Organizational Behavior in a Negative or Positive Manner Essay

Organizational Behavior in a Negative or Positive Manner - Essay Example Organizational behavior helps to draw the organizational as well as industrial psychology. Key elements of organization’s behavior are people, structure, technology, environment and many other external elements. This is required for improving job performance, increasing job satisfaction, encouraging leadership, promoting innovation etc. Management will adopt various techniques to evaluate the performance, modify salary and compensation structure by using this method. There are positive and negative sides also. Benefits of organizational behavior are it is systematic study of attitude and action of people within organization. Managers can do proactive work in effective and efficient way by using this method etc. on the other hand managing work force diversity, improving quality and productivity through the existing manpower, responding to globalization etc are few challenges for using this method. Culture can be defined as such kind of behavior that is cultivated and transmitte d socially. It includes knowledge, values, religion, beliefs, relation, roles, meanings, concepts of the universe, material possessions etc. Different types of culture are pluralism, dualism, salad blow, pragmatic culture, normative culture, academic culture, club culture etc. For example it can be said that in pragmatic culture management will focus only on the customer’s satisfaction. In normative culture management of the company is strict and rigid about the company’s guidelines, rules and regulations. Three major types of culture are discussed below: Pluralism- In this culture smaller groups of individuals try to maintain their unique culture identity and their value, culture, identities are related to broader culture and tradition.

Sustainable Management Futures. Corporate Social Responsibility Assignment

Sustainable Management Futures. Corporate Social Responsibility - Assignment Example Even though, they acknowledge its efficiency, they still claim that free enterprise is inherently exploitive or unfair. Although opponents agree that free market is productive, they still argue that it produces the wrong commodities. For instance, they argue that free market produces too much of the luxury goods at the expense of public goods. The opposition to free market is not much of economic considerations as moral. For example, profit comes from the workers, but the workers are only entitled to a small pay. The profit rightfully belongs to workers but end up being denied the right. Although production from the free market can be efficient, the commodities produced do not fit what people desire. The inequalities resulting from the free market depict unethical moral standards. Individuals gain wealth unequally favouring inequality in the distribution of resources, which is morally wrong (Schumpeter, 1994 pp 68). It is in the free market that individuals dictate what people should consume and what they should earn. These considerations represent a moral consideration. These considerations are based on values and goals rather than the real working of an economy. Moral equality supports that no individual should be superior to the other and, therefore, no one can impose his value, desire, and belief on another. Since each person has his to follow his discretion in what he decides to produce or sell, there is no coercion. When there is no coercion, there is no moral wrong; hence, since free market is free from coercion, the market is then ethical. It is only in the free-market that commodities and services are worth what individuals believe they are worth. This makes individuals be willing to pay for a charge that they feel is worth the value of the commodity or service. Moral equality in a free market is emphasized by the equal right of all individuals being free to act without coercion. Involvement of government in a free economy is unnecessary and wrong ethi cally. When governments are involved in a market economy, there is coercion to doing certain things. For example, people are coerced to pay taxes to sustain inefficient bureaucracies. These violate the rights of individuals. People, who oppose free market and prefer power of government in making things done, impose their views on others, which indicate moral superiority on others. A free economy depicts a free society, where every person can live as per his own values and principles. Since people need to be free without being coerced to act, free market exists as the only market practicing ethics. Capitalism represents a system of interaction, which utilizes money as the medium of exchanging commodities and services (Nelson, 2010 pp 16). The system evolved from barter trade, where individuals traded items in terms of value. Just like a free market, there is no coercion in the trading of products and services. Each person has the discretion of producing or selling what he feels is ri ght for him. What makes capitalism a moral aspect is the presence of fair trade and involvement of voluntary transactions. Capitalism benefits the society through freeing up commerce, creation of wealth, and provides incentives necessary for technological advancements. Socialism usually exists in a parasitic association with capitalism (Mises, 2009 pp 51). It has to rely and work within a monetary system.

