Perform an NPV analysis to determine if ACH should accept or reject the renovation project. The Director of Finance for ACH has determined that the appropriate discount rate for a project of this risk is 14%. An analysis of ACH’s tax returns indicates that ACH’s average income tax rate is 35%.
Alliance Care Hospital (ACH) is a private hospital that is currently considering a project in which they would extensively renovate and upgrade equipment over a five-year period. The renovations would cost $80,000,000; this would be spent over the five-year life of the project. The plan includes expenditures of $10,000,000 per year in each of the first two years of the project and revenues equally divided over each of the remaining years of the project. For the purposes of any analysis assume that these cash flows and the associated tax consequences occur at the end of each year. For this project, Alliance Care would have to invest extensively in some special new equipment. The expected investment would be $12,000,000. This equipment would be part of an extensive array of equipment and would be placed in an asset class with a 7-year depreciation schedule. Alliance Care has many assets in this class and the UCC of this class is currently over half a million dollars. At the end of the project Alliance Care expects to be able to dispose of this special equipment by selling it to a public hospital for $4,000,000.
One of ACH’s major concerns is that if they accept the project they will be obliged to forego an alternate opportunity, namely, a private-public partnership contract with the state of Florida to create ambulatory centers. This contract would have netted them $4,000,000 per year in net income (before taxes) over the next 3 years. Assume that these cash flows and any tax consequences occur at the end of each year.
ACH believes that the additional working capital required, because of undertaking the project, will be as follows:
Year 0 $1,000,000
Year 1 $2,500,000
Year 2 $3,000,000
Year 3 $2,000,000
Year 4 $4,500,000
Year 5 $0
Another of ACH’s major concerns is that if they reject the potential contract with the state of Florida, it will impugn their reputation as a collaborative partner and that they will lose future business as a result. They estimate that the potential losses will be $3,000,000 per year for each of the next 5 years. (Assume that these losses and any related tax consequences will occur at the end of each year.) After that time (and because of the expected success of the Project) ACH expects that business will return to pre-project levels.
Perform an NPV analysis to determine if ACH should accept or reject the renovation project. The Director of Finance for ACH has determined that the appropriate discount rate for a project of this risk is 14%. An analysis of ACH’s tax returns indicates that ACH’s average income tax rate is 35%.
Select one of the case studies at the end of Chapters 3 and 4 of the textbook and answer the questions at the end of it. Submit an essay of not more than 3 pages of content in a simple APA style document before the end of Sunday.
ch 3 case studies :
A) You have been hired as a consultant by your local town newspaper, theMidland Clarion.Midland is a small town of about 10,000 residents. TheClarionhas seen its paid subscrip-tion list decline steadily over the past 10 years, but the number of visitors to the newspa-per’s Web site, which currently includes all of the stories that run in the paper, has steadilyincreased over the same time period. TheClarion’spublisher is considering charging anannual subscription fee for access to the editorials and columns on the Web site. Under thisplan, theClarion’sclassified and display advertising, along with short summaries of topnews stories, would continue to be available at no cost. Prepare a report of about 100words in which you assess the risks of switching to this advertising-subscription mixed rev-enue model for theClarion. You may also include a discussion of other revenue modelsthat might work for the newspaper.
B) High-end jewelry retailers such asCartier,Harry Winston, andTiffanyoften use Adobe’sFlash software to create their Web sites. In about 200 words, present three arguments forand three arguments against the use of Flash animations in sites such as these. Considerthe retailers’objectives, the characteristics of the products being sold, and the type of cus-tomers who visit these sites.
