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can The answer please be explained in your own wordsand also no plagiarism and also with the woman clearly I haveextremely bad eyes thank you

Regulation of Business

  • Explain the rationale for government regulations on businessesin your own words.
  • Identify a federal or state regulation that you support oroppose.
  • Explain your support or opposition to the regulation.

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Nelly Stracke
Nelly StrackeLv2
28 Sep 2019

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Make a reasonable estimate of the required return, starting with a 12% weighted average cost of capital for the U.S. auto manufacturer, and adding reasonable estimated percentages for each of the separate risk elements you can foresee.

To make it easier for all of you to address this question efficiently, I have made a template which each of you can fill in with the risks that you see and which you can then quantify. Our discussion can then revolve around the issue of how risky each of the elements each of you identify actually are. For example, someone might inaccurately state that ten percentage points should be added to the WACC to adjust for foreign exchange rate risk and give his or her reasons for adding such a high risk premium. Others will likely disagree with that assessment, giving their reasons, and that will give us material for a very lively discussion.

I have written a few risks into the template below. Please add your own and estimate how many percentage points should be added to reflect the higher risk in China. Explain your reasoning.

Required Rate of Return

Estimate

Company domestic WCC

12%

Economic and Legal Risk

Foreign Exchange risk

Government & Political risk

Estimated Required Rate of Return=

Background

You are an investment advisor and your clients, Marilyn and David, require your services. Marilyn and David are both 65 and are about to retire. They have no assets other than $1,600,000 in cash savings, and they have no debts. They wish to maintain their current lifestyle during their retirement years. Their current annual living expenses are $120,000. They have no children and they do not wish to bequeath any assets to charity (after their death). Marilyn and David are in excellent health and have a normal life expectancy. They are, however, concerned about the possibility of outliving their retirement income (i.e., longevity risk). They will rely entirely on their cash savings to support themselves financially during their retirement years. Furthermore, they have a strong aversion to risk.

Marilyn and David have decided to use their cash savings to purchase an annuity that will provide them with the necessary income to cover their living expenses over their retirement years. They initially consult with Ms. Sheila Young who is an investment advisor at Merrill Lynch about purchasing their desired annuity. Ms. Young is a very experienced advisor and she claims that she could get Marilyn and David a much higher annual income than they require because she “knows” how to invest their savings in financial instruments that can yield at least 15% per year. This rate of return is well above the current and historical average return for U.S. stocks as measured by the S&P 500 index.

Marilyn and David want you to provide a “second opinion” of the analysis done by the Merrill Lynch advisor. Specifically, they want you to write a memo to Ms. Young that compares the two alternatives and highlights the risks and benefits of each alternative. They feel certain that Ms. Young is not giving due consideration to assumptions and variables that will impact their decision (e.g., market risk, the clients’ risk tolerance, life expectancy, among others), but they don’t know how to articulate their concerns to her. Therefore, since you speak “finance” they would like you to prepare this memo on their behalf.

Assignment

Write a memo to Ms. Sheila Young containing the following information:

Provide a professional and financially sound critique where you identify the problem(s), if any, with her investment analysis.

Conduct your own comprehensive investment analysis where you address any problem(s) identified using the appropriate methods (e.g., formulas, models, etc.) and assumptions; and provide the appropriate insight from your analysis.

Recommend one or more specific, clearly explained actions that address the problem(s) identified based on your investment analysis; and support your recommendations using your analytical results.

Grading and Instructions

The grade on this assignment will be equally divided (50/50) between the analytical quality of your argument (reasoning ability) and clarity of thought, correct use of grammar, punctuation, etc. (writing skills). Please note, simply providing “numbers” is insufficient to obtain a passing grade. Please provide your analysis in a clear and analytically sound memo that supports your final recommendations/conclusions. All supporting tables and graphs must be clearly presented and labeled.

I need Support on this

Week 3 Individual Case Study Assignment 1

Cash flow forecasts and projected financial statements

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For the following Individual Case Study, you assume the role of someone who has been asked to provide a Business Report for a group of friends who have invested in an organisation, Fashion Clothing. They had heard you are taking an Accounting and Finance Module and have asked for your advice.

