Seat Adjuster Case Summary

The U.S. electric passenger car industry in 2011 was described as being in its infancy, because it is still a new concept to buyers. However there are signs of growth from 2011-2015. Buyers do not consider the car because of price, travel range and vehicle size, along with other secondary concerns.

I do not think it is proper. Since hurdle rate is the key factor to determine whether we should accept a project, it is concerned with a specific investment opportunity belonging to a division. As we can see in Table 1, each of Midland`s divisions had its own target debt ratio. Those

State and explain the decision rule behind the IRR method. Assume a hurdle rate of 10%.

There are many trade-offs for each of the decisions that a company makes within all three types of these cost types when quality consideration is used. If the company decides to put more time into training employees properly on operating machines and

Nancy Denny believed she was buying a Bronco II, which gave her the ability to switch between two-wheel and four wheel drive. According to the sales manual this feature would be appealing to women due to the vehicles’ ability to drive safer on snow and ice. Nancy Denny bought the vehicle due to the benefits of the four wheel drive and additionally, she had not interest in using the vehicle for off road purposes. It could be said that the information provided in the manual were somewhat misleading, especially for those not

Grappling with the potential purchase of Olive Hill Farm, we decided to conduct a financial analysis to determine whether the project should be taken or not. Our financial analysis include scenarios for the best, worse, and most likely outcomes of purchasing the farm. For each scenario a Net Present Worth (NPW) and an Internal Rate of Return (IRR) was calculated and compared. This revealed that there was little gain for the worst case scenario and large gains for the other two scenarios. A sensitivity analysis and a break-even analysis was also conducted. The sensitivity analysis identified the most influential factors on the NPW. In the end, the analysis favored buying Olive Hill Farm because it would be a low risk, high reward investment.

As Motorking Corporation considers introducing its now “gas extender” product into the market, the management must consider various factors to determine if this is a good financial move. The production manager needs to determine if the product will generate a profit for the corporation, how much product is expected to sell to determine how much to produce and how much to outsource.

The land was accounted for opportunity cost. If we don’t run the project, we can sell it and earn $6 million right now.

Personal evaluation of this case would take into consideration the fact; one engineer did offer a document indicating and estimate for the cost of value refitting which would prevent the Ford Pinto from bursting into flames should a rear end collision occur. A simple, $1, plastic gadget weighing one pound fitted over the gas tank bolts would have prevented the tank from being punctured. Conclusion was that "it was more economical to let people die and settle the suits afterward" (Newton and Ford, 2008). Put simply, the Ford corporate heads believed no project was worth manufacturing if the cost-benefit indicated a greater cost than the benefit. Further evaluation of the analysis indicated if the

Preparedness is crucial when presenting change to a large group of professionals. In this case, the Vice President of Operations was responsible for presenting new quality indicators for surgical infection prevention. Knowing that the physicians grudgingly accepted previous CMS indicators, as Vice President of Operations, I would meet with the surgical section chair prior to the meeting and discuss the new expectations and possibilities for how to incorporate best practice into current operations and ways in which to gain support. Having the section chair’s support will allow for valuable, thoughtful feedback. In addition, the chair can help brainstorm obstacles and necessary data for support of the new concept. At the meeting with all

Rob’s goal is to keep margins consistent. As an example, he explained that if a customer wanted to upgrade from 10 seats to 30, an additional $200 in manufacturing costs would be added to

Today about 6 million people drive a car in the United States, but the percentage of those people that drive a manual transmission is significantly less than those who drive automatic. In every country in Europe, and perhaps in the world, manual cars are a common sight. However, here in the U.S.A. finding a manual car and someone who knows how to drive one is like looking for a needle in a haystack. Although they are not as common as an automatic car,

Two managers attending an executive education course attempt to develop a cost of capital estimate for a leading telecommunications company, Telus The two managers are somewhat confused about the costs of various sources of capital, the calculation of the overall cost of capital and the appropriate use of the hurdle rate

The savings for the customer, however, comes from the savings in labor costs. Estimating a total of $714 labor costs/hour (Exhibit A), the approximate labor savings totals $5.08/foot driven (using Sanwal’s conservative estimates of 292,000,000 feet driven per year, page 5). Comparatively, CMI pads result in only $3.57/foot driven. On a job of 15,000 feet, the difference in value is $22,650 in saved labor costs alone. Consequently, a customer should be willing to pay $5.28/foot driven for the CMI Cushion Pads (see Figure 4). With this value-added, CMI can charge up to $2,837 for one pad, which would make the price exactly as much as the cheapest competitor (including labor costs). With that price, CMI would only have to sell 21,854 pads (which would service approximately 12% of the market, a feasible goal for CMI’s entrance) to make $62,000,000.00 (VP Joseph Fernandez’s approximate sales goal). The recommended CMI price, however, is $1986.34 (which is the value-capturing price of $2,837 with a 30% reduction). With an estimated 292,000,000-390,000,000 driven feet per year, the pile-driving

Although, it is true that lower hurdle rates would translate into high growth projects, but including it in Manager’s compensation plan might lead to agency problem where managers may try to manipulate the hurdle rates in order to get the projects through and make money.