Describe how technology is changing the face of businesses today.

Assignment 3: How is Technology Changing the Face of Business Today?

 

M1 ASSIGNMENT 3 DISCUSSION

 

 

 

 

Assignment 3: How is Technology Changing the Face of Business Today?

 

The traditional retail model has focused on finding high-margin, high-volume products or services because limited space means reduced space inventory. For example, organizations such as Walmart select the biggest hits from the broadest genres, called the “short head.” The short head means Walmart will only carry a select mix of country, pop, and rock that is calculated to provide the greatest cost/benefit. The business model of Amazon is different. Amazon provides the short head but also provides the “long tail” of more than 100,000 different audio selections. The competition for customers between the Walmart and Amazon marketplace is profoundly changing the face of retail business today.

 

Using the assigned reading and the Argosy University online library resources, find at least three scholarly articles that address similar current trends related to e-business and how e-business is changing the face of businesses today.

 

Using your company or a real-world example from your research, respond to the following:

 

Describe how technology is changing the face of businesses today.Describe the most critical business processes that utilize information systems in your selected company.Explain how IT makes the company’s business processes faster, cheaper, more accurate, and customer-savvy than that of competitors.Cite at least three sources found in your online library research.

 

Give reasons and examples from your research to support your responses.

 

Write 3–5-page paper in Word format. Be sure to use and cite the module readings. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M1_A3.doc. For example, if your name is John Smith, your document will be named SmithJ_M1_A3.doc.

 

By Week 1, Day 4, post your assignment to the appropriate Discussion Area.

 

By Week 1, Day 7, review and comment on at least two peers’ responses. Consider the following:

 

Examine if their examples adequately demonstrate how technology is changing the way businesses work today and explain why or why not.Assignment 3 Grading Criteria

 

Maximum Points

 

Explained how IT makes the selected company’s business processes faster, cheaper, more accurate, and customer savvy than that of competitors.

 

40

 

Describe how technology is changing the face of businesses today.

 

20

 

Describe the most critical business processes that utilize information systems in your selected company.

 

20

 

Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation.

 

20

 

Total:

 

100

Which one of the following is not considered to be a generally recognized type of market efficiency?

Review Test Submission: Quiz 6
Instructions This quiz consist of 20 multiple choice questions. The first 10 questions cover the material in Chapter 11. The second 10 questions cover the material in Chapter 12. Be sure you are in the correct Chapter when you take the quiz.

•  Question 1
An order that remains in effect until the end of the day is called a:

•  Question 2
The price for which the owner is willing to sell the security is called the:

•  Question 3
If an investor feels the price of a stock will decline in the future, which trade should the investor undertake?

•  Question 4
An agreement whereby an investment banker tries to sell securities of an issuing corporation, but assumes no risk if the flotation is unsuccessful is called a:

•  Question 5
Commercial banks were for many years prohibited from full-fledged investment banking by the:

•  Question 6
Sales of securities that the seller does not own is called a:

•  Question 7
___________________ is the maximum purchase price or minimum selling price specified by an investor.

•  Question 8
A market whereby large institutional investors arrange purchases and sales of securities among themselves without the benefit of a broker or dealer is referred to as the:

•  Question 9
A contract that gives the owner the option or choice of selling a particular good at a specified price on or before a specified date is called a (n):

•  Question 10
A contract that obligates the owner to purchase an underlying asset at a specified price on a specified day is a (n) ____________ contract.

•  Question 11
Which one of the following is not considered to be a generally recognized type of market efficiency?

•  Question 12
Which of the following is not required to compute the standard deviation of a two-stock portfolio?

•  Question 13
The market portfolio would have a beta of:

•  Question 14
Variations in a firm’s tax rate and tax-related charges over time due to changing tax laws and regulations is called:

•  Question 15
In comparing the deviations of returns, which one of the following assets has historically had the largest standard deviation of annual returns?

•  Question 16
The risk cause by variations in income before taxes over time because fixed interest expenses do not change when operating income rises or falls is called:

•  Question 17
The correlation between the return on the risk-free asset and the return on a risky asset is always:

•  Question 18
If the _____________ of a stock is known, an investor can use the security market line to determine the expected return on that stock.