The scenario

A group of friends have formed a new business called Fashion Clothing, an online and mail-order clothing business, in which they have invested £200,000 of their own capital. They intend to manufacture and sell quality clothes. They have set up the business and are selling direct to the final consumer, using a combination of aggressive marketing across a range of different media and also with the use of an automated Web site that accepts online orders. To support this, they also have a department of telephone sales and support staff ready to help customers. The sales staff work in teams and receive a basic salary plus commission for each successful sale. By the start of July 20X5, they have spent £150,000 on tangible non-current assets, and they currently have the remaining £50,000 in their business bank account.

They provide you with the following forecasted figures for their first 6 months of trading:

£

Sales for the next 6 months

1,350,000

Cost of the materials used up in sales

390,000

Labour costs for the 6 months

480,000

Other expenses for the 6 months, including marketing costs and £15,000 depreciation of tangible non-current assets

345,000

Materials purchased during the 6 months

520,000

Their projected cash receipts and payments are estimated to be as follows:

Month (20X5)

Sales Receipts

Payments for Materials

Labour and Other Expenses

£

£

£

July

150,000

120,000

These payments are divided equally over each of the 6 months.

August

120,000

100,000

September

150,000

60,000

October

210,000

60,000

November

260,000

60,000

December

285,000

60,000

Totals

1,175,000

460,000

In addition to the above, they expect to have to pay a tax bill of £20,000 in December 20X5 and also plan to buy (and pay for) £30,000 additional tangible non-current assets in that same month. All transactions will go through their business bank account.

Required

You are asked to provide a Business Report (1,000 words for the main body of the report) for the friends who have invested in Fashion Clothing, commenting on the business’ prospects and including the following five financial statements:

Since none of the investors have a background in accounting and finance, you should also explain what each of these statements means as a part of your report.

  1. An opening statement of financial position at the start of July 20X5.
  2. A monthly cash flow forecast, showing the bank balance at the end of each of the 6 months and indicating what level of overdraft facilities the friends need to negotiate with their bank manager. Explain what additional expense they should take into account as a result of needing this financial assistance (overdraft).
  3. A projected income statement for the first 6 months of trading.
  4. A projected statement of financial position for Fashion Clothing at the end of its first 6 months of operations.
  5. A projected statement of cash flows for the first 6 months of trading and using the indirect method.

Keep the following in mind:

  1. Using a spreadsheet may help you to produce your cash flow forecast. Remember here that £150,000 of the initial £200,000 has already been spent. Hence, your opening bank balance should be £50,000. Your closing bank balance should be included in your statement of financial position as at 31.12.20X5.
  2. Think carefully about the £15,000 depreciation charge when working out your monthly cash outflows for labour and other expenses.
  3. Also think carefully about the figures for closing stocks (inventories), creditors (payables) and debtors (receivables).
  4. Please remember that your qualitative analysis and explanation of your five statements are justas important as the calculations themselves. These, together with your presentation of a professional report, will contribute towards your grade for this assignment.
  5. Please be sure to re-visit the Key Concept Overviews for Weeks 1 and 2, as well as Week 3. These should serve as a reminder of the accruals concept, plus the difference between a cash flow forecast and a statement of cash flows. They also include detailed numerical examples that should assist with your calculations for your financial statements.

Ideally a business report should be produced with a suitable structure and quality of discussion around the following key areas:

Executive summary

Table of contents

List of figures

  1. Introduction
  2. Main financial findings.

2.1 Summary of the first 6 months business operations

2.2 Financial accounting statements

  1. Analysis

3.1 Initial analysis in context of the three financial statements.

3.2 Investigations to increase efficiency

  1. Conclusion
  2. References

ANNEX I: Statement of financial position Fashion Clothing – 01.07.20X5 and 31.12.20X5

ANNEX II: Income statement Fashion Clothing – 6 months to 31.12.20X5

ANNEX III: Statement of cash flows Fashion Clothing – 6 months to 31.12.20X5

ANNEX IV: Projected cash flow forecast for the first 6 months of trading

To complete the assignment:

  • Be sure to read over your Individual Assignment before submitting it to your Instructor. Make sure the spelling and grammar are correct and the language, citing and referencing you use when providing your opinion are appropriate for academic writing.



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