full on December 31, 2014.

Faital Company’s credit rating permits it to borrow funds from

its several lines of credit at 10%. The comput

(Entries and Questions for Bond Transactions) On June 30, 2010, Mackes Company issued
$5,000,000 face value of 13%, 20-year bonds at $5,376,150, a yield of 12%. Mackes uses the
effective-interest method to amortize bond premium or discount. The bonds pay semiannual
interest on June 30 and December 31. (a) Prepare the j

(Imputation of Interest with Right) On January 1, 2010, Durdil Co. borrowed and received
$500,000 from a major customer evidenced by a zero-interest-bearing note due in 3 years. As
consideration for the zero-interest-bearing feature, Durdil agrees to supply the customer’s
inventory needs for the loan period at lower

How are restrictions of retained earnings reported?

(Entries for Retirement and Issuance of Bonds) Robinson, Inc. had outstanding $5,000,000 of
11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued
$7,000,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 98. A portion of the
proceeds was used to call the 11% bonds a

See Full Question And Answer at solutionrank.com

(Long-Term Debt Disclosure) At December 31, 2010, Redmond Company has outstanding three
long-term debt issues. The first is a $2,000,000 note payable which matures June 30, 2013. The
second is a $6,000,000 bond issue which matures September 30, 2014. The third is a
$12,500,000 sinking fund debenture with annual sinking

Shown below is the liabilities and stockholders’ equity section of the balance sheet for
Ingalls Company and Wilder Company. Each has assets totaling $4,200,000. For the year each
company has earned the same income before interest and taxes. At year-end, the market price of
Ingalls’s stock was $101 per share, and W

Satchel Inc. purchases 10,000 shares of its own previously issued $10 par common stock for
$290,000. Assuming the shares are held in the treasury with intent to reissue, what effect does
this transaction have on (a) Net income, (b) Total assets, (c) Total paid-in capital, and (d) Total
stockholders’ equity?

List possible sources of additional paid-in capital

Mr. Davis filed a delinquent tax return on July 27. The return reflected $3,700 total tax, $4,000
withholding, and a $300 refund due. Compute his late-filing penalty?

See Full Question And Answer at solutionrank.com

Buddy Bushey is a student at a local community college. This year, he received a $20,000 living
allowance from his parents and an $11,500 academic scholarship from a civic club. This
scholarship paid $8,200 for Buddy's tuition, $1,300 for his text books, and $2,000 for his
commuting expenses. Buddy also won $5,000 play

Weisberg Corporation has 10,000 shares of $100 par value, 6%, preferred stock and 50,000
shares of $10 par value common stock outstanding at December 31, 2010. Answer the questions
in each of the following independent situations. (a) If the preferred stock is cumulative and
dividends were last paid on the preferred sto

For what reasons might a company restrict a portion of its retained earnings?

Cole Inc. owns shares of Marlin Corporation stock classified as available-for-sale securities. At
December 31, 2010, the available-for-sale securities were carried in Cole’s accounting
records at their cost of $875,000, which equals their market value. On September 21, 2011, when
the market value of the securities wa

What is meant by par value, and what is its significance to stockholders?

See Full Question And Answer at solutionrank.com

Describe the accounting for the issuance for cash of no par value common stock at a price in
excess of the stated value of the common stock.

(Term Modification without Gain—Creditor’s Entries) Using the same information as in

E14-21 above, answer the following questions related to American Bank (creditor). (a) What
interest rate should American Bank use to calculate the loss on the debt restructuring? (b)
Compute the loss that American Bank will suffer

Mr. and Mrs. Boyd Knevel use a fiscal year ending July 31 as the taxable year for filing their
joint Form 1040. a. What is the last date on which the Knevels can apply for an automatic
extension of time to file their return for fiscal year ending July 31, 2017? b. Assuming that the
Knevels make a timely application,

Moonwalker Corporation issued 2,000 shares of its $10 par value common stock for $60,000.
Moonwalker also incurred $1,500 of costs associated with issuing the stock. Prepare
Moonwalker’s journal entry to record the issuance of the company’s stock.