•  Question 19
Which one of the following assets has historically had the highest average annual return?

•  Question 20
The risk cause by variations in interest expense unrelated to sales or operating income arising from changes in the level of interest rates in the economy is called:

What is the amount of its credit carryover and the last year to which the carryover could be used?

1. Simon purchased 1,000 shares of ABC stock for $8,000 on April 4. On March 1 he had sold 1,500 shares of ABC stock for $9,000 that he had purchased three months earlier for $15,000. What is Simon’s realized and recognized loss, respectively, on the March 1 stock sale? (Points : 5)
$6,000, $6000
$6,000, 0
$6,000, $4,000
$4,000, $6,000
None of the above

2. Cal exchanges office furniture (fair market value = $100,000; adjusted basis = $90,000) and a business auto (fair market value = $10,000; adjusted basis = $6,000) for fire retardant filing cabinets (fair market value = $110,000; adjusted basis = $80,000). How much gain or loss does Cal recognize on the exchange?
(Points : 5)
0
$4,000 gain on auto
$10,000 gain on furniture
$14,000 total gain
None of the above

3. Cloud Corporation has a taxable income of $100,000 in 2011 along with a $30,000 general business credit. What is the amount of its credit carryover and the last year to which the carryover could be used?
(Points : 5)
$70,000, 2031
$7,750, 2031
$7,750, 2016
$13,125, 2031

4. Which of the following is not a characteristic of a like-kind exchange?
(Points : 5)
The holding period for like-kind property includes the holding period of the property surrendered.
Receipt of boot can cause gain recognition up to the gain realized.
Business realty can be exchanged for business personalty.
Personal-use assets do not qualify for like-kind exchanges.
All are like-kind characteristics.

5. A large corporation had a net long-term capital loss in 2011 and net operating loss in 2011. What are the earliest year(s) to which these losses can be carried?
(Points : 5)
2008 for both
2007 for both
2009 for the capital loss; 2007 for the NOL
2008 for the capital loss; 2009 for the NOL

6. Which of the following would not be considered an involuntary conversion?
(Points : 5)
The theft of jewelry
Sale of property in a flood zone
Condemnation of a building for a highway
Destruction of a home by a tornado
All are involuntary conversions

7. Coho is a corporation that has $1,100,000 of gross revenue and $1,021,000 of deductible expenses? What is its income tax liability?
(Points : 5)
$79,000
$30,494
$26,860
$15,110
None of the above

How much will she have in her account after five years?

Review Test Submission: Quiz 4
Instructions This quiz consist of 10 multiple choice questions and covers the material in Chapter 9. Be sure you are in Chapter 9 when you take the quiz.

•  Question 1
Jill Clinton puts $1,000 in a savings passbook that pays 4% compounded quarterly. How much will she have in her account after five years?

•  Question 2
What would be the future value of a loan of $1,000 for two years if the bank offered a 10% interest rate compounded semiannually?

•  Question 3
Consolidated Freightways is financing a new truck with a loan of $60,000 to be repaid in six annual end-of-year installments of $13,375. What annual interest rate is Consolidated Freightways paying?

•  Question 4
The future value of $100 received today and deposited at 6 percent for four years is

•  Question 5
For positive interest rates, the future value interest factor is

•  Question 6
When compounding more than once a year, the true opportunity costs measure of the interest rate is indicated by the:

•  Question 7
In future value or present value problems, unless stated otherwise, cash flows are assumed to be

•  Question 8
For positive interest rates, the present value interest factor is

•  Question 9
An annuity with an infinite life is called a (n)

•  Question 10
For a given interest rate, as the length of time until receipt of the funds increases, the present value interest factor

what is the growth rate it can support?