C) Some industry analysts believe that the online encyclopediaWikipediawas largely responsi-ble for the struggles that theBritannicaWeb site experienced as it was experimenting with dif-ferent revenue models. Others believe that the difficulties Britannica faced were a result of itstransition from being a print publisher to an online resource. Using what you learned in thischapter and your favorite search engine, write about 100 words in which you outline what youbelieve the impact of Wikipedia was on Britannica’s revenue model transitions.
ch 4 case study:
6. You are the new marketing manager for theMidland Daily Courier, a weekly newspaperthat publishes local news, high school sports results, and feature stories about local busi-nesses and political issues. The paper also publishes several regular columns written bylocal experts on gardening, home repair, and crafts. Like many small weeklies, theCourierhas seen its subscriber base shrink gradually over the past 10 years. The newspaper has aWeb site on which it posts all of the display ads that run in the print edition, its free classi-fied ads, and all of the news content from the print edition. Your job is to work with thepublisher and the editorial staff to revive interest in the paper and devise marketing plansthat will either increase subscriptions directly or generate increased interest and awarenessof the newspaper’s value to potential subscribers. In about 400 words, provide a viral mar-keting plan that uses blogs and social media tools to generate interest in theCourier.Bespecific about how you would promote each element of the newspaper’s offerings, includingwhich tool you would use for which element.
Requirements: as shown above | .doc fileATTACHMENTS
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Describe the what accounts losses were we all increase spending
Describe the what accounts losses were we all increase spending
What is the face value, not the actual value, of the bond that you will be investing in?
Part A:
By the end of this year, you will be 35-years old, and you want to plan for your retirement. You
wish to retire at the age of 65, and you expect to live 20 years after retirement. Upon retirement
you wish to have an annual sum of $50,000 to supplement your social security benefits.
Therefore, you opened your retirement account with a 7% annual interest rate. At retirement you
liquidate your account and use the funds to buy an investment grade bond which makes $50,000
annual coupon payments based on a 6 % coupon rate throughout your retirement years.
1. What is the face value, not the actual value, of the bond that you will be investing in?
2. Please calculate the monthly payment in your retirement account in order to be able to
achieve the plan mentioned above.
3. How much will your inheritors receive?
Now let us extend the problem so that you protect yourself against inflation.
Part B:
Suppose you think if you were to retire right now, you would have needed $50,000 each year to
supplement your social security and maintain your desired lifestyle. But because there is on
average 3% annual inflation, when you retire 30 years from now, you need more than $50,000 per
year to maintain the lifestyle you like.
1. How much will be equivalent to $50,000 at retirement time when adjusted for inflation?
2. What will be the face value of the bond that yields the equivalent of $50,000, found in #4
of Part B in coupon payment?
3. How much annual payment in the retirement account is needed to accumulate the amount
needed to purchase the bond when retiring?
4. What is the purchase power of the amount that will be received by your inheritors,
measured in the current value of $ at the time of opening the retirement account?
(Hint: First calculate what the future value will be in 30 years, which is equivalent to $50,000
now and then solve the rest of the problem).
Provide your explanations and definitions in detail and be precise. Comment on your findings.
Provide references for content when necessary.
Pdf or word format please
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What is Contribution Margin? What is the Total Revenue? What is the Average Check per cover?
The Barcelona Restaurant has 120 seats and opens 360 days a year. The construction and start-up costs amount to $8,000,000. The owner has $6,000,000 in cash that will be invested into the restaurant. The owner has a loan of $2,000.000 at an interest rate of 12%. The owner expects a 12% return on investment annually. The income tax rate is 30%. The estimated fixed charges and costs (excluding income taxes) is $1,500,000. The undistributed expense is $500,000. The forecasted food cost is $750,000. The projected average seat turnover is 2.5.Given the above information, use the Hubbart Formula to calculate the minimum average check.Answer the following questions, 1. What is the desired Net Income? 2. What is the Total fixed costs and charges? 3. What is Contribution Margin? 4. What is the Total Revenue? 5. What is Average Check per cover?
Considering the points of analysis explored in this seminar, what is encouraging and discouraging about the Alberta curriculum if our aim in education is social justice-oriented citizenship?
Considering the points of analysis explored in this seminar, what is encouraging and discouraging about the Alberta curriculum if our aim in education is social justice-oriented citizenship?
What is the difference between blue and green ammonia?
What is the difference between blue and green ammonia?
