Posted: March 12th, 2023

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DB 7

Examples of Successful Negotiation

Negotiation is ever-present: from the boardrooms of companies for billion dollar deals to a parent and a child discussing terms for an afternoon trip, everyone engages in negotiations. Developing the skills to be good at this activity is going to pay off in multiple ways and it is always a good idea to start with some examples.

For this Discussion research news articles and provide an example where a company has performed a successful negotiation. The article must discuss why this was considered a “good win” and what they did to make the effort a success. Include the following details:

1. Describe the situation- who was engaged in the negotiations, what was at stake

2. Why was this particular situation notable? What was at stake and why was it a difficult effort?

3. What did the organization do to be successful? There must be a clear answer to this question for your example to meet the requirements.

Reading

It is strongly recommended that you complete this interactive learning activity. This will help you practice important concepts related to establishing formal relationships with vendors

Journal 7

Based on your readings in this unit, answer the following questions, with explanations (do not simply name concepts and move on):

1) Among the concepts you have learned, which do you think is most useful to you or your organization?

2) Which concept(s) caused the most confusion in this unit?

3) Which concept(s) did you wish went into further detail, either because you are interested or because it’s too complex for the coverage it received?

Db8

Lean Manufacturing

Lean manufacturing is a very popular approach to inventory management with a lot of examples of both success and failure. In fact the idea and the principles have also been applied beyond manufacturing.

For this Discussion, research news articles and provide an example of a company successfully implementing lean manufacturing. You are looking to learn from their experience so your example needs to be more detailed than “they implemented lean manufacturing and saved X million dollars.” You should find an example that talks about details of their implementation and/or issues they faced.

Provide the following details:

1. What is the company and what do they do?

2. How did they implement lean manufacturing? What was the result?

3. What challenges did they run into and how did they solve these?

Reading

You will focus on ethical behavior and the role of inventories in supply management. Purchasing managers must understand the changing nature of law at the international, federal, state, and regional levels, and acting ethically. You will also focus on managing inventory efficiently and effectively to remain competitive.

Journal 8

Based on your readings in this unit, answer the following questions, with explanations (do not simply name concepts and move on):
1) Among the concepts you have learned, which do you think is most useful to you or your organization?
2) Which concept(s) caused the most confusion in this unit?
3) Which concept(s) did you wish went into further detail, either because you are interested or because it’s too complex for the coverage it received?

DB 8

Topic: Presentation to the Board of Directors, the Pros and Cons of Debt Financing

The calculation of the after-tax cost of debt versus the cost of equity plays a major role in managing capital costs for a company. Knowing the difference between the cost of debt and the cost of equity would determine how you would manage the cost of capital within a company.

You are the CFO of a company that is considering issuing its first bond issue to the public.

You have been asked to present a few matters related to debt (bond) financing to the board of directors.

Please briefly explain to the board: (1) the usual collateral position of bondholders (lenders) versus equity investors, (2) why common stockholders can demand a higher rate of return than lenders, and (3) why you would suggest debt (or equity) financing.

DB 9

Topic: Modigliani and Miller: A Challenge to Capital Budgeting Strategies

Financing corporate purchases and overall capital budgeting usually require the finance manager to assess tax rates, dividend payout policy, weighting of capital sources, and more. However, the Modigliani and Miller propositions state that, in most situations, it does not matter if the firm’s capital is raised by issuing stock or selling debt.

As a student, you might assume studies of capital budgeting strategies will no longer be reviewed in coursework.

Before coming to that conclusion, please discuss the principles presented by Modigliani and Miller, what they are trying to prove within their theory, and if you agree or disagree with the theory’s premise.

ASSIGNMENT 8

Assignment: The Angel Investor

In this assignment, you will be assessed based on the following Course Outcome:

MT480-6: Incorporate the combined attributes of debt and equity given a cost of capital model.

The concept of after-tax weighted average cost of capital (WACC) is a foundation when assessing the cost of capital and investment options. The assignment will present the opportunity to assess a financing transaction, build upon your understanding of this cost of capital concept, and demonstrate your ability to calculate the after-tax WACC.

Read the scenario and address the checklist items below.

Scenario: You are an angel investor who an entrepreneur has approached to assess an investment opportunity.

An entrepreneur asks for $100,000 to purchase a diagnostic machine for a healthcare facility. The entrepreneur hopes to maintain as much equity in the company as possible . Yet, the angel investor began negotiations saying he wanted the transaction to be financed with 50% debt and 50% equity.

As the angel investor, you assign a cost of equity of 14% and a cost of debt at 10%. Based on Year 1 sales projections, the entrepreneur assures you a return on investment (ROI) of 9%; conceptually, this will cover the first year’s pretax cost of debt and allow for planned equity growth and refinancing model for Year 2. You will use an after-tax weighted average cost of capital (AT- WACC) model, including the after-tax cost of debt and proportionate costs of debt versus equity. A 32% marginal tax rate is applied.

Address the following checklist items.

Checklist:

· Explain the tax benefits of debt financing.

· Calculate the AT-WACC with a 50% debt and 50% equity financing structure.

· Apply the calculated AT-WACC to explain why this is or is not a viable investment for you as the angel investor.

· Explain a financial restructuring AT-WACC (given changes to proportions of percent debt versus percent equity financing) that would create a positive ROI.

· Explain why you, as the angel investor, would require more or less debt versus equity financing. Be sure to note the role of the Unified Commercial Code-1 (UCC-1) document in this transaction and the order of claim on assets in times of a bankruptcy.

· Include a strong thesis statement, introduction, and conclusion. The main points of the response should be developed and explained clearly with appropriate financial and accounting terminology.