Hofstedes Cultural Dimensions in Australia

Hofstedes Cultural Dimensions in Australia The word culture stems from a Latin root that means the tilling of the soil, like in agriculture. In many modern languages the word is used in a figurative sense, with two meaning. The first meaning which is more commonly used is civilization, including education, manners, and arts and crafts and their products. It is the domain of a ministry of culture. The second meaning is derived from social anthropology, but in the past decades it has entered common parlance. It refers to the way people think, feel and act (Hofstede, G. Et al. 2011). According to Geert Hofstede, Culture is the collective programming of the human mind that distinguishes the members of one human group from those of another. Culture in this sense is a system of collectively held values (Geert Hofstede). Categories can refer to nations, regions within or across nations, ethnicities, religions, occupations, organizations, or the genders. He also spoke about culture as the software of the mind that guides us in our daily interactions. Another definition of culture according to Edgar Schein is, Culture is the deeper level of basic assumptions and benefits that are shared by members of an organisation that operate unconsciously and define in a basic taken for granted fashion an organisations view of its self and its environment (Edgar H. Schein. 2004). *According to Peterson (2004), Culture is the relatively steady set of inner values and beliefs commonly held by groups of persons in countries or regions and the visible impact those values and beliefs have on the populations outward behaviour and environment. Hence, culture includes many elements which include behaviour, knowledge, motives, ideas, and customs that differentiate the members of one group from another (Neelankavil and Rai, 2009). The aim of this essay is to discuss and evaluate the key dimensions of national culture of Australia using the cultural dimensions model developed by Hofstede which is based on an extensive study of how values in workplace are influenced by culture. A particular culture will be rated against five distinct categories. These dimensions are Power Distance, Uncertainty Avoidance, Individualism versus Collectivism, Masculinity versus Femininity and Long Term Orientation (Hofsted, 2001). I will also discuss some limitations and criticism of the Hofstede Model of Culture Dimensions, concluding my discussion with a brief summary at the end. National Culture of Australia: *Australia is a well developed country making marks in the world economy. Australian Culture echoes the nations exceptional unification of different cultures. Australias diverse culture and lifestyle reflect its liberal democratic traditions and values, geographic closeness to the Asia-Pacific region and the social and cultural influences of the millions of migrants who have settled in Australia since World War II. Australia is a product of a unique blend of established traditions and new influences. The countrys original inhabitants, the Aboriginal and Torres Strait Islander peoples, are the custodians of one of the worlds oldest continuing cultural traditions (Australiacountrybook. 2011). Australia culture has grown to be one of the most diverse cultures of the world. Heavily influenced by Anglo-Celtic origins the culture of Australia has also been shaped by multi-ethnic migration which has influenced all aspects of Australian life, including business, the arts, cooking, sense of humour and sporting tastes. Australian culture is based on the following principles: Productive diversity- All the people should uplift the cultural, social and economic values. And Cultural respect- All the people of Australia can practice their own religion and culture. Today Australia has a population of more than 21 million people (World News Network. 2011). Hofstedes Cultural Dimensions framework of Australia Power Distance: Power distance is the extent to which less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally. (Hofstede, 2001). This represents inequality (more versus less), but defined from below, not from above. It suggests that a societys level of inequality is endorsed by the followers as much as by the leaders (Geert Hofstede. (2009). In high power distance cultures the following things are observed. Those in authority openly demonstrate their rank. Subordinates are not given important work and expect clear guidance from above. Subordinates are expected to take the blame for things going wrong. The relationship between boss and subordinate is rarely close/personal. Politics is prone to totalitarianism. Class divisions within society are accepted and parents are more highly respected and corporal punishment is more common (Hofstede on Cultural Awareness. 2011). In comparison in low power distance cultures the following things are observed. Superiors treat subordinates with respect regardless of their rank. Subordinates are entrusted with important assignments and tasks. If things go wrong, the blame is generally shared or very often accepted by the superior due to it being their responsibility to manage. Managers may often socialise with their subordinates. Liberal democracies are the norm and societies lean more towards egalitarianism. Power Distance in Australia: Power Distance (PDI) in Australia is relatively low, with an index of 36, compared to the world average of 55. This is indicative of a greater equality between societal levels, including government, organizations, and even within families. This orientation reinforces a cooperative interaction across power levels and creates a more stable cultural environment (Australian Business Culture. 