...Angelica Lopez BUS 330 Business Finance Online Road King Trucks Case Paper Instructor Richard Hasse March 15, 2015 Outline Summary Mission Objectives Paper Road King Trucks Road King Trucks, Inc has been in business since 1880 and it specializes in transportation. The company was establised by the Smith brothers and it manufactured wagons. With the advance technologies and keeping up with the population they started manufacturing school buses in 1940. The school buses accounted for 50% of it's revenues. Michael Livingston is a newly hired CEO of Road King Trucks, Inc. and he's proposing a new product to the top management, chief design and manufacturing engineers. How much inportantce should be given to the energy cost situation? What are the project's cash flows for the next twenty years? What assumptions did you use? What is the company's cost of capital? What is the appropriate discount factor for you to use in evaluationg the bus project? If you decide to go ahead with the project, which of the two engines should be used in the bus, and why? Evaluate the quality of the project, by using appropriate capital budgeting techniques. Would you recommend that Road King Trucks accpet or reject the project? What are the key factors on which you base your recommendation? Capital is the source of fiancé through which resources are provided. It may be debt financing or equity financing. The cost of debt financing is interest which is the before...
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...Road King Trucks Introduction Michael Livingston has recently been hired as the CEO of Road King Trucks, Inc. Previously he had been the marketing manager for a large manufacturing company and had established a reputation for identifying new consumer trends. Road King Trucks Inc. is a California-based truck manufacturing company. The company is well known for manufacturing large, heavy-duty trucks at a reasonable cost. One of its greatest achievements is that its trucks can be easily modified or customized for different applications. Road King Trucks also builds school buses. The company is considering an expansion of its current product line to include transit buses. Mr. Livingston feels that due to high gasoline prices, commuters will be more willing to consider using mass transit instead of using their cars to commute to work. Company Profile Road King Trucks, Inc. was established by the Smith brothers in 1880 as the California Wagon Company. The firm started manufacturing horse-drawn wagons to serve the growing population in California. The brothers quickly realized that the times were changing, so they started looking for the technologies that would keep them at the forefront of their field of business. In 1915, the Smith brothers decided that they needed to make trucks as replacements for the wagons, because trucks were starting to serve the same uses as wagons, and the wagon industry was not going to be viable in the longer term. The company started...
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...Vikash Nahar The New king of Indian Roads: Mercedes and BMW Since the time of its invention, automobiles and more specifically the luxury cars have always captured the fancies of men and the Indian consumers are no exception to this. The Indian luxury car market over the years has evolved from being a humble consumer of a handful of the so called dream machines in the early 1950s to becoming the fastest growing market for luxury cars in the world, in 2010. Two companies that can be distinctly identified in race for supremacy in the Indian luxury car market would be BMW and Mercedes Benz. Baggonkar, S (2011, Dec 02) writes that “Though ballooning inflation and dipping growth prospects are slowing the economy, Germany’s BMW and Mercedes-Benz are betting big on Indians’ voracious appetite for luxury cars.” Though of the same origin, the strategic positioning and performance of both this auto-makers can be categorized into the following: (1) Product innovation, (2) Adaptation to Indian conditions, (3) Customer service and brand image. Though historically,considered conservative and easy to please, the Indian auto consumers of today are becoming increasingly discerning about their tastes and preferences. In addition to design and quality, product innovation is appreciated and preferred. Krishnan, N of Business Standard Moroting, explains in his article,Mercedes enjoyed monopoly in the luxury car segment for 12 years till BMW rocked its foundation by driving past its annual sales...
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... Total Capital employed = 100 Debt capital ( D ) = 40 Equity Capital ( E ) = 60 Cost of debt (kd) = Current yield on bond*(1-tax rate) = 6.5%*(1-40%) = 3.90% Cost of equity (Ke) = Rf+(β*Mp) = 4%+(1.15*5.5%) = 10.33% Cost of Capital (WACC) (Ko) = (Kd*(D/(D+E)))+(Ke*(E/(E+D))) = (3.9%*(40/100))+(10.33%*(60/100)) = 7.76% Cost of capital of Road King Trucks is 7.76% (as calculated above)....