(Debtor/Creditor Entries for Settlement of Troubled Debt) Gottlieb Co. owes $199,800 to
Ceballos Inc. The debt is a 10-year, 11% note Because Gottlieb Co is in financial trouble,
Ceballos Inc. agrees to accept some property and cancel the entire debt. The property has a book
value of $90,000 and a fair market value of

See Full Question And Answer at solutionrank.com

Zachary and Stella Hernandez divorced this year. The divorce agreement reads, "Zachary
Hernandez shall pay Stella Hernandez $1,750 every month. This payment is in complete
satisfaction of Mr. Hernandez's legal obligation to his former wife and their two children, Tony
and Kristen Hernandez." The agreement provides no o

Mr. T has not paid income tax or filed a tax return for the last eight years. He believes that the
IRS can no longer assess back taxes for the first five of those years. Identify the tax issue or
issues suggested by the above situations, and state each issue in the form of a question

(Entries for Retirement and Issuance of Bonds) Friedman Company had bonds outstanding with
a maturity value of $500,000. On April 30, 2011, when these bonds had an unamortized discount
of $10,000, they were called in at 104. To pay for these bonds, Friedman had issued other bonds
a month earlier bearing a lower interes

Wool ford Inc. declared a cash dividend of $1.00 per share on its 2 million outstanding shares.
The dividend was declared on August 1, payable on September 9 to all stockholders of record on
August 15. Prepare all journal entries necessary on those three dates.

(Effective-Interest Method) Samantha Cordelia, an intermediate accounting student, is having

difficulty amortizing bond premiums and discounts using the effective-interest method.
Furthermore, she cannot understand why GAAP requires that this method be used instead of the
straight-line method. She has come to you with

See Full Question And Answer at solutionrank.com

Mr. and Mrs. JM, ages 68 and 66, always claim the standard deduction on their joint return. They
own a local restaurant, the Shoreline Grill, as a sole proprietorship. They are both graduates of
State University and make regular donations to their alma mater. Their method for doing so is a
bit unusual. At the beginning

Mr. and Mrs. Pratt failed to apply for an extension of time to file their 2016 Form 1040 and
didn't mail the return to the IRS until May 29, 2017. Assuming the Pratts had no excuse for filing
a delinquent return, compute their late-filing and late-payment penalty if: a. The return showed a
$19,758 balance of tax due.

Explain how underwriting costs and accounting and legal fees associated with the issuance of
stock should be recorded.

Where in the financial statements is preferred stock normally reported?

Discuss the propriety of showing: (a) Treasury stock as an asset. (b) “Gain” or “loss”
on sale of treasury stock as additions to or deductions from income. (c) Dividends received on
treasury stock as income.

See Full Question And Answer at solutionrank.com

(Term Modification with Gain—Creditor’s Entries) Using the same information as in E14-
21 and E14-23 above, answer the following questions related to American Bank (creditor). (a)
Compute the loss American Bank will suffer under this new term modification. Prepare the
journal entry to record the loss on American’s

What are the principal considerations of a board of directors in making decisions involving
dividend declarations? Discuss briefly.

Hinges Corporation issued 500 shares of $100 par value preferred stock for $61,500. Prepare
Hinges’s journal entry.

Mr. Hall prepared and signed last year's tax return on April 3. However, he forgot to mail the
return until the morning of April 20. He enclosed his check for the $3,612 balance of tax due
with the return. Compute his late-filing and late-payment penalty?

What factors influence the dividend policy of a company?

See Full Question And Answer at solutionrank.com

Abernathy Corporation was organized on January 1, 2010. It is authorized to issue 10,000 shares
of 8%, $50 par value preferred stock, and 500,000 shares of no par common stock with a stated
value of $2 per share. The following stock transactions were completed during the first year. Jan.
10 Issued 80,000 shares of comm

Ravonette Corporation issued 300 shares of $10 par value common stock and 100 shares of $50
par value preferred stock for a lump sum of $13,500. The common stock has a market value of
$20 per share, and the preferred stock has a market value of $90 per share. Prepare the journal
entry to record the issuance.

Distinguish between common and preferred stock.

