...Bus 379 Course Project March 31, 2013 Task 1 1. National First with an APR of 3.25%(Prime Rate) +6.75%=10% The ERA=(1+10%/2)^2 – 1= 10.25% Regions Best 13.17 APR compounded monthly. The ERA = (1+13.17%/12)^12 – 1= 13.99% 2. I would recommend National First Bank, the ERA with NFB is 10.25% and the ERA with Regions Best is 13.99%. National First Bank is calculated semiannually so it is only twice a year but Regions Best is compounded monthly. The APR with National Best is low even if it is Prime. 3. The loan amount is $6,950,000, interest rate is 8.6% APR over 5 years. To do the calculation we work with (loan amount)*(interest rate)/(years) N=60 I=0.7167 PV= 6,950,000 Payment =x The monthly payment for to pay back the loan from Regions Best is $142,926.43. With AirJet taking out a smaller amount for the loan they can pay back the loan faster but if they do not have enough the company won’t be able to finish the project which could result in a huge lose overall. Task 2 1. Growth rate = 5% According to the Dividend Growth Formula R = (D1 / P0)+g Dividend yield = 3.10% per http://ycharts.com/companies/NOC/dividend_yield Dividend per share = Dividend yield * Market price per share Dividend per share = 0.031 * 70.15 Dividend per share = 2.17 R = (2.17 / 70.15) + 0.05 R = 0.031 + 0.05 R = 0.081 R= 8.1% The Rate of Return for Northrup Grumman Corporation is 8.1%. 2. Required Rate of Return = 8.10% Constant Growth Rate...
Words: 712 - Pages: 3
...Course Project – Part I © The content of this document is the property of Wendell W. Bragg and DeVry University. No portion of this document may be reproduced in any manner except as a homework assignment submission. Duplication, reproduction or display either physically or electronically for any other purpose without the author’s written consent is prohibited. Introduction The Course Project is an opportunity for you to apply concepts learned to a real-life simulation experience. Throughout the Course Project, you will assume that you work as a financial analyst for Aero Plain, Inc. The Course Project is provided in two parts as follows: Part I – In Part I, you work with Aero Plain, Inc. staff to identify the best loan options, as well as to valuate stocks and bonds. Part II – In Part II, you will provide the company with a recommendation for purchasing a new machine. You will base your recommendation on the Net Present Value (NPV) of the capital investment project using the cost of capital (WACC) as your discount rate. PART I | Here is how you will be graded: | Possible | Earned | Task 1: | Assessing loan options | | | | Convert APR to EAR: | | | | Screen Shot | 3 | | | Calculations | 7 | | | Decision | 5 | | | Calculate payments | 10 | | | Calculate total of payments | 10 | | | Decision | 5 | | | Calculate LoansRUS monthly payments | 10 | | | Calculate LoansRUS total payments | 5 | | | Decision...
Words: 1180 - Pages: 5
...Executive Summary Blue Giraffe Spa is a new upscale destination in Beaverton, Oregon, offering a complete day spa experience. We offer seven ultra-chic, ultra-comfortable treatment rooms with the finest spa linens and equipment. We offer massage in a variety of styles - traditional Swedish Massage, Deep Tissue work, Hot Stone Massage, Reflexology, Sports, Pregnancy and others. We also offer facial and body treatments, like a Vitamin C Antioxidant Facial and Pevonia's Anti-Free Radical Treatment. The day spa has the latest in anti-aging products and techniques but does NOT offer services on hair such as cutting, styling and coloring. The only time a pedicure would be provided, is when it's part of a full treatment, like a Blue Giraffe Foot and Leg Reflexology Treatment. In fact, for location, we prefer being located near hair and nail salon for co-marketing opportunities. Our goal is to tailor the client's experience based on initial interview information, as well as feedback during the treatments, to ensure the client's comfort and satisfaction, and to increase repeat business. We are mindful of the overall experience - using only the finest oils and lotions, beauty treatments and aromatherapies. Special lighting, music, decor, and textiles are used throughout the spa to complete the comfortable, plush environment and enhance the client's overall spa experience. There are about 19,900 spas in the U.S., according to ISPA (International Spa Association), and seven out of ten...
