BUSN – The Ford Pinto Case

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A number of critics have claimed that the Ford Motor Company acted unethically in producing the Ford Pinto as it did, knowing that it could have been made safer by adding an inexpensive part. Read carefully the Case Study, “The Ford Pinto Case” in De George, pp 298-99.

You are to write a paper in which you decide, on the basis of the best utilitarian analysis you can construct, whether Ford Motor’s decision to produce as it did was ethically justifiable. Your paper should show that you understand what using a utilitarian approach to evaluating a moral issue involves. You should clearly describe the action that you are evaluating. You should present the various considerations that lead you to make the moral judgment you make about the action. Be sure to consider all the consequences of the action you analyze for all those affected by the action. Do not focus only on the cost-benefit analysis presented in the case.

Although you should go through the steps of a utilitarian analysis before you write the paper, the paper should not list all the steps. Rather, in writing your paper assume you are writing for a general audience (many of whom may disagree with you), and write in such a way as to try and convince your readers, by the strength of your analysis, that you are correct in your moral judgment. Hence, you should present and develop the utilitarian arguments that lead to your judgment, and you should not simply state your beliefs. Your analysis should conclude, as a result of the utilitarian analysis you have made, with the conclusion to which that analysis leads. Be careful not to prejudge the case either by describing it as unethical (or ethically justifiable) to begin with or by concluding it is justifiable (or unjustifiable) before you finish the analysis. To help you through the steps of a utilitarian analysis there’s a guide on page 56 in your text.

Your paper should be 4 to 5 pages and formatted double-spaced, Font size 12, with one-inch margins and will include a properly formatted Works Cited. There should also, be at least 3 sources cited. In citing Internet sources, even if you use several articles from one website, the website itself is an individual source (this is similar to using several articles from one individual newspaper).

Your paper should be written in sections that are identified by the Rubric Criteria found in the Syllabus. Namely; Introduction, Moral Argument, Alternative, Conclusion, References. In doing so, the Format should be followed.

SPREADSHEET PROBLEM

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SPREADSHEET PROBLEM

(10-23)

Build a Model: Capital

Budgeting Tools

Start with the partial model in the file Ch10 P23 Build a Model.xls on the textbook’s

Web site.Gardial Fisheries is considering two mutually exclusive investments. The

projects’ expected net cash flows are as follows:

Expected Net Cash Flows

Year Project A                   Project B

0                -$375                   −$575

1               −300                       190

2                −200                     190

3                −100                    190

4                 600                     190

5                600                      190

6                926                      190

7                −200                       0

a. If each project’s cost of capital is 12%, which project should be selected? If the

cost of capital is 18%, what project is the proper choice?

b. Construct NPV profiles for Projects A and B.

c. What is each project’s IRR?

d. What is the crossover rate, and what is its significance?

e. What is each project’s MIRR at a cost of capital of 12%? At r = 18%?

(Hint: Consider Period 7 as the end of Project B’s life.)

f. What is the regular payback period for these two projects?

g. At a cost of capital of 12%, what is the discounted payback period for these two

projects?

h. What is the profitability index for each project if the cost of capital

 

Employed And Desirable Policies Devised

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It has been said that “a company that deserves a union gets one,” suggesting that if proper leadership and motivation techniques are employed and desirable policies devised, the workers will not want to unionize. Either agree or disagree with this philosophy. Support your position and explain what a company could do to create an environment where workers will not want to unionize.
Some means of resolving negotiations impasses involve economic weapons (e.g. strikes and lockouts). There are other means of impasse resolution that do not involve the use of economic weapons (e.g. fact finding, mediation, med/arb/interest arb, etc.). Select two (2) non- economic means of impasse resolution, 1) explain how each one functions and 2) discuss the relative pros and cons of each.
Unions have declined as a percentage of the workforce in the private sector. With this decline, have career and workplace dissatisfaction and alienation increased? If so, why is this so? If not, why not? Support your position.
List and discuss some of the advantages and disadvantages in using seniority as a factor to determine shift preference or overtime assignments.
Identify two different steps a company should take to prepare for its first round of bargaining with the union pre-negotiation activities. Explain why each of the steps you have identified is critical to achieving an initial successful collective bargaining agreement with the union.
Identify and explain the major ways in which the government is an important participant in the labor relations.

Investment Problems

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1. A stock sells for $15 per share. You purchase 200 shares for $15 a share (i.e., $3000), and after a year the price rises to $22.50.

  1. What will be the percentage return on your investment if you bought the stock on margin and the margin requirement was 25 percent? Round your answer to one decimal places.________%

 

B.   What will be the percentage return on your investment if you bought the stock on margin and the                 requirement was 50 percent? Round your answer to one decimal places____________%

 

C.        What will be the percentage return on your investment if you bought the stock on margin and the margin requirement was 75 percent?   Round your answer to one decimal places.__________%

 

 

 

2. A stock sells for $20 per share. You purchase 200 shares for $20 a share (i.e., for $4,000), and after a year the price falls to $17.50.

 

a. What will be the percentage return on your investment if you bought the stock on margin and the margin requirement was 25 percent? Round your answer to one decimal places.___________ %

 

b. What will be the percentage return on your investment if you bought the stock on margin and the margin requirement was 50 percent? Round your answer to one decimal places.___________%

 

c. What will be the percentage return on your investment if you bought the stock on margin and the margin requirement was 75 percent? Round your answer to one decimal places.___________%

 

(Ignore commissions, dividends, and interest expense.)