You are provided the following working capital information for the Ridge Company:
Ridge Company
Account $
Inventory     12.890   47.223
Accounts receivable     12.800   37.499
Accounts payable     12.670   46.417
Net sales   124.589
Cost of goods sold     99.630   38.305
Cash conversion cycle: What is the cash conversion cycle for Ridge Company?
83.5 days
46.4 days
38.3 days
129.9 days
Payout and retention ratio: Drekker, Inc., has revenues of $312,766, costs of $220,222, interest payment of $31,477, and a tax rate of 34 percent. It paid dividends of $34,125 to shareholders. Find the firm’s dividend payout ratio and retention ratio.
85%, 15%
15%, 85%
55%, 45%
45%, 55%
M&M Proposition 1: Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.
If Dynamo wishes to change its capital structure from 75 percent to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they issue?
 $              321
 $              375
 $              225
 $              600
Multiple Analysis: Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.
What is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.
$1,315 million
$1,334 million
$453.6 million
$1,787 million
External financing needed: Jockey Company has total assets worth $4,417,665. At year-end it will have net income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no external financing, what is the growth rate it can support?
27.3%
25.1%
32.9%
30.3%
How firms estimate their cost of capital: The WACC for a firm is 13.00 percent. You know that the firm’s cost of debt capital is 10 percent and the cost of equity capital is 20%. What proportion of the firm is financed with debt?
50%
70%
30%
33%
The cost of equity: Gangland Water Guns, Inc., is expected to pay a dividend of $2.10 one year from today. If the firm’s growth in dividends is expected to remain at a flat 3 percent forever, then what is the cost of equity capital for Gangland if the price of its common shares is currently $17.50?
15.36%
15.00%
14.65%
12.00%
Present value: Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to nearest dollar.)
 $         19.444
 $         22.680
 $         26.454
 $         16.670
PV of multiple cash flows: Ferris, Inc., has borrowed from their bank at a rate of 8 percent and will repay the loan with interest over the next five years. Their scheduled payments, starting at the end of the year are as follows—$450,000, $560,000, $750,000, $875,000, and $1,000,000. What is the present value of these payments? (Round to the nearest dollar.)
 $    2.615.432
 $    2.815.885
 $    2.431.224
 $    2.735.200
PV of multiple cash flows: Ajax Corp. is expecting the following cash flows—$79,000, $112,000, $164,000, $84,000, and $242,000—over the next five years. If the company’s opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)
 $       414.322
 $       429.560
 $       477.235
 $       480.906
Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)
16%
32%
40%
12%
Bond price: Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company’s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)
              1.014
              1.066
                 972
                 923
PV of dividends: Next year Jenkins Traders will pay a dividend of $3.00. It expects to increase its dividend by $0.25 in each of the following three years. If their required rate of return is 14 percent, what is the present value of their dividends over the next four years?
11.63
9.72
13.5
12.5
Capital rationing. TuleTime Comics is considering a new show that will generate annual cash flows of $100,000 into the infinite future. If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project?
0.11
0.9
1.9
1.11
PV of multiple cash flows: Ajax Corp. is expecting the following cash flows—$79,000, $112,000, $164,000, $84,000, and $242,000—over the next five years. If the company’s opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)
$414.322
$429.560
$477.235
$480.906
Future value of an annuity: Jayadev Athreya has started on his first job. He plans to start saving for retirement early. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years? (Round to the nearest dollar.)
$3.594.524
$2.667.904
$1.745.600
$5.233.442
Teakap, Inc., has current assets of $ 1,456,312 and total assets of $4,812,369 for the year ending September 30, 2006. It also has current liabilities of $1,041,012, common equity of $1,500,000, and retained earnings of $1,468,347. How much long-term debt does the firm have?
$803.010
$2.123.612
$1.844.022

The Board of Governors of the Federal Reserve System considers bankers’ acceptances used in international trade to be:

Review Test Submission: Quiz 3
Instructions This quiz consist of 20 multiple choice questions. The first 10 questions cover the material in Chapter 5. The second 10 questions cover the material in Chapter 6. Be sure you are in the correct Chapter when you take the quiz.

•  Question 1
The federal government pays for the services it provides primarily through:

•  Question 2
In our financial system, the money multiplier:

•  Question 3
U.S. debt management is generally designed to:

•  Question 4
In fall 2008, the U.S. Congress and President George W. Bush responded to the financial crisis with the passage of the _____________ in early October of that year.