Words: 1423 - Pages: 6
...Course Project Part 1 Task 1: Assessing loan options for AirJet Best Parts, Inc. (1) EAR of National First Bank loan is 10.25%. APR = 3.25 (Prime Rate) + 6.75 M = 2 (Compounded semiannually) Formula: EAR = (1+APR/M)^M – 1 Solution: 0.1025 = (1+.10/2)^2 – 1 EAR of the Regions Best Bank loan is 13.99%. APR = 13.17 M = 12 (Compounded monthly) Formula: EAR = (1+APR/M)^M – 1 Solution: 0.1399 = (1+.1317/12)^12 – 1 (2) I recommend using National First Bank because the APR and the EAR are lower than Regions Best, which will result in paying back less interest over the course of the loan. (3) The monthly payment amount of the loan is $147,357.20. I agree with this decision because APR and EAR would be lower than National First resulting in paying back less interest over the duration of the loan. I got this answer with the following information and formula in Excel: PV= $6,950,000 r= 8.6% =PMT(rate,nper,PV,FV) m= 5 (years) Task 2: Evaluating Competitor’s Stock (1) The competitor I chose is Raytheon and the rate of return assuming the dividend growth rate is 5% would be 7.57%. Raytheon’s latest dividend amount was obtained from Yahoo Finance and used with the following formula. g = 5% R = ? D1 = 2.2 (dividend amount) P0 = $85.28 (stock price) Formula: R = D1/P0 + g Solution: R = 2.2/85.28 + .05 = .0757 = 7.58% (2) Current share price of Air Jet Best Parts, Inc. is $23.06. Rate of return is...
Words: 585 - Pages: 3
...PM 592 Project Cost and Schedule Control Executive Summary After reviewing the project costs, schedules, and earned values I have realized that there are some concerns with the schedule and costs. I have found that there are some tasks that have put the project behind schedule and over budget. After reviewing the project closely and making the adjustments by requesting and adding additional percentage for resources to the builder, plumber, electrician, hvac, and the ferris wheel supplier it will bring the project back on track and under budget. Which if you review the revised schedule you will find that the new schedule will still allow the theme park to open on time and within budget. Schedule 1 [pic] Performance Analysis Based on the Earned Value Management I have found that there are a couple stages behind schedule and once complete will end up over budget. Phase 1.5 Joists and Roof Deck is currently at 76% completion and is behind schedule, according to the charts once this is complete will end up finishing late and over budget. The responsibility of this task is on the Builder. Phase 1.7 Rough Carpentry is currently at 65% completion and also is behind schedule, this phase also will end up finishing late and over budget. Once again this task responsibility is on the Builder. Phase 1.11 Elevator is currently at 76% completion and also is behind schedule, this phase also will end up finishing late and over budget. Once again this task responsibility is on...
Words: 970 - Pages: 4
...BUSN379 Course Project Part 1 Task 1: Assessing loan options for AirJet Best Parts, Inc. 1. Regions Best (1+ .1317/12)^12 -1 =0.14 EAR = 14% National First (1+ (6.75+3.25)/2)^2 -1 =.1025 EAR = 10.25% 2. Based on my calculations I would choose the National First loan because the EAR is only 10.25%. The EAR for the Regions Best loan is 14%. The ideal EAR for the company would be the smallest rate. 3. (1+8.6/12)^12 -1 = 8.95%. Monthly payment 8.95% of $6,950,000 = $622,025. By taking a smaller amount loan will save them money that they will need to pay back in the end. If they don’t borrow enough they may end up closing because they ran out of money to get their feet off the ground. It all comes down to saving money now and taking that chance of starting quickly, or spending money now to get the factory set up and make money later. Task 2: Evaluating Competitor’s Stock 1. Lockheed Martin Corporation as of May 12, 2012 Price: 85.21 Dividend: 4.00 Rate of Return 4*(1+.05)/85.21 + .05 =.1204 =12.04% 2. Current Share Price Rate of Return = 12.04% 1.50*(1+.01) / (.1204-.01) =$13.72 3. Preferred Stock Price 1.5 / .1204 =$12.46 I would assume that the stockholder would want the current price to be higher than the preferred price because that would mean the stock is doing better than projected to be...
