Wk 1 The Utah Mining Corporation Case Study Questions

1.Balance Sheet Discussion Question 1Review the fictitious company Balance Sheet in Chapter 2: Table 2.1 in the textbook and Income Statement in Chapter 2: Table 2.2 based on a fictitious company. What do you believe the significance of each of these is for financial management? Why did you answer the way you did?2.Financial Manager Question 2Suppose you were the financial manager of a not-for-profit business (a not-for-profit hospital, perhaps).What kinds of goals do you think would be appropriate? Why?Return on investment What is the relationship between return on investment and return on assets?Mini Case: Planning for Growth at SS Air” Question 1Review “Mini Case: Planning for Growth at SS Air” in your textbook on page 129, also found at the end of Chapter 4 in your textbook. Then, answer the following questions: Calculate the internal growth rate and sustainable growth rate for SS Air. What do these numbers mean? How do you know? SS Air is planning for a growth rate of 12% next year. Calculate the EFN for the company assuming the company is operating at full capacity. Can the company’s sales increase at this growth rate? Explain your reasoning. Most assets can be increased as a percentage of sales. For instance, cash can be increased by any amount. However, fixed assets must be increased in specific amounts because it is impossible, as a practical matter, to buy part of a new plant or machine. In this case, a company has a “staircase” or “lumpy” fixed cost structure. Assume SS Air is currently producing at 100% capacity. As a result, to increase production, the company must set up an entirely new line at a cost of $5,000,000. Calculate the new EFN with this assumption. What does this imply about capacity utilization for the company next year?Long-Term Financial Planning Question 2Review the following video about long term and short term planning.Video Source:Nedoshepa, A. (2016, July 7). Long term and short term planning animated [Video]. YouTube. As you begin your career, what are two things that you can do to prepare for your personal, long-term financial goals? What is one short-term financial goal you have for yourself as you begin your career? What is one long-term financial goal you have for yourself as you begin your career?1.TMCC Discussion Question 1 A feature of this particular deal is that TMCC has the right to buy back the securities on the anniversary date at a price established when the securities were issued. What impact does this feature have on the desirability of this security as an investment?2.Mini Case: The MBA Decision” Discussion Question 2Review “Mini Case: The MBA Decision” in your textbook on page 200, or at the end of Chapter 6 in your textbook. Then, answer the following questions: What other, perhaps non-quantifiable, factors affect Ben’s decision to get an MBA? Assuming all salaries are paid at the end of each year, what is the best option for Ben—from a strictly financial standpoint? Ben believes that the appropriate analysis is to calculate the future value of each option. How would you evaluate this statement? What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position? Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 5.4%. How would this affect his decision? What are some of the reasons that foreign manufacturers of products as diverse as automobiles, cell phones, and tires might arrive at the same conclusion to build plants in the United States?Graphic OrganizersFree Graphic Organizer Templates8 Editable Graphic Organizer Templates for Google AppsTips for Designing a Graphic Organizer:A graphic organizer, also known as a knowledge map, concept map, cognitive organizer, advance organizer, or concept diagram is a tool that uses visual symbols to express knowledge and concepts through relationships between them. The main purpose of a graphic organizer is to provide a visual aid to facilitate learning.Examples of Graphic Organizers:T-ChartsConcept MapsVenn DiagramFlow Charts in Google Slides1.Dividend Discussion Question 1 -Four years ago, Bling Diamond, Inc., paid a dividend of $1.65 per share. The company paid a dividend of $2.10 per share yesterday. Dividends will grow over the next five years at the same rate they grew over the last four years. Thereafter, dividends will grow at 5% per year. What is the IRR for the gold mine? The Utah Mining Corporation requires a return of 13% on such projects. Should the mine be opened?1.Capital Markets Discussion Question 1After you graduate from college and start your professional career, you will need to consider investing for your retirement. A 401(k) plan is a retirement plan offered by many companies. Such plans are tax-deferred savings vehicles, meaning that any deposits you make into the plan are deducted from your current pretax income, so no current taxes are paid on the money. For example, assume your salary will be $50,000 per year. If you contribute $3,000 to the 401(k) plan, you will pay taxes on only $47,000 in income. There are also no taxes paid on any capital gains or income while you are invested in the plan, but you do pay taxes when you withdraw money at retirement. As is fairly common, the company also has a 5% match. This means that the company will match your contribution up to 5% of your salary, but you must contribute the amount that you want matched, up to the maximum.Consider the following questions based on the history of capital markets. What advantages do mutual funds offer compared to the company stock?1.ABC Company Discussion Question 1ABC Company has hired you to explain the criteria for assessing the performance of a security, specifically expected rate of return, standard deviation of rate of return, and coefficient of variation (CV). They also want you to show how, by forming a portfolio, an instrument can be generated that has properties better than each of its constituents in terms of the standard deviation of rate of return and CV. How would you explain and show this information to ABC Company?