Part 3: GDP in Different Countries (weight 25% of the assignment grade) Complete the following exercise: Go to World Development Indicators database: http://databank.worldbank.org/data/views/variableSelection/selectvariables.aspx?source=world-development-indicators Select 8 countries for your project by checking the check boxes under Country. Select the 2 data series GDP (current US$) and Population (Total) under Series. Select the most recent year under Time. You can now retrieve that data by clicking one of the options on the upper right of the window. Clicking âTableâ will allow you to view and copy the data for each country. Clicking âDownloadâ will allow you to download the data in Excel, which can then be copied into your report table. Or you can simply type the required data into the table below. Fill in the table below. Calculate the per capita GDP for the most recent available year for the countries with the equation given in the far right column. Country GDP Population Per Capita GDP 1 2 3 4 = 2/3 Write a short report in your own words (1 page, double-spaced), which contains the analysis of the results you have gotten. In this report consider, but do not be limited to the following: List the countries by highest per capita GDP to lowest. Does the order remain the same for total GDP as for per capita GDP. If not, explain why is it different?

The city of Annapolis, Maryland is considering turning a subway station to a high-speed rail station in an initiative called “Rails to Monorails”. This railway would be called the Annapolis Purple Line. Although the railway will connect Annapolis to surrounding areas, the project will be funded by the city of Annapolis. You have been asked to calculate the expected expenses to the city government if the rail is built. In addition, you are to calculate the projected economic costs of this project, which will be used for a cost-benefit analysis of the proposal. The accounting domain for the cost-benefit analysis will be the state of Maryland. No taxes would be owed on purchases, except where noted below. This rail would extend a total of 100 miles, running from Annapolis to neighboring cities in the area. Although most of the old subway rail has been removed, there is still some cleanup work to be done on the subway line in order for it to be suitable for putting down monorail tracks. This work will require rental of machinery from one of a number of local rental shops, at a cost $10 per linear foot of subway rail. Because the subway station will be refashioned into a new monorail station, a lot of the necessities are already included, such as bathrooms, etc. Also, the monorail train itself was already procured previously as Annapolis has built other monorail stations previously and has extra train cars available. The rail line would, however, need to have track laid. The current cost for track rails is $50 per linear foot. However, due to the large amount of railing needed for the project, it is projected that the price would increase to $56 per linear foot, and that the city would have to pay this higher price. Signs R Us, one of a number of local firms selling electronic displays in the area, will supply and install 100 digital displays at the Purple Line train stops. Each will cost the city $330. New subway turnstiles will be special ordered from Maryland Industrial, a local firm. The total bill for these items is projected to be $50,345 per stop along the Purple Line, which is a markup of $5,490 above costs. The Purple Line has 5 stops along the way. There will be a number of other features included in several locations along the Purple Line. These include: Benches - 30 per stop (ordered from an out of state vendor at a cost of $80 each, which is $24 above their costs) Updated restroom equipment - will be donated to the city by Johnson Capital (a local firm), which raised $70,000 for this purpose and will order the equipment from an out of state vendor. LED lights - 100 (special ordered from Annapolis Hardware at a cost of $365 each, which is $23 above their cost) Trash receptacles - 30 (purchased off the shelf from Annapolis Hardware at a cost of $250 each) Finally, local construction workers will be hired to work on the project, and it is expected that 45,000 hours of labor will be needed for this project. For these workers, the gross wage is $16.00/hr, but $1.50 of that amount is withheld for federal income and payroll taxes, and $.40 is withheld for state and county income taxes.

Calculate Expenses (Include a short, general description on how expenses were calculated, and give an example for one of the input items)

Calculate Economic Costs (For each input, describe the method you used to calculate the economic (opportunity) cost. If an adjustment to the expense was necessary to calculate the opportunity cost, explain why. If no adjustment to the expense was necessary, explain why not.)

coppercicada291

Final Project Scenario

You are an economist for the Vanda-Laye Corporation, which produces and distributes outdoor cooking supplies. The company has come under new ownership and management and will be undergoing changes in its product lines and operating structure. As an economist, your responsibilities include examining the market factors that affect success or failure of a product, including the supply and demand for the product, market conditions, and the behavior of competitors with similar products.

The new management has identified several possible investments for the coming year. It has asked you and your team to evaluate the possibilities and make a recommendation to the board of directors. Jorge has identified two mutually exclusive opportunities (Investment A) and two independent opportunities (Investment B) and assigned you the task of making a recommendation on the investments.

Investment A

Your company would like to increase its product lines. Two alternatives are available, a new line of outdoor smokers and a new line of outdoor grills. The two lines are mutually exclusive, meaning that only one of these investment alternatives can be selected. The projected cash flows and their respective probabilities for each alternative are given in the table. There are three possible levels of demand and their corresponding probabilities, which depend on the state of the economy.