2011). A low power distance implies that power in Australia is spread out to everyone instead of being reserved to a few groups. This relatively low score implies that Australians believe that they are close to power, that they should have access to that power, that the powerful and the powerless should try to live in concert with each other, and that a hierarchy is an inequality of roles established for convenience (Samovar and Porter, 1991). Uncertainty Avoidance: Uncertainty Avoidance deals with a societys tolerance for uncertainty and ambiguity; it ultimately refers to mans search for truth. It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. Unstructured situations are novel, unknown, surprising, and different from usual. Uncertainty avoiding cultures try to minimize the possibility of such situations by strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute truth; there can only be one truth and we have it. People in uncertainty avoiding countries are also more emotional, and motivated by inner nervous energy. The opposite type, uncertainty accepting cultures, are more tolerant of opinions different from what they are used to; they try to have as few rules as possible, and on the philosophical and religious level they are relativist and allow many currents to flow side by side. People within thes e cultures are more phlegmatic and contemplative, and not expected by their environment to express emotions (Geert Hofstede. 2009). Some of the common traits found in countries that score highly on the uncertainty avoidance scale are as follows. They are usually countries/cultures with a long history, where the population is not multicultural, i.e. homogenous. Where risks, even calculated, are avoided in business and where new ideas and concepts are more difficult to introduce (EuroAfricaCentral Network Multicultural Communication Training. 2009). In comparison, some of the common traits found in countries that score low on the uncertainty avoidance scale are as follows. They are usually countries with a young history and where the population is much more diverse due to waves of immigration. Where risks are embraced as part of businesses and innovation and pushing boundaries is encouraged (Hofstede on Cultural Awareness 2011). Uncertainty Avoidance in Australia: The Geert Hofstede analysis shows the high level of individuality Australians hold dear. This is reinforced in their daily lives and must be considered when travelling and doing business in the Country. Privacy is considered the norm and attempts at personal ingratiation may meet with rebuff. Uncertainty avoidance is relatively low with a family centred culture and a stable society (Geert Hofstede. (2009). Australia received a score of 27 on the scale of Uncertainty Avoidance. This score implies that Australians do not like uncertainty, that they want stability for members, they strive for consensus, follow many rules, and tend to have more stress and anxiety (Samovar and Porter, 1991). Individualism/collectivism: According to Hofstede (2001), individualism/ collectivism refer to the extent to which individuals are integrated groups. *Individualism is the opposite of collectivism; together they form one of the dimensions of national cultures. Individualism stands for a society in which the ties between individuals are loose: everyone is expected to look after himself or herself and his or her immediate family only. People in individualistic cultures emphasize their success/achievements in job or private wealth and aiming up to reach more and/or a better job position (International Business Cultures. 2010). Collectivism stands for a society in which people from birth onwards are integrated into strong cohesive in groups, which throughout peoples lifetime continue to protect them in exchange for unquestioning loyalty. Alexandra Giroux. (2011). Highly individualist cultures believe that an individual is the most important unit. In this kind of culture people only take care of themselves and their immediate family. People are self orientated. Identity is based on individual. It is also a kind of a guilt culture. People make decisions on their individual needs. Emphasis is on individual initiative and achievement and everyone has a right to a private life (Ann P. Copeland. (2011). *In comparison, highly collective cultures believe that an individual is the most important unit. In this kind of culture people expect absolute loyalty to a group i.e. extended family. It is group oriented and decisions are based on what is best for the group. Identity is based on a social system and it is also a kind of shame culture. Dependence on organisation and institutions i.e. expects organisations/institutions/groups to take care of an individual. There is an emphasis on belonging and private life is invaded by institution and organisations to which one belongs to. Individualism in Australia: The Geert Hofstede analysis for Australia reflects the high level of individuality Australians hold dear. The Individualism (IDV) index for Australia is 90, the second highest score of any country in Hofstedes survey, behind the United States ranking of 91. This individuality is reinforced in Australians daily lives and must be considered when travelling and doing business in their Country. Privacy is considered the cultural norm and attempts at personal ingratiating may meet with rebuff (International Business Centre. (2008). Masculinity/Femininity: This dimension indicates the extent to which dominant values in a society tend to be assertive and look more interested in things than in concerning for people and the quality of life. Masculinity is the opposite of femininity; together, they form one of the dimensions of national cultures (International Business Cultures. (2010). According to Hofstede, Masculinity stands for a society in which social gender roles are clearly distinct: Men are supposed to be assertive, tough, and focused on material success; women are supposed to be more modest, tender, and concerned with the quality of life. Femininity stands for a society in which social gender roles overlap: Both men and women are supposed to be modest, tender, and concerned with the quality of life. (Hofstede (2001). Masculine cultures tend to be