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2.5 Assignment: Water and Sewer Utility Marcel Melo
Embry-Riddle Aeronautical University
HROM 510 – Enterprise Risk Management
Professor Chris Mandel
October 30, 2022
2
In the video that we watched about a water and sewer provider, there was a debate on whether System Development Fees (SDF) or System Improvement Charges (SIC) are better for collecting capitol charges over time. The impact of SDF’s versus SIC’s weigh both on the company value and the net present value. To understand what would be more beneficial we must
first understand the difference between present value and net present value. According to Investopedia, “Present value (PV) is the current value of a future sum of money or stream of cash
flow given a specified rate of return. Meanwhile, net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of
time” (Beers, 2022). This means that Present Value (PV) is what you’ll require to earn a certain amount of money in the near future, but it’s discounted by a rate of return. At the same time, Net Present Value (NPV) is used to decide how profitable your project might be over time, so it uses the present value cash outflows and inflows over time. If we were to look at SDF’s and SIC’s like stocks with equal basis points to their discount
rates, the SDF’s would be a volaille stock with the potential to yield more capitol while the SIC would be a more consistent stock with potentially less capitol over the years. If we view the difference between the two in this manner, then we can assume the risk associated between the two options. Since risk is the basis for most Enterprise Risk Management (ERM) organizations, it would be safe to assume the decision-maker’s assessment would be based upon the highest probability of financial loss. Therefore, the organization’s decision maker would have to consider several risk-based scenarios based on market analysis in order to determine the best ERM strategy. While it might seem like a straightforward decision to go with the more stable SDF’s, the decision maker of this organization might need to ratify a strategic plan developed
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Related Questions
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HW 5 Quadratic Functions and Optimization in Quadratic Models: Problem 14
(3 points)
Results for this submission
Entered
Answer Preview
24.14
24.14
Result
incorrect
incorrect
At least one of the answers above is NOT correct.
1 of the questions remains unanswered.
An average of 20,000 people visit Riverside Park each day in the summer. The park charges $18.00 for admission. Consultants predict that for each $1.00 increase in the entrance price, the park
would lose an average of 3, 500 customers per day.
(a) Express the daily revenue from ticket sales, R as a function of the number of $1.00 price increases, .
R = f(x)=
(b) What ticket price maximizes the revenue from ticket sales? $
(round to nearest cent)
Note: You can earn partial credit on this problem.
Preview My Answers Submit Answers
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You received a score of 0% for this attempt.
Your overall recorded score is 0%.
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5
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A5
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A-3
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QUESTION 30
WKU is doing the following two research projects:
X: Developing identity theft prevention software. The software will be sold in the market.
Y: Cost reimbursement contract with the US Treasury Department. WKU performs a financial fraud
detection research and it will be reimbursed 250% of the reported costs incurred in the project.
For each project, WKU incurred both direct and indirect costs. WKU incurred a total of $1,000,000 indirect costs. Indirect costs are allocated using a base chosen by WKU. The following information is given:
Project
Direct costs
Computer time in hours
(CTH)
Pages of all articles read
(PAR)
Lab experimental hours (LEH)
Number of assistants used (NAU)
X
$1,000,000
5,000
65,000
1,000
300
Y
$2,500,000
5,000
35,000
4,000
500
Which of the following allocation bases is the best for the benefit of WKU?
A.
CTH
B.
LEH
C.