Click here to download the table for Investment A. (Table Below)

Investment A

Demand	Probability	Year 1	Year 2	Year 3	Year 4	Year 5
Outdoor Smoker
High	0.2	$800,000	$900,000	$1,000,000	$1,100,000	$1,500,000
Moderate	0.6	$500,000	$700,000	$800,000	$960,000	$1,240,000
Low	0.2	$200,000	$350,000	$500,000	$600,000	$750,000
Outdoor Grill
High	0.2	$600,000	$750,000	$850,000	$975,000	$5,160,000
Moderate	0.6	$450,000	$500,000	$700,000	$825,000	$4,980,000
Low	0.2	$150,000	$220,000	$370,000	$500,000	$4,750,000

The two alternatives carry equal risk and should be evaluated at the company's cost of capital. The cost for the new smoker line will be $7,000,000. Also, the company has been guaranteed a buyer for the new line at the end of the fifth year. The buyer has agreed to purchase the new line for $7,900,000. The outdoor grill alternative will cost $3,987,000 and also has a guaranteed buyer, who has agreed to pay $4,000,000 at the end of the fifth year.

Investment B

Investment B involves two independent investment opportunities. The decisions on these two investment alternatives are also independent of Investment A. Investment B-1 involves a new packaging machine, which will eliminate the need for a local firm for packaging Vanda-Laye's products. The cost of this machine will be $24,000, and the expected revenues from this opportunity are given in the table and are considered to be of average risk. Investment B-2 is the purchase of a new computer system that will allow the company to sell its products on the Internet worldwide. The cost of this new system will be $29,000, with the expected cash flows after taxes given in the table.

Click here to download the table for Investment B. (Table Below)

Investment B

Year	Cash Flows

	Packaging Machine	Computer System
1	$8,400	$9,100
2	$4,800	$8,800
3	$7,800	$8,300
4	$6,200	$8,000
5	$5,500	$5,100
6	$4,600	$4,000
7	$3,000	$3,500

Jorge has asked you to provide detailed responses to the following:

Management of Vanda-Laye has determined that the capital structure of the company will involve 30% debt and 70% common equity. This structure will be used to finance all investments by the company. Currently, the company can sell new bonds at par, with a coupon rate of 7%. Any new common stock can be sold for $45, with a required return (or cost) of 15.57%. Using Microsoft Excel, calculate the company's cost of capital to be used in the evaluation of possible investment projects.

For Investment A:

Using Microsoft Excel, create a decision tree. Indicate the various levels of demand and their respective probabilities. Also, include the calculations for the expected cash flows.

Calculate the expected NPV for each alternative. Explain the decision rules for making a selection between the two alternatives on the basis of the expected NPV.

Assuming the two alternatives are mutually exclusive, specify which alternative you would recommend to the company. Explain why.

If the two alternatives were independent of each other, specify which project you would select. Would you accept both projects if funding were available for both? Explain your answer.

For Investment B:

Using Microsoft Excel, calculate the NPV for each alternative.

Using the decision-making criteria for the NPV, specify which alternative you would select if the two alternatives were mutually exclusive. Explain your answer.

Given that the two alternatives are independent of each other, specify which investment you would select, if not both. Explain your answer.

Using Microsoft Excel, calculate the IRR for each investment.

Using the decision-making criteria for the IRR, specify which alternative you would prefer. Explain your answer.

If funding were available, specify whether you would select both investments. Why or why not?

Calculate the profitability index (PI) for the two investments. Which project is preferred?

Determine whether there is a ranking conflict present in terms of the IRR and the NPV. Explain your answer. If a conflict does exist, explain how you would resolve the situation.

Submission Details:

Compile a report including all your responses from Weeks 1, 3, and 5. Make sure your report reads as one report rather than three reports pasted together. Complete all revisions suggested by your instructor in previous weeks. Make sure all responses are complete and accurate, supported by references and documented examples. The report should be 10â15 pages in length and include an executive summary.

You are an economist for the Vanda-Laye Corporation, which produces and distributes outdoor cooking supplies. The company has come under new ownership and management and will be undergoing changes in its product lines and operating structure. As an economist, your responsibilities include examining the market factors that affect success or failure of a product, including the supply and demand for the product, market conditions, and the behavior of competitors with similar products.

The new management has identified several possible investments for the coming year. It has asked you and your team to evaluate the possibilities and make a recommendation to the board of directors. Jorge has identified two mutually exclusive opportunities (Investment A) and two independent opportunities (Investment B) and assigned you the task of making a recommendation on the investments.

Investment A

Your company would like to increase its product lines. Two alternatives are available, a new line of outdoor smokers and a new line of outdoor grills. The two lines are mutually exclusive, meaning that only one of these investment alternatives can be selected. The projected cash flows and their respective probabilities for each alternative are given in the table. There are three possible levels of demand and their corresponding probabilities, which depend on the state of the economy.

Click here to download the table for Investment A.

The two alternatives carry equal risk and should be evaluated at the company's cost of capital. The cost for the new smoker line will be $7,000,000. Also, the company has been guaranteed a buyer for the new line at the end of the fifth year. The buyer has agreed to purchase the new line for $7,900,000. The outdoor grill alternative will cost $3,987,000 and also has a guaranteed buyer, who has agreed to pay $4,000,000 at the end of the fifth year.

Investment B

Investment B involves two independent investment opportunities. The decisions on these two investment alternatives are also independent of Investment A. Investment B-1 involves a new packaging machine, which will eliminate the need for a local firm for packaging Vanda-Laye's products. The cost of this machine will be $24,000, and the expected revenues from this opportunity are given in the table and are considered to be of average risk. Investment B-2 is the purchase of a new computer system that will allow the company to sell its products on the Internet worldwide. The cost of this new system will be $29,000, with the expected cash flows after taxes given in the table.

Click here to download the table for Investment B.