(Analysis of Amortization Schedule and Interest Entries) The following amortization and interest
schedule reflects the issuance of 10-year bonds by Capulet Corporation on January 1, 2004, and
the subsequent interest payments and charges. The company’s year-end is December 31, and
financial statements are prepared onc

Explain each of the following terms: authorized capital stock, unissued capital stock, issued
capital stock, outstanding capital stock, and treasury stock.

See Full Question And Answer at solutionrank.com

Fogelberg Corporation is a regional company which is an SEC registrant. The corporation’s

securities are thinly traded on NASDAQ (National Association of Securities Dealers Quotes).
Fogelberg has issued 10,000 units. Each unit consists of a $500 par, 12% subordinated debenture
and 10 shares of $5 par common stock. Th

In the absence of restrictive provisions, what are the basic rights of stockholders of a
corporation?

The following are selected transactions that may affect stockholders’ equity. 1. Recorded
accrued interest earned on a note receivable. 2. Declared and distributed a stock split. 3. Declared
a cash dividend. 4. Recorded a retained earnings restriction. 5. Recorded the expiration of
insurance coverage that was previou

Percy Wilson is a calendar year taxpayer. What is the un-extended filing date of Percy Wilson's
2017 federal income tax return if: a. Percy Wilson Inc. is a corporation? b. Mr. Percy Wilson is
an individual?

Hartman Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value
preferred stock for a lump sum of $100,000. (a) Prepare the journal entry for the issuance when
the market value of the common shares is $168 each and market value of the preferred is $210
each. (Round to nearest dollar.) (b)

See Full Question And Answer at solutionrank.com

(Term Modification without Gain—Debtor’s Entries) On December 31, 2010, the American
Bank enters into a debt restructuring agreement with Barkley Company, which is now
experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,000,000
note receivable by the following modifications: 1. R

Twenty-five thousand shares reacquired by Pierce Corporation for $48 per share were exchanged
for undeveloped land that has an appraised value of $1,700,000. At the time of the exchange the
common stock was trading at $60 per share on an organized exchange. (a) Prepare the journal
entry to record the acquisition of lan

(Comprehensive Problem: Issuance, Classification, Reporting) Presented below are four

independent situations. (a) On March 1, 2011, Wilke Co. issued at 103 plus accrued interest
$4,000,000, 9% bonds. The bonds are dated January 1, 2011, and pay interest semiannually on
July 1 and January 1. In addition, Wilke Co. incur

Egolf Corporation failed to include $300,000 of taxable interest income on its 2017 calendar year
Form 1120. The gross income reported on the return was $4.7 million, and the return was filed
on February 20, 2018. a. What is the last day on which the IRS may assess additional tax for
Egolf's 2017 taxable year? b. How

McNabb Corp. had $100,000 of 7%, $20 par value preferred stock and 12,000 shares of $25 par
value common stock outstanding throughout 2011. (a) Assuming that total dividends declared in
2011 were $64,000, and that the preferred stock is not cumulative but is fully participating,
common stockholders should receive 2011

See Full Question And Answer at solutionrank.com

Davison Inc. recently hired a new accountant with extensive experience in accounting for
partnerships. Because of the pressure of the new job, the accountant was unable to review what
he had learned earlier about corporation accounting. During the first month, he made the
following entries for the corporation’s capit

Describe the accounting entry for a stock dividend, if any. Describe the accounting entry for a
stock split, if any.

Mr. and Mrs. Kilo purchased their first home in 2003 for $240,000. They sold this home in 2007
for $210,000. They purchased their second home in 2008 for $435,000 and sold it this year for
$1,150,000. a. Did the Kilos recognize a deductible loss on the 2007 sale of their first home? b.
Compute the income tax and Medi

The following information has been taken from the ledger accounts of Sampras Corporation.
Determine the current balance of retainedearnings.

For the past 10 years, Mr. Y lived on his sailboat for eight months of the year and spent the other
four months in his daughter's home. This year, he realized a $35,200 gain on sale of the boat and
moved into his own apartment. Identify the tax issue or issues suggested by the above situations,
and state each issue in

See Full Question And Answer at solutionrank.com

Green Day Corporation has outstanding 400,000 shares of $10 par value common stock. The
corporation declares a 5% stock dividend when the fair value of the stock is $65 per share.
Prepare the journal entries for Green Day Corporation for both the date of declaration and the
date of distribution.