ambitious and need to excel. Members of these cultures have a tendency to polarize and consider big and fast to be beautiful. In workplaces employees emphasize their work to a great extent (live in order to work) and they admire achievers who accomplished their tasks. Feminine cultures consider quality of life and helping others to be very important (Hideyuki SUGAWARA. (2009). A High Masculinity ranking indicates the country experiences a high degree of gender differentiation. In these cultures, males dominate a significant portion of the society and power structure, with females being controlled by male domination. A Low Masculinity ranking indicates the country has a low level of differentiation and discrimination between genders. In these cultures, females are treated equally to males in all aspects of the society. Masculinity/Femininity in Australia: *The Geert Hofstede analysis for Australia in relation to masculinity reflects almost 58% population is male dominated which is just below half level at 48% compared to the rest of the world. This shows that females still are not considered equal to men in different fields of life; however, femininity equality rights are increasing rapidly in Australia according to some online statistics and reports. Long Term Orientation: Long-Term Orientation (LTO) focuses on the degree the society embraces, or does not embrace long-term devotion to traditional, forward thinking values. High Long-Term Orientation ranking indicates the country prescribes to the values of long-term commitments and respect for tradition. This is thought to support a strong work ethic where long-term rewards are expected as a result of todays hard work. However, business may take longer to develop in this society, particularly for an outsider. A Low Long-Term Orientation ranking indicates the country does not reinforce the concept of long-term, traditional orientation. In this culture, change can occur more rapidly as long-term traditions and commitments do not become impediments to change (International Business Centre. 2008). A long term orientation is characterized by persistence and perseverance, a respect for a hierarchy of the status of relationships, thrift, and a sense of shame. Countries include China; Hong Kong; Taiwan, Japan and India. A short-term orientation is marked by a sense of security and stability, a protection of ones reputation, a respect for tradition, and a reciprocation of greetings; favours and gifts. Countries include: Britain, Canada, the Philippines; Germany and Australia (Robert Paterson. (2003). High long term orientation cultures will show respect to traditions and longer work commitments, this is because one believe rewards will come following work even if it is not immediate. Long term rewards are expected for work done today. Low long term orientation societies do not confirm to traditions and long term rewards. Traditions and commitments in cultures with low long term orientation are likely to change with time (Confucius Institute. (2008). Long Term Orientation in Australia: Long term orientation in Australia is at 30% which is just below half level at 44% compared to the rest of the world. This shows that long term orientation is at a low level in Australia. This might also means that Australia leans more towards short term orientation than long term. Limitations of the Hofstede Model of Culture Dimensions: Even though Hofstedes model is generally accepted as the most comprehensive framework of national cultures values, its validity and its limitations have been extensively criticized. Certain criticism has been raised such as the following. Firstly, the averages of a country do not relate to individuals of that country. Even though this model has proven to be quite often correct when applied to the general population, one must be aware that not all individuals or even regions with subcultures fit into the mould. It is to be used as a guide to understanding the difference in culture between countries, not as law set in stone. As always, there are exceptions to the rule. Secondly, there is no certainty concerning the accuracy of the data. The data has been collected through questionnaires, which have their own limitations. In some cultures the context of the questions asked are as important as their content. Especially in group orientated cultures, individuals might tend to answer questions as if they were addressed to the group he/she belongs to. Lastly, the question is as to how up to date is the data considering factors such as how much does a country change over time, either by internal or external influences. Conclusion After discussing in detail, Hofstedes Cultural Dimensions framework for Australia, it can be seen that the power distance situation in Australia is relatively low. A low power distance implies that power in Australia is spread out to everyone instead of being reserved to a few groups. This also indicates that there is good equality between social level, including government, and organisations. This orientation reinforces a cooperative interaction across power levels and creates a more stable cultural environment. In relation to uncertainty avoidance, it is also relatively low with a family centred culture and a steady society. It can also be seen that Australians do not like uncertainty, that they want stability for members, they strive for consensus, follow many rules, and tend to have more stress and anxiety. It can also be witnessed that there has been a high level of individuality. The masculinity / femininity level seems to be balanced as well with both genders sharing equality in business and ethics. As for orientation, you can see both long and short term as Australia is a product of a unique blend of established traditions and new influences. Overall this portrays that Australia has come a long way from where it once stood has improved on many issues and fields heading towards a strong, solid and promising future in terms of culture.