Words: 521 - Pages: 3
...Course Project Paper 1 David J Marshall Business Economics GM545 Winter Term 2012 mr_marshalls@live.com Exercise 1: Microeconomics Issues: Question # 1 There are two reasons gas prices must go up. The first is to get people into coal-powered cars. Coal-powered cars can only be driven around 40 miles before they must be plugged back into the grid for more coal power. If everyone moves to coal-powered cars, the drivers will be forced to live closer to cities (Erickson, 2011). According to my current reading, when you look at the term product differentiation in buying your gas, this term gives competitors the edge to host the cheapest gas (Chapter 10:253). In the current week, the Shell gas pump went from $3.65 to $3.57 per gallon and the week before that the gas price during week 1 was $3.47 expecting to rise to $4 per gallon in Lexington, KY. During my travel to Indiana the gas prices average $3.99 per gallon. In using the midpoints of price and quantity to compute the relevant percentage changes essentially gives us the average elasticity between point (a) and point (b) (Stone, Gerald. “Core Economics” Worth Publishers, 07/2011. p. 118). My equation below may show just exactly how these price may increase or decrease based on the elasticity formula: Eᵈ = 200 / 400 ÷ 3.65 – 3.57 / (3.57 + 3.65) / 2 = 200 / 400 ÷ (- 0.08 / 5.3950) = .5 ÷ -0.0148 = [-33.72] = 33.72 I think for the most part of our gas prices has increase due to determinants of our increase...
Words: 762 - Pages: 4
...Course Project Parts 1-3 ITT Technical Institute GE 273 Microeconomics How outsourcing affects the US economy and contributes to political stability in developing economies is a matter of great debate. Many people think this practice will have an overall positive effect on the US economy, since it saves money for companies, opens up opportunities for greater entrepreneurship in the US, and leads to more Americans holding higher level jobs. Jobs that companies outsource to save money besides medical and manufacturing include copy writing jobs for publishing companies, administrative jobs, and data entry jobs for insurance companies. Critics suggest hiring foreign workers has an immediate effect on the US economy by stripping many Americans of jobs they would have performed, particularly by semi-skilled or skilled laborers. Further, many argue that giving jobs to workers in less developed countries improves those countries economically and increases trade for US products. It also increases a country’s ability to pay back debts to the US, and may promote better political relationships. Companies economically benefit by selling their products in other countries. This means they can hire more people in the US, lower their prices on products for US consumers. Comparative advantage and efficiency takes place when countries, individuals, and firms have lower opportunity costs in the production of a good or service with comparison to that of their competitors. This creates more...
Words: 1329 - Pages: 6
...Task 1 1 EARS # of times compounded National First 0.1025 10.25% Semiannually Regions Best 0.139947879 13.99% Monthly 2 The bank that would recommend is National First Bank because the rate is lower and the interest is componded semiannually. 3 Loan amount of $6,950,000 being offered by Regions Best at 8.6%APR for 5 yrs? Monthly payment amount will be $142,926.09 PMT ? PV $6,950,000 Interest 0.72% (8.6% divided by 12 months) Periods 60 FV 0 PMT(rate,nper,pv,fv,type) $142,925.09 Monthly Payment By comparing the interest rates Regions Best of 8.6% and National First Bank of 10%, Region Best offers lower interest payments Task 2 1 Using the dividend growth the rate of return for Raytheon with a dividend growth rate of 5% is : 2.31 dividend after one year applying 5% growth 100.96 current stock price 0.022880349 division of D1/current price 0.05 growth factor 7.29% Raytheon return 2 The current share price of AirJet Best Parts, Inc. using the rate of return from Raytheon of 7.29%with the constant growth rate of 1% and dividend per share paid on the stock was $1.50 is: Po=Do*(1+g)/R-g Po=(1.50*1.01)/(.0729-.01) 24.08585056 24.08585056 current price of one share 3 Preferred is paid first, less risky Common stock can be traded, price could go up more...