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...ROAD KING TRUCKS CASE ANALYSIS Capital is the source of fiancé through which resources are provided. It may be debt financing or equity financing. The cost of debt financing is interest which is the before tax cost of capital, while after tax cost of capital is r (1-t). If the interest rate or yield to maturity is 6.5% and the rate of tax is 40%, it means that before tax cost of capital is 6.5% and after tax cost of capital is 3.9%. In equity finance the cost of capital is dividend. If the rate of dividend is 10%. The after tax cost of capital and before tax cost of capital are same, which is 10% as there is no tax shield available, as the dividend is not the expense, rather it is distribution of profit. The cost of equity can also be calculated by using the capital assets pricing model, which is known as CAPM. In this case under the CAPM, the cost of equity is 10.33% If a project is financed only from debt financing the cost of capital will be 3.9% and if it is only financed from equity the cost will be 10.33%. When there is no debt the WACC is equal to the cost of equity, as there is no tax shield available on cost of equity, therefore it is always on higher side but when the debt is introduced, the WACC started to fall down as the weightage of low cost of financing is increasing. The cost of debt financing is always on lower side due to tax shield. But if financing is done 40% from debt and 60% from equity, then the cost of capital will be 7.76%. The...
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...Road Kings Trucks Abstract This paper is an analysis of Road King Trucks’ new project which is introducing a new product into its product line. I will decide whether run the project or not. Six issues will be discussed as follows 1) importance of energy cost; 2) project’s cash flows; 3) cost of capital; 4) choose an engine 5) evaluation 6) accept or reject. We should accept the project because of the positive NPV and high IRR. We will gain $532 million in wealth which is a big money on the scale like this. The company has a bond rating of AA that makes the risk relatively low. So we should definitely say yes. Issues Importance of Energy Cost Road King Trucks, Inc. is a truck manufacturing company. The new CEO Michael Livingston arranged a meeting with the firm’s top managers and engineers considering introducing a large, public transit bus into its current product line. As the oil prices keep going high and have no sign of decreasing. Mr. Livingston thought it would lead people more likely to use public transportation. The price of gas has gone up for the 30th day in a row, and with it tempers are rising. Increased demand for public transportation is expected to continue into the spring [1]. The impact of high oil prices makes people more willingly to use public transportation and there will be an increase of riders. The company should adapt itself to the changes of market. Now it is a fashion to be “Green”. People show great environmental consciousness to the world...
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...To: Subject: Road King Trucks: Project Deliverables Here is what I expect for your individual projects: A report broken down into the following sections: Summary results and recommendations—up front, concise, and to the point. Answers to the 6 questions asked—devote a paragraph to each, with individual headings Attached exhibits which are readable and understandable (I suggest using Calibri font in 11 pitch for the spreadsheet(s), because it is plain and easy to read) Spreadsheet printout(s) showing your derivation of Operating Cash Flows Incremental Cash Flows, including investment and salvage Warranty costs WACC NPV and IRR Any other supporting exhibits you feel are relevant A file containing your spreadsheet file, including all supporting elements. I want to get a sense of how well you used the power of the Excel program to make your calculations. A simple typed report is adequate. I do not need fancy graphics or covers. Use 12 pitch, Times Roman font for the body of the report. Single spacing is preferred, and will allow you more than enough space to complete your report in less than 5 pages. You should refer back to your exhibits for data or calculations, keeping them out of the main body of the report. Make sure name is listed on a cover sheet, as well as the project title and the date. The cover page does not count against the 5 page limit. I am a stickler for grammar, punctuation, and spelling (GPS). Proof read your document well...
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...Road King Trucks Case Analysis Abstract This paper is an analysis of Road King Trucks’ new project which is introducing a new product into its product line. I will decide whether run the project or not. Six issues will be discussed as follows 1) importance of energy cost; 2) project’s cash flows; 3) cost of capital; 4) choose an engine 5) evaluation 6) accept or reject. We should accept the project because of the positive NPV and high IRR. We will gain $532 million in wealth which is a big money on the scale like this. The company has a bond rating of AA that makes the risk relatively low. So we should definitely say yes. Issues Importance of Energy Cost Road King Trucks, Inc. is a truck manufacturing company. The new CEO Michael Livingston arranged a meeting with the firm’s top managers and engineers considering introducing a large, public transit bus into its current product line. As the oil prices keep going high and have no sign of decreasing. Mr. Livingston thought it would lead people more likely to use public transportation. The price of gas has gone up for the 30th day in a row, and with it tempers are rising. Increased demand for public transportation is expected to continue into the spring [1]. The impact of high oil prices makes people more willingly to use public transportation and there will be an increase of riders. The company should adapt itself to the changes of market. Now it is a fashion to be “Green”. People show great environmental consciousness...