Halloween And Christianity :: essays research papers

Halloween and Christianity It is often said that Halloween is not the "harmless" holiday it is thought to be, instead it is believed to be a pagan ritual which dates back to the ancient Celtic Druids. According to the article "Should Our Kids Celebrate Halloween?" in Catholic Digest Halloween's origin is very much Christian and American. Although the ancient Celts celebrated a minor festival on the 31st of October, it fell on that day because the Feast of All Saints or "All Hallows" falls on November 1st. During the 840s Pope Gregory IV gad All Saints Day to be celebrated everywhere. The day before the feast became known as "All Hallows Even" or "Hallowe'en". At the time, that day did not have any real significance. In the year of 998, the abbot of the monastery of Cluny in southern France, St. Odilo added a celebration on November 2nd called All Souls Day. The new celebration was a feast whose purpose was to recognize those in heaven and in purgatory. The tradition of dressing up in costumes on Halloween is derived from the Feast of All Souls Day in France. During the 14th and 15th centuries when Europe was hit by outbreaks of the bubonic plague, about half of its population was wiped out. Since life spans were greatly shortened because of the plague, Catholics began to focus on the after life. The number of Masses help largely increased and people of all social classes gathered to dress in different garments and lead lost spirits to the tomb in a daisy chain which became known as the "Dance of Death". Dressing up did not become part of Halloween until the creation of the British colonies in North America. During that period of time, Catholics had no legal rights in England. At times English Catholics attempted to resist. One such occasion was a plot to destroy King James I and his Parliament with gunpowder. The plan was ill-conceived and easily foiled when the guard of the powder, Guy Fawkes, was found and hung on November 5, 1605. The date became widely celebrated in England. Bands of revelers began to wear masks on that date

TKAM

A hero is a person who carries divergent qualities and abilities and is admired by others for his achievements and his brave deeds. In the book To Kill a Mockingbird by Harper Lee, Tactics Finch is exhibited as man who stuck with his morals, values, beliefs and ethics regarding all situations he was put through throughout the novel. He stood on his ground, making a luminous understanding to the people of Macomb that nothing would affect his thinking.Finch is a hero through his effectuation that are underscored right through the evolve and his abilities that were demonstrated and explained through other characters in the novel. Despite all Finch took the challenge of defending a â€Å"colored† man in the time of when slavery was abolished but black people were thought to be lower than white people. In life, one is taught and influenced by many of how to approach, and solve problems. One should be capable of standing strong in his/her beliefs despite what others might not say.Ta ctics Finch was a man who believed in what was right as cliche as it might sound he did not believe in the popular convictions because according to him success was not in winning in fact he did not mind loosing as long as he put his best in the situation. Often in life, one confronts situations where they have to make a decision, a decision that will lead them to the right path and having only one chance of doing so. Sometimes in failure was where one would find their victory.Tactics Finch, a successful lawyer in Macomb, Alabama, was authorized to take up the case of defending a black or â€Å"colored† man as referred in the novel regardless of the â€Å"usual Macomb disease† that conquered the whole town. Finch's kids, Jean Louis offered as Scout and Gem, were being bullied in school for their father defending a black man that is wrong no matter what the circumstances are. They were being questioned and they questioned their father about why Finch would defend a black when it is not accepted or considered good in the people of Macomb.Tactics Finch was a well respected man of the town, he always knew what to do and what not to do. When the kids questioned he simply answered â€Å"l am simply defending a Necrosis name's Tom Robinson† (Lee 75). Tactics Finch was a man of his words, once said he put all his strength to accomplish the task. His confidence and dignity made him a heroic figure for the people in town, in fact many people looked up to him. Once the word was spread of him taking Robinsons case, the citizens