LEAD QUESTIONS FOR J&G DISTRIBUTORS
(Note: Discussion should not be restricted to these questions)

Day 1
1.Identify the cost of capital and estimate the cost of placing an order. Assume that the annual inventory cost of a unit is given by, CH = iCI, where i is the cost of capital and CI, the unit cost of the item. 2.Consider the connector data and the all unit price structure described in Table 1. For each price level ($5.00, $4.75, etc.) determine the EOQ, and the corresponding total annual cost. Sketch the total annual cost as a function of the order quantity. Based on these results, identify the optimal ordering policy. 3.Repeat the analysis of (2) above for the incremental unit discount situation described in Table 2.

Day 2
4.Consider the make or buy decision for item #4569802 (on page 4). Using the economic order quantity (EOQ) model, determine the order quantity (lot size) for each alternative and the corresponding annual cost. 5.Consider the three items procured from a single overseas vendor (page 4 of the case). In this analysis you may ignore variability. a.Evaluate the cost of switching to local suppliers, i.e. assume that each item is managed independently and ordered from local suppliers. Compute the EOQ and the corresponding total annual cost of the three items. b.Now evaluate the cost of using overseas supplier and placing joint orders for the three items. What is the corresponding total annual cost? Is the EOQ model useful?

Day 3
6.Consider the special resistor # 4915082 (inexpensive part). Based on the information presented on page 3, develop a probability distribution of demand during lead time. 7.Consider the inexpensive part (# 4915082). Determine the appropriate inventory policy for this item in order to achieve the desired objective of shipping 99% of demand within 24 hours (treat this as the required fill rate). 8.Revisit “several items ordered together” with a target service level of 99%, i.e. the probability of...

...The Cost of Capital for Goff Computer, Inc.
Rahul Parikh
BUS650: Managerial Finance (MAH1209A)
Dr Charles Smith
March 18, 2012.
The Cost of Capital for Goff Computer, Inc.:
1. Most publicly traded corporations are required to submit 10Q (quarterly) and 10K (annual) reports to the SEC detailing their financial operations over the previous quarter or year, respectively. These corporate fillings are available on the SEC Web site at...

...ON CHAPTER 15 (COST OF CAPITAL)
1.) The Wind Rider Company has just issued a dividend of $2.10 per share on its common stock. The company is expected to maintain a constant 7% growth rate on its dividends indefinitely. If the stock sells for $40 a share, what is the company’s cost of equity?
2.) The Ball Corporation’s common stock has a beta of 1.15. If the risk free rate is 5% and the expected return on the market is 12%, what is Ball...

...What is cost of capital?
The cost of capital is the cost of obtaining funds, through debt or equity, in order to finance an investment. It is used to evaluate new projects of a company, as it is the minimum return that investors expect for providing capital to the company, thus setting a benchmark that a new project has to meet.
Importance
The concept of cost of capital is a...

...Questions
Case #5 – Marriott Corporation: The Cost of Capital
1. Are the four components of Marriott’s financial strategy consistent with its growth objective?
2. How does Marriott use its estimate of its cost of capital? Does this make sense?
3. What is the weighted average cost of capital for Marriott Corporation?
a. What risk free rate and risk premium did you use to calculate the...

...Cost of Capital
Definition: cost of capital is the rate of return that a company must earn on its project investments to maintain its market value and attract funds. The cost of capital to a company is the minimum rate of return that is must earn on its investments in order to satisfy the various categories of investors, who have made investments in the form of shares , debentures and loans. The...

...ogCost of capital
First of all I would like to say the I wanted to calculate the cost of debt and cost of equity but the information given in the statements are missing the items needed to calculate the cost of debt and the cost of equity but I would like to analyze the information related to this part
The market capitalization already increased in year 2010to 7,016 million from the previous year which was 3,805 million...

...WEIGHTED AVERAGE COST OF CAPITAL FOR DELL COMPUTER
1) From the SEC website, the balance sheet of Dell Computer reveals a
Book value of debt = $3,394,000,000 and
Book value of equity = $4,625,000,000
The same balance shows the breakdown of the long-term debt (book values) in table 1.
Table 1
Coupon Rate
(%) Maturity Book Value
(Face Value in million $)
3.38 06/15/2012 400
4.70 04/15/2013 599
5.63 04/15/2014 500
5.65 04/15/2018 499
5.88...

...What’s your real cost of capital?
By James J. McNulty, Tony D. Yeh, William s. Schulze, and Michael H. Lubatkin
Harvard Business Review, October 2002
Issue of the article: valuing investment projects
Number of pages: 12
Daniel Miravet Campos
Part 1. Executive summary
This article is fundamentally based on the exposition of a new method to calculate the cost of capital for a company (MCPM), to meet the inefficiencies of the...

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