual payment, non-callable bonds with 15 years remaining to maturity is $1,153.72. Harley Davidson does not use short-term interest bearing debt on a permanent basis. New bonds would be privately placed with no flotation cost.

The current price of the firm’s 10%, $100 par value, quarterly dividend, perpetual preferred stock is $116.95. Harley Davidson would incur flotation costs equal to 5% of the proceeds on a new issue.

Harley Davidson common stock is currently selling at $50 per share. Its last dividend (D0) was $4.19, and dividends are expected to grow at a constant rate of 5% in the foreseeable future. Harley Davidson beta is 1.2, the yield on T-bonds is 7%, and the market risk premium is estimated to be 6%. For the bond-yield-plus-risk-premium approach, the firm uses a 4 percentage point risk premium. 

Divisional Weighted Average Cost of Capital - Anheuser-Busch Companies, Inc.

Solution is available here for U$0.75

In 2006 Anheuser-Busch Companies, Inc (BUD) engaged in the production and distribution of beer worldwide, operating through four business segments: Domestic Beer, International Beer, Packaging, and Entertainment. The Domestic Beer segment offers beer under Budweiser, Michelob, Busch, and Natural brands in the United States in addition to a number of specialty beers including non-alcohol brews, malt liquors, and specialty mail beverages, as well as energy drinks. The International Beer segment markets and sells Budweiser and other brands outside the United States and operates breweries in the United Kingdom and China. In addition, the International Beer segment also negotiates and administers license and contract brewing agreements with various foreign brewers. The Packaging segment manufactures beverage cans and can lids for drink customers, buys and sells used aluminum beverage containers, and recycles aluminum containers. Finally, the Entertainment segment owns and operates theme parks.