knew that he might Just have s chance of being Justified.On the day of the Robinson Trial, when Tactics entered the court room people stood up for him as respect. Reverend Sykes had even demanded for Scout to stand up when her father entered the courtroom. Considering the fact that Sykes was black, all the â€Å"colored† groups stood up as well. California, a black woman who worker in Finch's home, took Gem and Scout to h er lack people church where they were not disrespected or kicked out rather was welcomed warmly. If Tactics had denied to take up Robinsons case than the situation would have been different because than the kids could have been treated the complete opposite.However, the black people completely aware that Tactics definitely possessed the traits to handle such a complicated case in a such a difficult situation which Just made them respect him and his family more. Not Just taking up the Robinsons case made Finch a hero but it was throughout how he helped others in need. Finch was known as the â€Å"One-Shot Finch† as he was the best shooter in the whole town and got his work done in one gun-shot, no more than one. Finch had been successful in saving the town from a â€Å"mad dog† by shooting at it with one shot.This was a new side to Finch that his kids were not aware of, and when witnessed it, it left them stumped. Miss Maude, a woman who always spoke with a reason, seem ed to know Tactics pretty well, she told Gem and Finch, when younger Finch was known as the â€Å"01†² One Shot† (98 Lee). That had left the kids a bit confused since they were strangers to this news about their father. Miss Maude cleared their confusion that their father was capable of performing everything. Miss Maude told them that Tactics Finch was the best checker player and had knowledge in playing Jews harp.Tactics once said muff never really know a man until you stand in his shoes and walk around in them† and to Scout â€Å"As Tactics advised me to, I tried to climb into Gem's skin and walk in it† were two clear examples of showing how his kids followed his suggestions (Lee 57). Because for Gem and Scout he was a true hero in their eyes; they were so sure that Tactics Finch would give it his best regardless of how implicated the situation is. Their father was who they looked up to and knew that he was always correct.Not did he only defend a black mal e, but remained respectful to everyone in the town including Mrs.. Dubos. Mrs.. Dubos remained grouchy and mean all the time to everyone, Tactics always tried to ignore her ignorance and talk to her in a cheerful- attitude†Ã¢â‚¬ ¦ You look like a picture this evening†(Lee 100). Mrs.. Dubos was not the only one that Tactics tolerated, but his sister, Alexandra also gave him, the kids and mainly California a really difficult time. Tactics and the kids thought of California as their Emily member; however, Aunt Alexandra never appreciated their presence.Also, as Tactics said † †¦ Scaloppini's not leaving this house until she wants to. She's a faithful member of this family†¦ † (Lee 137). Tactics is a major influence to others especially when he is clearly highlighted that courage and believing in one self helps to overcome any obstacle that comes in ones way. Tactics stated in the book that you must fight despite you seeing chances of loosing more than winning. He did not believe racism existed as he was the one who went out in the courtroom to defend a black despite seeing no chances of him inning.He was well aware that no matter how strong his case would be racism would always come in the way and prevent from him wining; however, that did not discourage in fact it Just made him work harder on his case and presented exceptionally well which even left the audience in the courtroom stumped. Finch believed in equality, and no matter what race you are humanity should always exist no matter what the circumstances become. He fought till the very end, from risking his life for Robinson to making a solid and strong speech which was mind blowing end to the case.Finch protected his family well which he also took pride in; ergo, he never got egotistical about it because often he doubted himself not to be a good father despite him trying so hard to be a good. He was able to give his children advice on what they were struggling on. Finch was a strong, determined man who did not tolerate any kind of nonsense and only went through decisions of his own that he thought were correct in is eyes Often in life, one confronts situations where they have to make a decision, a decision that will lead them to the right path and having only one chance of doing so.