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...Philippine Jeepney: The Indisputable King of the Road A helping hand is lent not just only for those who carry heavy loads of things but also for the parents who bring child/children with them. Helping these little toddlers mount inside a public utility vehicle, until they find a seat fit for everyone. The jeepney is the indisputable king of the road because of the sense of bayanihan inside. The jeepney, which had its origins from the reinvention of US military jeeps at the end of the Second World War, has developed since then. Jeepney manufacturers have turned it into an icon, a symbol and one of the insignia of Philippine culture while still retaining its purpose as a popular means of mass transportation. Statistically speaking, jeepneys are one of the most favorable means of public transportation by the Filipinos. As the Land Transportation Office (LTO) reports on the first quarter of 2011, they registered 230, 622 units around the country and surprisingly 61, 145 units are around the small region of Metro Manila. What does it say about the popularity and continuing patronage of the people? A Complete Turn Around As we are hearing from most of the people, there are a lot of words opposing the use and presence of these jeepneys. There are a lot of complaints that says they are the primary cause of heavy traffic along major highways and avenues, and a major cause of air pollution because of the increasing number of smoke-belchers to name a few. However, they...
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...In “One for the Road” by Stephen King, Booth is an example of the crowd favorite stereotype because he is one of the good guys, he’s the guy that people want to live. He is kind, yet serious; he is sincere for the little girl in the end, and after all he is the narrator of the whole story. In the story when the Gerard Lumley came in the bar around closing he was freezing, he was fighting back frostbite so Booth and Tookey helped warm him up and got his story out of him. He is from New York City, him and his wife and daughter were driving through visiting and their car got stuck in the blizzard; his wife and daughter are waiting in the car so he needs help to get them out and somewhere safe and warm. So Tookey and Booth decide to help but they know what happens in the woods where the car is stuck, vampires....
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...all made the playoffs last season. However, so did several other teams, so why mention these three? If we look back at their road to the postseason, these three squads have a significant difference in their win-loss record when compared to all the other teams: when playing at home, their records were far better as compared to when playing on the road. Let’s take a look at the Indiana Pacers. Going into the playoffs, this team was the third seed in the Eastern Conference, a noteworthy achievement. However, when playing on the road, this team was mediocre throughout the season, ending up with a sub-500 record, 19-22 (ESPN). However, this squad seemed to sync and “click” when playing in Indianapolis, recording 30 home wins as opposed to only 11 losses, enabling them to clinch such a high seed in the playoffs. A similar pattern occurred in Golden State, seeded six due to their home record of 28-13, despite a road record of 19-22 (ESPN). The most astonishing team was the Denver Nuggets, who were also the three seed, but in the Western Conference. This squad managed to tally a whopping 38 wins at home to only three losses! With this near-perfect win-loss ratio, you must be questioning how they were not seeded number one. The answer lies in their struggle to achieve similar success while playing as the visiting team: the Nuggets had the same road record as the Pacers and Warriors, an average 19-22 (ESPN). Due to this peculiar and intriguing stat, every time these three...