Words: 384 - Pages: 2
...Project Proposal: Local Grind To Investors Investing PM592 – Summer 2011 Executive Summary When you think of coffee in the Northwest, most people know there is Starbucks and small coffee shops. Coffee shops have become a familiar feature of American communities, not only for the purchase of a morning cup of coffee and snacks, but for mid-day and evening as well. With the introduction of fancy espresso-based coffee and drinks, people are spending between $3 and $6 for their cappuccino, mocha latte, vanilla ice blended drink, or other flavored drink that may be coffee based. Privately owned coffee houses have been on the increase for over 20 years because they are relatively recession proof. Leading companies, such as Starbucks and Peet’s, are located in almost every major city in the US. Small unique coffee shops like the Local Grind are able to compete with these larger chains; they are able to develop competitive advantages by catering to the specific demographics of their location and by personalizing their services to cater local needs. Our goal is to provide quality coffee related services and products by capitalizing on an untapped demographic that has many potential un-serviced customer. To accomplish our goals, we are requesting $100,000 from your company, as an initial investment to set up operations. We plan to invest an additional 20% from our own resources, up front, for the start up operational costs. Local Grind is scheduled to open for business...
Words: 2591 - Pages: 11
...PM 592 COURSE PROJECT John Lawson, Mathew Freeman ENERGY EFFICIENCY INSTALLATION BUSINESS VENTURE PILOT PROJECT TABLE OF CONTENTS: Item | Page | 1.0 Executive Summary | 2 | 2.0 Project Description | 2 | 2.1 Major Activities | 3 | 2.2 Resources | 3 | 2.3 Project Milestone | 4 | 2.4 Assumptions | 4 | 2.5 Project Deliverables | 4 | 2.6 Constraints | 4 | 2.7 Risk Management | 5 | 3.0 Work Breakdown Structure | 6 | 4.0 Cost Estimates | 8 | 4.1 Cost Estimation Assumptions | 8 | 4.2 Cost & Contingency Estimation | 9 | 5.0 Financial Analysis | 11 | 6.0 Project Schedule | 12 | 7.0 References | 12 | 1.0 Executive Summary This project is a pilot project for the development of a business venture to promote the installation of energy efficiency and conservation features into homes to save home owners money through the reduction of monthly energy bill. The objective of the project is to install energy efficiency features into a home of about 2500 square feet in Atlanta, Georgia and expected to be completed within 5 months at an estimated cost of $96,558.21, using a three point estimation; and achieve about 50% savings in energy usage. The expected benefits include: * Reduced utility and maintenance costs * Increased home comfort * A healthier and safer indoor environment * Improved building durability * Ultimate increase in home value The project will begin on April 16, 2013...
Words: 1381 - Pages: 6
...Task 1: Assessing loan options for Coca Cola. The company needs to finance $8,000,000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate bonds. Here is some of the information regarding the APRs offered by two well-known commercial banks. Bank APR Number of Times Compounded National First Prime Rate: 3.25% + 7.75%= 11% Monthly Regions Best 12.57% Semiannually 1. Assuming that Coca Cola is considering loans from National First and Regions Best, what are the EARs for these two banks? (15 pts) Bank EAR National First 11.57% Regions Best 12.97% See Excel attachment for calculations 2. Based on your calculations above, which of the two banks would you recommend and why? Explain your rationale. (15 pts) Based on the calculations above I recommend Coca Cola obtain a loan from National First Bank. Although the decision can be based on the APR, the EAR is the most accurate interest rate because it takes into account compounding and expresses the true interest paid on the loan. The EAR for Regions Best Bank is 12.97% while National First Bank has an EAR of 11.57%, because National First Bank has the lower interest rate of the two it is the more logical choice since their loan option will charge less interest for the life of the loan. 3. Coca Cola has decided to take a $6,980,000 loan being offered by Regions Best at 8.4% APR for 7 years. What is the annual payment amount on this loan? Show your calculations...