Finance: Free Cash Flow

inance COOPERATE FINANCE| Miss Afifa| | Assignment# 4| | UMAIR ASIF11 March 2013| You submitted this Assignment on Sun 10 Mar 2013 7:21 PM PDT. You got a score of 85. 00 out of 100. 00. You can attempt again, if you'd like. Top of Form Please read all questions and instructions carefully. Note that you only need to enter answers in terms of numbers and without any symbols (including $, %, commas, etc. ). Enter all dollars without decimals and all interest rates in percentage with up to two decimals. Read the syllabus for examples.The points for each question are listed in parentheses at the start of the question, and the total points for the entire assignment adds up to 100. You are strongly encouraged to use spreadsheets. Refer to Note on Sample Cash Flow Template. Question 1 (5 points) The project with the highest IRR is always the project with the highest NPV. Your Answer| | Score| Explanation| True| | | | False| ? | 5. 00| Correct. Try now to sort this out in different contexts,| Total| | 5. 00 / 5. 00| | Question Explanation This is all about the fundamental difference between IRR and NPV. Question 2 10 points) Ann Arbor is considering offering public bus service for free. Setting up the service will cost the city $0. 6M (where M stands for million). The useful life of the buses is 25 years. Annual maintenance of the buses would cost $50,000 per year and they would need a major overhaul in year 15 that will cost a total of $350,000. This overhaul is in addition to the annual maintenance. Annual operating costs will begin at $90,000 in year 1 and grow at 2% per year thereafter. By using the buses as advertisement space, the city will generate a revenue of $75,000 in year 1 and it will grow at 4% per year thereafter.Reduced parking requirements and other benefits generated by the project will save the city $100,000/year. The salvage value (price city can get in the future after maintenance) of the used buses in year 25 is expected to be $150,000. What is the NPV of the bus proposal? Ann Arbor does not pay taxes and the discount rate is 5%. (Again, all cash flows except initial investments happen at the end of the year. ) (You are strongly encouraged to use a spreadsheet. ) Your Answer| | Score| Explanation| -10223| | | | 29847| ? | 10. 00| Correct. You apparently have thought through issues. 31222| | | | 19323| | | | Total| | 10. 00 / 10. 00| | Question Explanation A real world problem with some simplifications in cash flows. Question 3 (5 points) Alpha Inc. has the following two projects that it is considering, and it wants to choose one. Project A has an investment outlay/expense today of $1,000, and its cash flows over the next three years are $500, $600, $700. Project B has an outlay of $2,000, and cash flows of $1,000, $1,200, and $1,400. Which project should Alpha choose? (You can assume no taxes. ) Your Answer| | Score| Explanation| Project A| | | |Does not matter; both are essentially the same| | | | Cannot make a choice based on information| ? | 5. 00| Correct. What information is missing? | Project B| | | | Total| | 5. 00 / 5. 00| | Question Explanation This question is probing your comfort level and understanding of decision making; and the most common pitfall we confront all the time. Question 4 (10 points) Mango Technology has the following three projects that it is considering; it can choose only one. Project A has an investment outlay/expense today of $100M, and its cash flows over the next three years are $20M, $40M, $70M.Project B has an outlay of $110M, and cash flows of $40M, $80M, $20M; Project C has an outlay of $120M and cash flows of $0M, $20M, and $142M. Which project should the company choose if the cost of capital for similar projects is 6%? Your Answer| | Score| Explanation| Project B| | | | Project C| | | | Do not have enough information| ? | 0. 00| You do have enough information. Try again. | Project A| | | | Total| | 0. 00 / 10. 00| | Question Explanation This is an exercise in testi ng your knowledge pitted against our tendency to choose the incorrect criterion for making decisions.Question 5 (5 points) To get from net operating profits after tax (NOPAT) to free cash flows (FCF), you need to ADD back depreciation, SUBTRACT capital expenditures and ADD net working capital (i. e. , current operating assets – current operating liabilities). (Free cash flow is another name for cash flows. ) Your Answer| | Score| Explanation| False. | ? | 5. 00| Correct. You understand the nature of â€Å"capital. â€Å"| True. | | | | Total| | 5. 00 / 5. 00| | Question Explanation This is an important issue that makes you focus on differences between stocks and flows. Question 6 5 points) Last year your firm had revenue of $20 million, cost of goods sold (COGS) of $12 million, Selling, General, ; Administration costs (SG;A) of $2 million, Account Receivables (AR) of $6 million, Account Payables (AP) of $4 million and Inventory of $4 million. What will be the free cash flow next/this year if you boost revenue 6% and AR 12%, while holding COGS growth to 3% and everything else remains the same as last year? (Assume no taxes and no new capital expenditures. ) (You are encouraged to use a spreadsheet even for this specific type of question. ) Your Answer| | Score| Explanation| 4170000| ? 0. 