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Economics of Enterprise
Analyze the various ways to determine the cost of capital and determine which is the most difficult to get right. Explain your rationale.
Economics of Enterprise
Ikea invades America. Please develop a response to the following:
What do you think of Ikea’s product strategy and product range?
IKEA’s plan to have 50 stores in operation in the United States by 2013 is an indicator of the company’s optimism about the viability of its value proposition in this country. Do you think they are being overly optimistic?
How would you improve IKEA’s value proposition to make it more attractive to American consumers?
What do you think of Ikea’s product strategy and product range?
IKEA’s plan to have 50 stores in operation in the United States by 2013 is an indicator of the company’s optimism about the viability of its value proposition in this country. Do you think they are being overly optimistic?
How would you improve IKEA’s value proposition to make it more attractive to American consumers?
Economics of Enterprise
Five Industries Please respond to the following:
Discuss the five industries listed below and evaluate whether it should be classified as
a) emerging, b) rapid-growth, c) mature/slow-growth, d) stagnant/declining, e) high-velocity/turbulent, or f) fragmented. Explain your position. Conduct research on the Internet if needed.
Network television
Wine, Beer, and Liquor retailing
Mobile Phone Industry
Computer software industry
Petroleum industry
Discuss the five industries listed below and evaluate whether it should be classified as
a) emerging, b) rapid-growth, c) mature/slow-growth, d) stagnant/declining, e) high-velocity/turbulent, or f) fragmented. Explain your position. Conduct research on the Internet if needed.
Network television
Wine, Beer, and Liquor retailing
Mobile Phone Industry
Computer software industry
Petroleum industry
Economics of Enterprise
E-Education is a new star-up that develops and markets MBA courses offered over the Internet. The company is currently located in Chicago and employs 150 people. Due to strong growth the company needs additional office space. The company has the option of leasing additional space at its current location in Chicago for the next two years, but after that will need to move to a new building. Another option the company is considering is moving the entire operation to a small Midwest town immediately. A third option is for the company to lease a new building in Chicago immediately. If the company chooses the first option and leases new space at its current location, it can, at the end of two years, either lease a new building in Chicago or move to the small Midwest town.
The following are some additional facts about the alternatives and current situation:
1. The company has a 75% chance of surviving the next two years.
2. Leasing the new space for two years at the current location in Chicago would cost $750,000 per year.
3. Moving the entire operation to a Midwest town would cost $1 million. Leasing space would run only $500,000 per year.
4. Moving to a new building in Chicago would cost $200,000, and leasing the new building’s space would cost$650,000 per year.
5. The company can cancel the lease at any time.
6. The company will build its own building in five years, if it survives.
7. Assume all other costs and revenues are the same no matter where the company is located.
What should E-Education do?
The following are some additional facts about the alternatives and current situation:
1. The company has a 75% chance of surviving the next two years.
2. Leasing the new space for two years at the current location in Chicago would cost $750,000 per year.
3. Moving the entire operation to a Midwest town would cost $1 million. Leasing space would run only $500,000 per year.
4. Moving to a new building in Chicago would cost $200,000, and leasing the new building’s space would cost$650,000 per year.
5. The company can cancel the lease at any time.
6. The company will build its own building in five years, if it survives.
7. Assume all other costs and revenues are the same no matter where the company is located.
What should E-Education do?
Economics of Enterprise
Discuss the non-rational factors that may have a role in the valuation of stocks and stock market equilibrium?
Economics of Enterprise
Assume the following capital structure:
Preffered stock: 6%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for three prior years (2007-2009)
Common Stock: $100 par value, 2,000 shares issued and outstanding.
Total Dividends declared and paid in 2010 were $50,000. How much of the 2010 dividend will be paid to the common stockholders assuming the preferred stock is cumulative?
A. $12,000
B. $50,000
C. $47,000
D. $38,000
Preffered stock: 6%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for three prior years (2007-2009)
Common Stock: $100 par value, 2,000 shares issued and outstanding.
Total Dividends declared and paid in 2010 were $50,000. How much of the 2010 dividend will be paid to the common stockholders assuming the preferred stock is cumulative?
A. $12,000
B. $50,000
C. $47,000
D. $38,000
Economics of Enterprise
Online Retailing Please respond to the following:
Discuss the costs that are bypassed when online retailers sell to online buyers.
Identify the costs that are increased by using online retailing.
Discuss the costs that are bypassed when online retailers sell to online buyers.
Identify the costs that are increased by using online retailing.
Economics of Enterprise
“Best Buy” competes aggressively on price with rivals such as Costco Wholesale, Sam’s Club, Wal-Mart, and Target but is also known by consumers for its first-rate customer service. Discuss how you would characterize Best Buy’s competitive strategy. Should it be classified as a low-cost provider, differentiation, or best-cost strategy? Explain your answer.
Economics of Enterprise
Muscarella Inc. has the following balance sheet and income statement data:
Cash $ 14,000
Receivables 70,000
Inventories 210,000
Total CA $294,000
Net fixed assets 126,000
Total assets $420,000
Sales $280,000
Net income $ 21,000
The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?
a. 4.28%
b. 4.50%
c. 4.73%
d. 4.96%
e. 5.21%
Cash $ 14,000
Receivables 70,000
Inventories 210,000
Total CA $294,000
Net fixed assets 126,000
Total assets $420,000
Sales $280,000
Net income $ 21,000
The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?
a. 4.28%
b. 4.50%
c. 4.73%
d. 4.96%
e. 5.21%
Economics of Enterprise
4. Muscarella Inc. has the following balance sheet and income statement data:
Cash $ 14,000 Accounts payable $ 42,000
Receivables 70,000 Other current liabilities 28,000
Inventories 210,000 Total CL $ 70,000
Total CA $294,000 Long-term debt 70,000
Net fixed assets 126,000 Common equity 280,000
Total assets $420,000 Total liab. and equity $420,000
Sales $280,000
Net income $ 21,000
The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?
Cash $ 14,000 Accounts payable $ 42,000
Receivables 70,000 Other current liabilities 28,000
Inventories 210,000 Total CL $ 70,000
Total CA $294,000 Long-term debt 70,000
Net fixed assets 126,000 Common equity 280,000
Total assets $420,000 Total liab. and equity $420,000
Sales $280,000
Net income $ 21,000
The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?