Dividends are sometimes said to have been paid “out of retained earnings.” What is the
error, if any, in that statement?

Buttercup Corporation issued 300 shares of $10 par value common stock for $4,500. Prepare
Buttercup’s journal entry.

(Imputation of Interest) Presented below are two independent situations: (a) On January 1, 2011,
Spartan Inc. purchased land that had an assessed value of $390,000 at the time of purchase. A
$600,000, zero-interest-bearing note due January 1, 2014, was given in exchange. There was no
established exchange price for the
(Entries for Zero-Interest-Bearing Notes) On January 1, 2011, McLean Company makes the two
following acquisitions. 1. Purchases land having a fair market value of $300,000 by issuing a 5-
year, zero-interest-bearing promissory note in the face amount of $505,518. 2. Purchases
equipment by issuing a 6%, 8-year promissory

See Full Question And Answer at solutionrank.com

(Term Modification with Gain—Debtor’s Entries) Use the same information as in E14-21
above except that American Bank reduced the principal to $1,900,000 rather than $2,400,000.
On January 1, 2014, Barkley pays $1,900,000 in cash to American Bank for the principal. (a)
Can Barkley Company record a gain under this te

(Settlement of Debt) Strickland Company owes $200,000 plus $18,000 of accrued interest to
Moran State Bank. The debt is a 10-year, 10% note. During 2010, Strickland’s business
deteriorated due to a faltering regional economy. On December 31, 2010, Moran State Bank
agrees to accept an old machine and cancel the entire

Eighteen months ago, Barry Shelton won a $2 million Maryland state lottery jackpot and chose
to receive it as $120,000 annual annuity for the rest of his life. This year his brothers persuaded
him to sell the annuity to a financial institution for $1.79 million and invest the sales proceeds in
a new family business. Ho

On April 13, Mr. LP applied for an automatic extension of time to file his Form 1040. He
estimated that the balance of tax due was $3,800, which he paid with the extension request. He
filed his return on June 20. The actual balance of tax due was $6,900, so he paid an additional
$3,100 with the return. Identify the ta

(Entries for Zero-Interest-Bearing Note; Payable in Installments) Sabonis Cosmetics Co.

purchased machinery on December 31, 2009, paying $50,000 down and agreeing to pay the
balance in four equal installments of $40,000 payable each December 31. An assumed interest of
8% is implicit in the purchase price. Prepare the j

See Full Question And Answer at solutionrank.com

Dagwood Inc. recently noted that its 4% preferred stock and 4% participating preferred stock,
which are both cumulative, have priority as to dividends up to 4% of their par value. Its
participating preferred stock participates equally with the common stock in any dividends in
excess of 4%. What is meant by the term par

(Issuance and Retirement of Bonds) Venezuela Co. is building a new hockey arena at a cost of
$2,500,000. It received a down payment of $500,000 from local businesses to support the
project, and now needs to borrow $2,000,000 to complete the project. It therefore decides to
issue $2,000,000 of 10.5%, 10-year bonds. Thes
A revenue agent determined that Ms. Owen understated her tax by $48,100 and concluded that
$9,200 was caused by her inadequate record keeping while the remainder was caused by her
misapplication of a complex rule of law. Compute the negligence penalty that the revenue agent
can impose on Ms. Owen?

The pilots of Skyway Airlines have been on strike for four months. Ms. BG received a $2,700
benefit from her union, the Airline Pilots Association International. The union funded the
benefits for Skyway pilots through a solicitation from union members flying for other airlines.
Identify the tax issue or issues suggest

The following data were taken from the balance sheet accounts of Wickham Corporation on
December 31, 2010. Prepare the required journal entries for the following unrelated items. (a) A
5% stock dividend is declared and distributed at a time when the market value of the shares is
$39 per share (b) The par value of the c

See Full Question And Answer at solutionrank.com

Briefly discuss the implications of the financial statement presentation project for the reporting
of stockholders’ equity.