00| Review the basics; see template and references. | 6120000| | | | 7240000| | | | 5250000| | | | Total| | 0. 00 / 5. 00| | Question Explanation Cash flow estimation for a specific year. Question 7 (15 points) Rain in Spain (RiS) is a manufacturer of high quality raincoats. Currently, the retail price of each raincoat is $70 and is produced at a cost of $45. This past year, they sold 50,000 raincoats and they expect this number to grow each year by 6% each year for the next 10 years. The operations team at RiS recently brought to your attention a new technology that could lower the cost of production.This technology requires an upfront fixed investment of $2,000,000 a nd has the capacity to produce up to 90,000 raincoats per year at a 12% lower cost per unit. There is no increased working capital need due to this new technology, and no value of the machine/technology after 10 years. What is the NPV of investing in the new technology? Ignore taxes and assume a discount rate of 14%. (Hint: Think incrementally; the difference between the world without and with this new technology! Also, ignoring taxes will be a big help if you think right. ) (Enter just the number without the $ sign or a comma; round off decimals. (You are strongly encouraged to use a spreadsheet. ) Answer for Question 7 You entered: Your Answer| | Score| Explanation| -150683| ? | 15. 00| Correct. You exhibit a clear understanding of how to conduct incremental analysis. | Total| | 15. 00 / 15. 00| | Question Explanation A probing question that is all about the creation of value; incremental value. Question 8 (15 points) Fresh off the excitement of the 2012 London Olympic Games, you decide that you want your firm to take advantage of the profits to be made for the 2016 games in Rio de Jeneiro. To do so you plan to open a factory in Brazil.After examining the idea, your CFO projects revenues next year (2013) to be $15 million and costs to be $9 million. Both of these are expected to grow at a rate of 25% per year as the excitement for the games builds. Your firms faces a 35% tax rate, a 14% discount rate and you can depreciate your new investment using the straight line method over the four years leading up to the games, at which point the value of the venture moving forward will be $5 million. (This $5 million is the terminal value that is in year 4 (that is, 2016) dollars and is the PV of all cash flows year 5 and beyond. The capital expenditure of this project is $12M. What is the NPV of the project? Assume that you have no significant working capital costs. (Enter just the number without the $ sign or a comma; round off decimals. ) (You are strongly encourag ed to use a spreadsheet. ) Answer for Question 8 You entered: Your Answer| | Score| Explanation| 9815100| ? | 15. 00| Correct. You know how to set up and execute a valuation exercise, albeit a simplified one. | Total| | 15. 00 / 15. 00| | Question Explanation A valuation exercise that includes most of the elements of a real world situation. Question 9 15 points) Starbuck's is considering opening another store in Chicago. A store is expected to have a long economic life, but the valuation horizon is 7 years. The store in Chicago is expected to create revenues of $3M in the first year and they are likely to grow at 2% per year thereafter. The cost of goods sold are $1. 2M in year 1 and they are also expected to grow at 2% per year thereafter. Selling and administration costs are likely to be $0. 5M in the first year and then grow at 5%. The tax rate is 35%. Starbucks is so good at managing its stores that working capital increases can be assumed to be negligible.But Starbucks will hav e to invest $3. 5M in purchasing a store (with land). The good news is that this outlay can be depreciated straight line over 7 years. Also, Starbucks has estimated that the terminal value in year 7 dollars will be $10M. This value is the value of all cash flows in year 8 and beyond. What is the NPV of opening this new store if the appropriate discount rate is 7. 75%? (Again, all cash flows except initial investments happen at the end of the year. Enter just the number without the $ sign or a comma; round off decimals. )(You are strongly encouraged to use a spreadsheet. ) Answer for Question 9You entered: Your Answer| | Score| Explanation| 7879584| ? | 15. 00| Correct. You are now building spreadsheet models. | Total| | 15. 00 / 15. 00| | Question Explanation It is time to do a more complete project analysis. Strongly encourage use of spreadsheets to build cashflows, though remember that you can do it step by step as well. Question 10 (15 points) Big Blue Granite (BBG) needs to purc hase a new saw for creating their top quality countertops. Saw A costs $250,000 with $4,000 of annual maintenance costs for the first year that will increase by 5% each year for the 7-year life of the saw.Saw B costs $150,000 with $10,000 of annual maintenance costs for the first year that will increase by 15% each year for the 4-year life of the saw. Which saw should BBG choose? What is the annualized cost of this choice? Assume a discount rate of 12%, and ignore all taxes. Your Answer| | Score| Explanation| (B, 46794)| | | | (B, 49983)| | | | (A, 59331)| ? | 15. 00| Correct. You know how to figure out the true annualized cost. | (A, 40367)| | | | (A, 38682)| | | | (B, 61624)| | | | Total| | 15. 00 / 15. 00| |