Words: 1345 - Pages: 6
...Keller Graduate School of Management Business Economics GM545 Online Graduate Course Summer Session A, July 2010 Project Part 1 16 July 2010 Exercise 1: Everyone’s Gasoline Problem One of the most classic application examples of supply and demand is the gas/petroleum market. Gas prices are established through basic supply and demand, when demand rises and supply falls, prices rise quickly; and just the converse when supply increases and demand falls, prices decrease (although rare in modern day occurrence). Fluctuations in gas prices are also the result of multiple industry factors including uncertainty in the economy, economic demands for oil and the price per barrel of oil. Speculation and forecasting also lend a hand in continuously moving market equilibrium. Intermediaries in the market, such as gas wholesalers, can also have a profound impact on the market through price increases, charging higher premiums for service and handling. Multiple influences affect the price of gas, some direct, others indirect. One such case of an indirect influence on price is natural disasters. The hurricanes in the Gulf of Mexico region have impacted gas prices on more than one occasion, more recently Hurricane Katrina. The devastation that rocked the nation impacted the supplies of crude oil and gas productions leading to a shortage. This shortage was felt almost immediately as prices per gallon of gas skyrocketed. (Chevron Corporation 2005-2008) Government regulations and taxation...
Words: 1947 - Pages: 8
...Course Project Part 1 GM545 Business Econcomics (Fall Session A 2010) November 9, 2010 Ethical Issues in Business Ethics is an everyday occurrence in the corporate world as well as one's personal life. Business ethics is the same as normal ethics. In both cases, ethics is knowing what is right or wrong, and/or learning what is right or wrong in the environment in which one is involved. An ethical issue may not have a concrete answer; therefore a person's decision may depend on that person's situation. This may happen because "ethics is a broad and murky area and the workplace is full of ethical dilemmas and issues" (Orinsi, 1999). Therefore, employees feeling the pressure to perform may resort to unethical decisions in order to meet the goals that they feel are unreasonable. This can happen at any level of management (Orinsi, 1999). I work in a industry full of healthful living and fitness plans, one of the most recent corporate ethical dilemas I believe is reasonable to discuss, centers around Susan G. Komen (SGK) for the Cure and chosing cause-marketing partner, Kentucy Fried Chicken (KFC). Questions have been raised by various media, including The Washington Post and The Huffington Post (one specifically about pesticides and their link to corn, chickens and cancer) to which Andrea Rader' SGK's director of commnications, responded with dollar amounts of SGK's contributions to research and education. (Stengel, 2010) In the majority of its responses to the media...
Words: 1194 - Pages: 5
...OF CHANGE This part of the project is presenting to readers an analysis of the images of change found in the two companies – Royal Philips Electrical and BMW. A review of the said companies is made and comparison based on their change stories. The image of change possessed by any manager is determined by how best he/she is able to plan, direct and control the organization's resources (human, finances, materials/equipment and time) in the best possible way. Rodger Dean Duncan (2013), maintained that managers of change should be gardeners as he presented it in a sub-heading “ Be a Gardener, Go for Growth; A first tendency of many business people is to fix things. But successful leaders invest energy in growing rather than fixing. They know the organization is a living organism with many interrelated elements capable of extinction or growth. Successful leaders are gardeners, they create a nurturing environment and they cultivate with care.'' The above quotation has given us a clear picture of how managers of change should look like and what they need to do in order to keep the organizations in continuous growth. Therefore, it is necessary to present a critical analysis of change images in organizations which may apply to any situation of management and not limited to any specific organization. 2.1 Review of the changes in each of the case study organizations: 2.1.1 Royal Philips Electronics Company: 1 Gerard Kleisterlee's turnaround...
Words: 2571 - Pages: 11