The revenue agent who audited Mr. and Mrs. Arnold's Form 1040 concluded that the couple
failed to report $16,900 of taxable income for the year. As a result, the IRS assessed a $4,225
deficiency of the tax on the omitted income. Compute the penalty that the IRS can impose if the
revenue agent concludes that: a. The Ar

The stockholders’ equity accounts of Lawrence Company have the following balances on
December 31, 2010. Common stock, $10 par, 200,000 shares issued and outstanding $2,000,000
Paid-in capital in excess of par 1,200,000 Retained earnings 5,600,000 Shares of Lawrence
Company stock are currently sell

(Entries for Retirement and Issuance of Bonds) On June 30, 2002, Mendenhal Company issued
12% bonds with a par value of $600,000 due in 20 years. They were issued at 98 and were
callable at 104 at any date after June 30, 2010. Because of lower interest rates and a significant
change in the company’s credit rating, it

What are the different bases for stock valuation when assets other than cash are received for
issued shares of stock?

See Full Question And Answer at solutionrank.com

Graves Mining Company declared, on April 20, a dividend of $500,000 payable on June 1. Of
this amount, $125,000 is a return of capital. Prepare the April 20 and June 1 entries for Graves.

The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to
reduce the share price and increase share volume prior to a new issue the per share par value is
$10; book value is $70 per share. Five million shares are issued and outstanding. Prepare the
necessary journal entries assuming

(Comprehensive Bond Problem) In each of the following independent cases the company closes
its books on December 31. 1. Sanford Co. sells $500,000 of 10% bonds on March 1, 2010. The
bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2013.
The bonds yield 12%. Give entries through D

On a recent scuba dive, Mr. UW located a shipwreck and recovered a Spanish sword inlaid with
precious stones. The sword's appraised value is $11,500. Mr. UW mounted the sword over his
fireplace. Identify the tax issue or issues suggested by the above situations, and state each issue
in the form of a question

Indicate how each of the following accounts should be classified in the stockholders’ equity
section. (a) Common Stock (b) Retained Earnings (c) Paid-in Capital in Excess of Par Value (d)
Treasury Stock (e) Paid-in Capital from Treasury Stock (f) Paid-in Capital in Excess of Stated
Value (g) Preferred Stock

See Full Question And Answer at solutionrank.com

Sprinkle Inc. has outstanding 10,000 shares of $10 par value common stock. On July 1, 2010,
Sprinkle reacquired 100 shares at $87 per share. On September 1, Sprinkle reissued 60 shares at
$90 per share. On November 1, Sprinkle reissued 40 shares at $83 per share. Prepare
Sprinkle’s journal entries to record these tra

(Negative Amortization) Good-Deal Inc. developed a new sales gimmick to help sell its
inventory of new automobiles. Because many new car buyers need financing, Good-Deal offered
a low down payment and low car payments for the first year after purchase. It believes that this
promotion will bring in some new buyers. On J

What features or rights may alter the character of preferred stock?

On January 12, 2015, Mr. and Mrs. Nixon moved out of their old residence (where they had
lived for 22 years) and into a new residence purchased nine days earlier on January 3. They
finally sold their old residence on June 7, 2015, for a $278,000 realized gain. a. How much gain
would they recognize on the sale of thei

On February 1, 2010, Buffalo Corporation issued 3,000 shares of its $5 par value common stock
for land worth $31,000. Prepare the February 1, 2010, journal entry.

See Full Question And Answer at solutionrank.com

An important rule is that you should never show a nominal rate on a time line or use it in
calculations unless what condition holds? (Hint: think of annual compounding, when iNom =
EAR = iPer.) What would be wrong with your answer to questions l(1) and l(2) if you used the
nominal rate (10%) rather than the periodic

Boeing's bonds were issued with a yield to maturity of 7.5 percent. Does the yield to maturity
represent the promised or expected return on the bond? Why is corporate finance important to all
managers? MINI CASE Sam Struthers and Shawna Tibbs are vice-presidents of Mutual of
Seattle Insurance Com