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...“Drivers of the road” We are all dangerous drivers. We have an abundance of drivers who have no respect for the law and other motorists. We have encountered these drivers most often in day to day life; we can go back and forth on who the better drivers are; Older? Younger? Women? Men? But do we really know? Firstly from time to time you’ll hear one of your elders speak on how experienced they are and how much they know compared to their younger generation. From what i’ve seen personally is that we all think we are unconquerable whether we are young or old. Are we all as good of drivers as we say? Or are we all just as bad as the next generation. We all have those days where we are tired, or angry and it affects our driving; when we are distracted and don’t pay considerable amounts of attention to the road and the people around us. Older drivers are considered worse, and younger better. But who is the judge, and how can we prove that this information is true to the bone? Do we have data proving who's the best, or someone reporting every time someone under the age of 20 is in an accident; or someone over the age of 70? In the world of cars and driving there are many various types of drivers, but young and old seem to always be grouped together in some way. It happens to most of us, getting stuck on a one-lane road behind an elderly woman or man who seems to refuse to drive at minimum speed. What should be done to keep elderly drivers and others safe on the roads? If we as a...
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...always hear my parents rant about safe driving. I can hear it in my head every second of everyday. They would tell me “better safe than sorry”, but I never listened. I was 16 years old and super happy with my brand new license, ready to take on the roads. I treated the roads like a vehicle playground. I drove like a street racer on “Fast and the Furious”. Stepping on the gas like it was my job, I would zip through traffic. This made me feel like a boss, street racer, king etc... Neglecting my parent’s advice on safe driving, I would test my limits on the road. I am in a vehicle with air bags ,as well as a great crash rating ,and I thought to myself, “what’s the worse that can happen?” that is until one day, I realized my parents were right. As my date with my girlfriend was coming to a conclusion, I was on my way to dropping her off. We had a great time filled with laughs and romance. The night went perfect. As I was driving to her house to drop her off, I was ripping the streets . Speeding all the way from the riverside to her house in my mom’s super small car. While I was speeding, my girlfriend starts to laugh hysterically at her phone. Not knowing what she was watching, I decided to take a peek at her phone. I took my eyes off the road for a second only to look at her phone and BAM! I had just crashed. I was scared for my life. I look to my right side and I notice my girlfriend is okay. I feel myself everywhere and surprisingly enough I was okay. Then the scare sets in. I had...
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...Slightly at first, maybe about 10 or 15 miles per hour, but after going into Burger King to use the restroom and get something to eat it picked up even more. My uncle asked if I was going to be okay driving in this or not, but I really did not have much of a choice at that point. So I just said yes a braced myself for what was about to happen. I knew now that I was not going to keep Sassy off my lap; none of the dogs liked wind, it freaked them out to much. Sugar was not even in the back anymore. My mom had Sancho in her lap, Sugar was leaned up to me, and Sassy was crawling all over me by now. We have not even moved yet and the truck was shaking from the wind by now, and there is dust everywhere. Therefore, the first thing I do is set a blanket up in my lap, holding it in place under my seat belt, make sassy lay down. Put both hands on the wheel, put the truck in park and pull out of the parking lot slow and easy east bound. It is like the fog only with this time with dust. Keeping my eyes on the road watching and scanning everything, and keeping an eye on my uncle. Every time a gust of wind would come from the north, I would turn the truck just slightly that direction, and kept that up until the wind died down. That was...
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...Political 18 7.0. ONLINE DISCUSSION FORUM REVIEW 19 8.0. CONCLUSIONS AND INFORMED POSITION 20 Conclusions 20 Informed Position 20 ACKNOWLEDGMENTS 21 REFERENCES 22 ABSTRACT The Brisbane City Council is embarking on the project of completing the staged upgrade of Kingsford Smith Drive to decrease traffic congestion and advance safety on the busy road. The Kingsford Smith Drive is a major lane connecting Brisbane CBD to the Brisbane Airport, Port of Brisbane, North-shore Hamilton, and the Australia Trade Coast area. The road was called after the aeronaut Charles Kingsford Smith. It links the suburb of Pinkenba to the Brisbane central business district at the Breakfast Creek. The Roadis categorized as a primary freight route. The demand for transportation of freight on Kingsford Smith Drive is anticipated to grow promptly. Construction of the phase one of the projects that widened a portion of Kingsford Smith Drive from four to six lanes was accomplished in mid-2011. However, the community preferred for the remainder of the project to involve broadening Kingsford Smith Drive to six lanes amid Theodore Street and Breakfast Creek Road, and creating out into the Brisbane River between Riverview Walkway and Breakfast Creek Road.This Planning was to continue throughout 2014. According to statistics, Kingsford Smith Drive is one of the eventful...
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