•  Question 5
Who made the following famous statement: “The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

•  Question 6
Budgetary deficits always have the effect of:

•  Question 7
Special Drawing Rights are a form of reserve asset or paper gold created by the:

•  Question 8
The government entity responsible for fiscal policy is:

•  Question 9
The monetary base:

•  Question 10
Bank reserves are increased when the Treasury:

•  Question 11
The benefits of specialization of effort among nations depend primarily upon:

•  Question 12
A statement by a bank guaranteeing acceptance and payment of a draft up to a stated amount is called a (n)

•  Question 13
The firm that enters into a futures contract with respect to foreign exchange does so:

•  Question 14
The _______ includes ALL international transactions.

•  Question 15
The Board of Governors of the Federal Reserve System considers bankers’ acceptances used in international trade to be:

•  Question 16
The manager of the foreign exchange office of a multinational corporation could, in anticipation of a decline in the value of currency of one of its foreign accounts:

•  Question 17
The traveler’s letter of credit is usually used by:

•  Question 18
An importer will generally try to avoid making payment for a purchase before the goods are actually shipped by:

•  Question 19
In purchasing a claim to foreign exchange:

•  Question 20
A draft that is not accompanied by any special documents and generally used when the exporter has confidence in the importer’s ability to meet the draft when presented is known as:

The likelihood that borrowers are ill and would not be able to make interest and principal payments is an example of:

Review Test Submission: Quiz 2
Instructions This quiz consist of 20 multiple choice questions. The first 10 questions cover the material in Chapter 3. The second 10 questions cover the material in Chapter 4. Be sure you are in the correct Chapter when you take the quiz.

•  Question 1
An organization that sells or markets new securities issued by businesses to individuals and institutional investors is called a (n)

•  Question 2
The item on the liabilities and equity section of a bank’s balance sheet that represents the largest proportion of a typical bank’s assets is:

•  Question 3
During the colonial period in the nation’s history, banks depended on:

•  Question 4
The adequacy of capital for commercial banks as measured by regulatory authorities is:

•  Question 5
Our system of national banks:

•  Question 6
The holding-company device to control two or more commercial banks:

•  Question 7
The principal assets of banks do not include:

•  Question 8
An organization that sells shares in their firms to individuals and others and invests the proceeds in corporate and government securities is called a (n)

•  Question 9
Legislation that provided for the separation of commercial banking and investment banking activities in the United States is called

•  Question 10
The likelihood that borrowers are ill and would not be able to make interest and principal payments is an example of:

•  Question 11
The dynamic actions of the Federal Reserve System:

•  Question 12
The ___________________ conducts monetary policy for the twelve European countries that formed the European Monetary Union and adopted the euro as their common currency at the beginning of 1999.

•  Question 13
A central bank serves the nation:

•  Question 14
The __________________, passed in 1968, requires the clear explanation of consumer credit costs and garnishment procedures (taking wages or property by legal means) and prohibits overly high-priced credit transactions.

•  Question 15
The Federal Open Market Committee:

•  Question 16
The Board of Governors:

•  Question 17
The Federal Open Market Committee:

•  Question 18
____________________________ prohibits discrimination in the granting of credit on the basis of sex, marital status, race, color, religion, national origin, age, or receipt of public assistance.

•  Question 19
The Board of Governors publishes ________________, which carries articles of current interest and offers a convenient source of the statistics compiled by the Fed.

•  Question 20
The Truth in Lending Act:

Money market funds are not included in which of the following definitions of the money supply?

Review Test Submission: Quiz 1

•  Question 1
Finance has its origins in:

•  Question 2
Successful businesses typically progress through a series of life-cycle stages—from the idea stage to exiting the business; these five stages include the:

•  Question 3
The theory of ___________________ implies that information is quickly embedded in prices making it difficult for investors to “beat the market.”

•  Question 4
Two risk assets can be combined to lower the overall risk of a portfolio. This principle is commonly referred to as

•  Question 5
____________________ provide the record-keeping mechanism for showing ownership of the financial instruments used in the flow of financial funds between savers and borrowers and record revenues, expenses, and profitability of organizations that produce and exchange goods and services.

•  Question 6
Maximizing _____________________ is accomplished through effective financial planning and analysis, asset management, and the acquisition of financial capital.

•  Question 7
Finance is:

•  Question 8
_______________ is the study of how individuals prepare for financial emergencies, protect against premature death and the loss of property, and accumulate wealth over time.