What is the value of the following call option according to the OPM? Stock Price = $27.00.
Exercise Price = $25.00 Time to Expiration = 6 Months. Risk-Free Rate = 6.0%. Stock Return
Variance = 0.11. Why is corporate finance important to all managers? MINI CASE Assume that
you have just been hir

Should flotation costs be included in the estimate? Why is corporate finance important to all
managers? MINI CASE During the last few years, Harry Davis Industries has been too
constrained by the high cost of capital to make many capital investments. Recently, though,
capital costs have been declin

Now assume that Temp Force is expected to experience supernormal growth of 30 percent for
the next 3 years, then to return to its long-run constant growth rate of 6 percent. What is the
stock’s value under these conditions? What is its expected dividend yield and capital gains
yield be in year 1 In year 4? Why is

See Full Question And Answer at solutionrank.com

What is put-call parity? Why is corporate finance important to all managers? MINI CASE
Assume that you have just been hired as a financial analyst by Triple Trice Inc., a mid-sized
California company that specializes in creating exotic clothing. Since no one at Triple Trice is
familiar with the bas

What are the expected dividend yield, the capital gains yield, and the total return during the first
year? Why is corporate finance important to all managers? MINI CASE Sam Struthers and
Shawna Tibbs are senior vice presidents of the Mutual of Seattle. They are co-directors of the
company’s pen

What is the term structure of interest rates? What is a yield curve? MINI CASE Assume that you
recently graduated with a degree in finance and have just reported to work as an investment
advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle
Dellatorre, a p

Explain the differences between open outcry auctions, dealer markets, and electronic
communications networks (ECNS). MINI CASE Assume that you recently graduated with a
degree in finance and have just reported to work as an investment advisor at the brokerage firm
of Balik and Kiefer Inc. One of t
What are the total return, the current yield, and the capital gains yield for the discount bond?
(Assume the bond is held to maturity and the company does not default on the bond.) Why is
corporate finance important to all managers? MINI CASE Sam Struthers and Shawna Tibbs are
vice-presidents of

See Full Question And Answer at solutionrank.com

What would happen to the value of the 10 year bond over time if the required rate of return
remained at 13 percent, or if it remained at 7 percent? (Hint: with a financial calculator, enter
PMT, I, FV, and N, and then change (override) n to see what happens to the PV as the bond
approaches maturity.) Why is corporat

What is the efficient markets hypothesis, what are its three forms, and what are its implications?
Why is corporate finance important to all managers? MINI CASE Sam Struthers and Shawna
Tibbs are senior vice presidents of the Mutual of Seattle. They are co-directors of the
company’s pension fund

Should the component costs be figured on a before-tax or an after-tax basis? Why is corporate
finance important to all managers? MINI CASE During the last few years, Harry Davis
Industries has been too constrained by the high cost of capital to make many capital investments.
Recently, though, capit

What do we call the price that a borrower must pay for debt capital? What is the price of equity
capital? What are the four most fundamental factors that affect the cost of money, or the general
level of interest rates, in the economy? MINI CASE Assume that you recently graduated with a
degree in

What is the stock’s expected value one year from now? Why is corporate finance important
to all managers? MINI CASE Sam Struthers and Shawna Tibbs are senior vice presidents of the
Mutual of Seattle. They are co-directors of the company’s pension fund management
division, with Struthers havin

See Full Question And Answer at solutionrank.com

What is the bond's nominal yield to call (YTC)? Why is corporate finance important to all
managers? MINI CASE Sam Struthers and Shawna Tibbs are vice-presidents of Mutual of
Seattle Insurance Company and co-directors of the company's pension fund management
division. A major new client, the North

Define the terms inflation premium (IP), default risk premium (DRP), liquidity premium (LP),
and maturity risk premium (MRP). Which of these premiums is included when determining the
interest rate on (1) short-term U.S. treasury securities, (2) long-term U.S. treasury securities, (3)
short-term corporate securities, a
What are the two primary ways companies raise common equity? Why is corporate finance
important to all managers? MINI CASE During the last few years, Harry Davis Industries has
been too constrained by the high cost of capital to make many capital investments. Recently,
though, capital costs have be