PAR…
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Question number 37
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Question 02
Reneta group is evaluating a new automatic surveillance system to replace their current security system in Savar. You are currently working as Finance manager in the Group, and Reneta has asked you to conduct a sensitivity analysis. Currently, Reneta group is renting a premise of 50,000 Square feet in Savar, and Reneta Fabrics is planning to rent another 10,000 Square feet from 2023. The new automatic surveillance system will cost $450,000. The cost will be depreciated straight-line to zero over the system’s four-year expected life. Reneta Group expects to have a total output of 50,000 units of cloths at USD 3 per cloth from Reneta Fabrics. Reneta thinks that the new automatic surveillance system will increase EBIT by $125,000 per year. The system is expected to be worth $250,000 at the end of four years. The tax rate is 34 percent. Calculate the NPV of this project if the discount rate is 17%. Conduct sensitivity analysis with a discount rate of 12%. Show detailed…
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Please I need fast answer without plagiarism i give up vote 2
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Question 1.4
The Trump International Hotel & Tower is a five-star hotel located in downtown Toronto. The hotel's
operations vice president would like to replace the hotel's legacy computer terminals at the
registration desk with attractive state-of-the-art flat-panel displays. The new displays would take less
space, consume less power than the old computer terminals, and provide additional security since they
can be viewed only from a restrictive angle. The new computer displays would not require any new
wiring. However, the hotel's chef believes the funds would be better spent on a new bulk freezer for
the kitchen.
Submission Instructions
2. Classify each item as a differential cost, an opportunity cost, or a sunk cost in the decision to
replace the old computer terminals with new flat-panel displays. Add an "X" in the right field. If
none of the categories apply for a particular item, select "None".
Item
Differential Cost
Opportunity Cost
Sunk Cost
None
Cost of the old computer…
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23 The Hanks Co is considering two projects. Project A consists of building a bee sanctuary on the firm's small parcel of land. Project B consists of building a retail store on on that same parcel. The parcel can accommodate only one of the projects. Which method of analysis is most appropriate for an analyst to employ?
A. Accounting rate of return
B. Profitability index
C. NPV
D. Payback
E. IRR
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TB 02-68 The characteristic shared by all liabilities...
The characteristic shared by all liabilities is that they:
Multiple Choice
obligate the company to do something in the future.
ace
O always end in the word "payable."
result in an inflow of resources to the company.
O provide a future economic benefit.
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Question
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None
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Q.3 The Nescafe Coffee Company is evaluating the within-plant distribution system for its new
roasting, grinding, and packing plant. The two altematives are (1) a conveyor system with a high
initial cost but low annual operating costs and (2) several forklift trucks, which cost less but have
considerably higher operating costs. The decision to construct the plant has already been made,
and the choice here will have no effect on the overall revenues of the project. The cost of capital
for the plant is 9 percent, and the projects' expected net costs are listed below:
EXPECTED NET CASH COSTS
YEAR
CONVEYOR
FORKLIFT
($150,000)
($60,000)
(33,000)
(48,000)
(33,000)
(48,000)
3
(33,000)
(48,000)
(33,000)
(48.000)
5
(33,000)
(48,000)
a. What is the IRR of cach alternative?
b. What is the present value of costs of cach alternative? Which method should be chosen?
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3
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11q13
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6
Chapter 10 deals with Cost/Benefit Analysis. Cost/Benefit Analysis are usually performed by people who work in finance, such as accountants, but our textbook tells us that anyone can do a simple Cost/Benefit Analysis. There are 3 primary variables in a Cost/Benefit Analysis – fixed costs, variable costs, and benefit. Should every program or research study begin or end with a Cost/Benefit Analysis – should you do an analysis before the work is done or after the study is completed?
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A-6
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QUESTION 43
The ____ was deliberately designed to measure outputs, without taking into account their beneficial or harmful environmental impacts.
a.
genuine progress indicator
b.
free market
c.
gross domestic product
d.
market pricing structure
e.
government subsidy system
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DISCUSSION QUESTION 5 INCREMENTAL ANALYSIS
IT
La
INCREMENTAL ANALYSIS
Management is often faced with the alternative of continuing to make a product or component internally, or
going to an external source and purchasing the product or component. In gathering relevant information for
these two alternatives, briefly identify the quantitative factors that should be considered. Are there any
qualitative factors that should also be considered?
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Q25
Environmental protection can best be done by the efforts of:
a.
All of these
b.
Business people
c.
Government
d.
Scientists
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Related Questions
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