•  Question 9
The primary securities markets are

•  Question 10
The primary goal of the financial manager of a profit-seeking organization is to:

•  Question 11
_______________________ is the sum of an individual’s money, real assets, and financial assets or claims against others less the individual’s debt obligations.

•  Question 12
The three functions of money are:

•  Question 13
The price level of goods and services may be expressed as the ratio of _____________.

•  Question 14
The only paper money of significance in the economy today is:

•  Question 15
Money market funds are not included in which of the following definitions of the money supply?

•  Question 16
Which of the following are not included in M1?

•  Question 17
When it is a means of paying for goods and services and discharging debts, money is referred to as a:

•  Question 18
_____________ is a short-term debt security sold by a business firm or financial institution to another business or institution where the seller agrees to buy back the security at a specified price and date.

•  Question 19
Token coins are:
coins containing metal of less value than their stated value

•  Question 20
Paper money popularly called continentals was issued by the U.S. government to help finance which of the following wars?

Determine the annual unit sales volume at which Martinez Company would be indifferent between the two manufacturing methods.

Determine the annual unit sales volume at which Martinez Company would be indifferent between the two manufacturing methods.

Martinez Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows.

 

  Capital-Intensive Labor-Intensive
Direct materials $5 per unit $5.50 per unit
Direct labor $6 per unit $8.00 per unit
Variable overhead $3 per unit $4.50 per unit
Fixed manufacturing costs $2,508,000 $1,538,000

 

Martinez’s market research department has recommended an introductory unit sales price of $30. The incremental selling expenses are estimated to be $502,000 annually plus $2 for each unit sold, regardless of manufacturing method.

 

Instructions

 

With the class divided into groups, answer the following.

 

(a) Calculate the estimated break-even point in annual unit sales of the new product if Martinez Company uses the:

1. Capital-intensive manufacturing method.
2. Labor-intensive manufacturing method.
(b) Determine the annual unit sales volume at which Martinez Company would be indifferent between the two manufacturing methods.

 

 

 

(c) Explain the circumstance under which Martinez should employ each of the two manufacturing methods.

(CMA adapted)

What is this project’s internal rate of return?

A. Consider the project with the following expected cash flows:
Year Cash flow
0 -$400,000
1 $100,000
2 $120,000
3 $850,000

• If the discount rate is 0%, what is the project’s net present value?
• If the discount rate is 2%, what is the project’s net present value?
• If the discount rate is 6%, what is the project’s net present value?
• If the discount rate is 11%, what is the project’s net present value?
• With a cost of capital of 5%, what is this project’s modified internal rate of return?

Now draw (for yourself) a chart where the discount rate is on the horizontal axis (the “x” axis) and the net present value on the vertical axis (the Y axis). Plot the net present value of the project as a function of the discount rate by dots for the four discount rates. connect the four points using a free hand ‘smooth’ curve. The curve intersects the horizontal line at a particular discount rate. What is this discount rate at which the graph intersects the horizontal axis?

[ Look at the graph you draw and write a short paragraph stating what the graph ‘shows”]..

b. Consider a project with the expected cash flows:

Year Cash flow
0 -$815,000
1 $141,000
2 $320,000
3 $440,000
•What is this project’s internal rate of return?
•If the discount rate is 1%, what is this project’s net present value?
• If the discount rate is 4%, what is this project’s net present value?
• If the discount rate is 10%, what is this project’s net present value?
• If the discount rate is 18%, what is this project’s net present value?

Now draw (for yourself) a chart where the discount rate is on the horizontal axis (the “x” axis) and the net present value on the vertical axis (the Y axis). Plot the net present value of the project as a function of the discount rate by dots for the four discount rates. connect the four points using a free hand ‘smooth’ curve. The curve intersects the horizontal line at a particular discount rate. What is this discount rate at which the graph intersects the horizontal axis?

[ Observe the graph and write a short paragraph stating what the graph ‘shows]

c. A project requiring a $4.2 million investment has a profitability index of 0.94. What is its net present value? (Remember: Profitability Index is defined as Present Value of the proceeds divided by the initial investment)