3.           You purchase 200 shares of stock at $300 ($60,000); the margin requirement is 40 percent. What are the dollar and percentage returns if

 

a. you sell the stock for $336 and buy the stock for cash? Round your answer to one decimal place.

 

________ %

 

b. you sell the stock for $270 and buy the stock on margin? Round your answer to one decimal place.

 

________%

 

c. you sell the stock for $180 and buy the stock on margin? Round your answer to one decimal place.

 

___________ %

 

4. Investor A buys 200 shares of SLM Inc. at $45 a share and holds the stock for a year. Investor B buys 200 shares on margin. The margin requirement is 60 percent, and the interest rate on borrowed funds is 8 percent.

 

 

 

 

 

a. What is the interest cost for investor A? Round your answer to the nearest dollar.

 

$

 

 

 

 

 

b. What is the interest cost for investor B? Round your answer to the nearest dollar.

 

$

 

 

 

 

 

c. If they both sell the stock for $50 after a year, what percentage return does each investor earn? Round your answer to one decimal places.

 

The percentage return for investor A is ____________ %

 

The percentage return for investor B is ____________ %

 

 

 

5. Investor A makes a cash purchase of 100 shares of AB&C common stock for $45 a share. Investor B also buys 100 shares of AB&C but uses margin. Each holds the stock for one year, during which dividends of $4 a share are distributed. Commissions are 4 percent of the value of a purchase or sale; the margin requirement is 50 percent, and the interest rate is 8 percent annually on borrowed funds.

 

 

 

 

 

a. What is the percentage earned by investor A if he or she sells the stock after one year for $30? Round your answer to one decimal places.

 

%

 

 

 

What is the percentage earned by investor B if he or she sells the stock after one year for $30? Round your answer to one decimal places.

 

%

 

 

 

 

 

b. What is the percentage earned by investor A if he or she sells the stock after one year for $45? Round your answer to one decimal places.

 

%

 

 

 

What is the percentage earned by investor B if he or she sells the stock after one year for $45? Round your answer to one decimal places.

 

%

 

 

 

 

 

c. What is the percentage earned by investor A if he or she sells the stock after one year for $50? Round your answer to one decimal places.

 

%

 

 

 

What is the percentage earned by investor B if he or she sells the stock after one year for $50? Round your answer to one decimal places.

 

%

 

 

 

 

 

d. What is the percentage earned by investor A if he or she sells the stock after one year for $60? Round your answer to one decimal places.

 

%

 

 

 

What is the percentage earned by investor B if he or she sells the stock after one year for $60? Round your answer to one decimal places.

 

%

 

 

 

 

 

If the margin requirement had been 30 percent, what would have been the annual percentage returns?

 

 

 

 

 

a. What is the percentage earned by investor A if he or she sells the stock after one year for $30? Round your answer to one decimal places.

 

%

 

 

 

What is the percentage earned by investor B if he or she sells the stock after one year for $30? Round your answer to one decimal places.

 

%

 

 

 

 

 

b. What is the percentage earned by investor A if he or she sells the stock after one year for $45? Round your answer to one decimal places.

 

%

 

 

 

What is the percentage earned by investor B if he or she sells the stock after one year for $45? Round your answer to one decimal places.

 

%

 

 

 

 

 

c. What is the percentage earned by investor A if he or she sells the stock after one year for $50? Round your answer to one decimal places.

 

%

 

 

 

What is the percentage earned by investor B if he or she sells the stock after one year for $50? Round your answer to one decimal places.

 

%

 

 

 

 

 

d. What is the percentage earned by investor A if he or she sells the stock after one year for $60? Round your answer to one decimal places.

 

%

 

 

 

What is the percentage earned by investor B if he or she sells the stock after one year for $60? Round your answer to one decimal places.

 

%

 

 

 

6. Ms. Tejal Gandhi has decided that the stock of SmallCap Inc is overvalued at $30 a share and wants to sell it short. Since the price is relatively low, short sales cannot be executed on margin, so Ms. Gandhi must put up the entire value of the stock when it is sold short.

 

 

 

 

 

a. What is the percentage loss if the price of the stock rises to $60? Round your answer to one decimal places.

 

%

 

b. What is the percentage loss if the price of the stock rises to $75? Round your answer to one decimal places.

 

%

 

c. What is the percentage gain if the company goes bankrupt and is dissolved? Round your answer to one decimal places.

 

%

 

d. What is the maximum percentage gain the short seller can earn?

 

-Select-50%100%150%200%There is no limit.

 

 

 

What is the largest percentage loss the short seller can sustain?

 

-Select-50%100%150%200%There is no limit.

 

 

 

e. From the short seller’s perspective

 

1. what is the best case scenarios?

 

-Select-The stock go to $0.The stock rises.

 

 

 

 

 

2. what is the worst case scenarios?

 

-Select-The stock go to $0.The stock rises.

 

 

 

7. An investor sells a stock short for $50 a share. A year later, the investor covers the position at $44 a share. If the margin requirement is 40 percent, what is the percentage return earned on the investment? Round your answer to one decimal places.__________ %

 

 

 

Redo the calculations, assuming the price of the stock is $56 when the investor closes the position. Round your answer to one decimal places._________%

 

 

 

8. A speculator sells a stock short for $55 a share. The company pays a $2 annual cash dividend. After a year has passed, the seller covers the short position at $45. What is the percentage return on the position (excluding the impact of any interest expense and commissions)? Round your answer to one decimal places.____________ %