Consider Triple Trice’s call option with a $25 strike price. The following table contains
historical values for this option at different stock prices: Create a table which shows (a) Stock
price, (b) Strike price, (c) Exercise value, (d) Option price, and (e) The premium of option price
over exercise value. W

Assume that temp force has a beta coefficient of 1.2, that the risk-free rate (the yield on T-bonds)
is 7 percent, and that the market risk premium is 5 percent. What is the required rate of return on
the firm’s stock? Why is corporate finance important to all managers? MINI CASE Sam
Struthers

See Full Question And Answer at solutionrank.com

What happens if a company has a constant g which exceeds its rs? Will many stocks have
expected g > rs in the short run (i.e., for the next few years)? In the long run (i.e. forever) Why is
corporate finance important to all managers? MINI CASE Sam Struthers and Shawna Tibbs are
senior vice pres

At any given time, how would the yield curve facing an AAA-rated company compare with the
yield curve for U. S. Treasury securities? At any given time, how would the yield curve facing a
BB-rated company compare with the yield curve for U. S. Treasury securities? Draw a graph to
illustrate your answer. MINI CASE

Write out the three equations that constitute the model. Why is corporate finance important to all
managers? MINI CASE Assume that you have just been hired as a financial analyst by Triple
Trice Inc., a mid-sized California company that specializes in creating exotic clothing. Since no
one at Tripl

What are call provisions and sinking fund provisions? Do these provisions make bonds more or
less risky? Why is corporate finance important to all managers? MINI CASE Sam Struthers and
Shawna Tibbs are vice-presidents of Mutual of Seattle Insurance Company and co-directors of
the company's pensio

What would the future and present values be if the annuity were an annuity due? Why is
corporate finance important to all managers? MINI CASE Assume that you are nearing
graduation and that you have applied for a job with a local bank. As part of the bank's evaluation
process, you have been asked

See Full Question And Answer at solutionrank.com

What is a constant growth stock? How are constant growth stocks valued? Why is corporate
finance important to all managers? MINI CASE Sam Struthers and Shawna Tibbs are senior vice
presidents of the Mutual of Seattle. They are co-directors of the company’s pension fund
management division, wit

What is the value at the end of year 3 of the following cash flow stream if the quoted interest rate
is 10 percent, compounded semiannually? Why is corporate finance important to all managers?
MINI CASE Assume that you are nearing graduation and that you have applied for a job with a
local bank

If you want an investment to double in three years, what interest rate must it earn? Why is
corporate finance important to all managers? MINI CASE Assume that you are nearing
graduation and that you have applied for a job with a local bank. As part of the bank's evaluation
process, you have been

Draw time lines for (a) a $100 lump sum cash flow at the end of year 2, (b) an ordinary annuity
of $100 per year for 3 years, and (c) an uneven cash flow stream of -$50, $100, $75, and $50 at
the end of years 0 through 3. Why is corporate finance important to all managers? MINI CASE
Assume that yo

What would the stock price be if its dividends were expected to have zero growth? Why is
corporate finance important to all managers? MINI CASE Sam Struthers and Shawna Tibbs are
senior vice presidents of the Mutual of Seattle. They are co-directors of the company’s
pension fund management divi

See Full Question And Answer at solutionrank.com

How does the equation for valuing a bond change if semiannual payments are made? Find the
value of a 10-year, semiannual payment, 10 percent coupon bond if nominal rd = 13%. Why is
corporate finance important to all managers? MINI CASE Sam Struthers and Shawna Tibbs are
vice-presidents of Mutual

What are financial assets? Describe some financial instruments. MINI CASE Assume that you
recently graduated with a degree in finance and have just reported to work as an investment
advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle
Dellatorre, a profes

Finally, Dellatorre is also interested in investing in countries other than the United States.
Describe the various types of risks that arise when investing overseas. MINI CASE Assume that
you recently graduated with a degree in finance and have just reported to work as an investment
advisor at th

What is the firm's cost of preferred stock? Why is corporate finance important to all managers?
MINI CASE During the last few years, Harry Davis Industries has been too constrained by the
high cost of capital to make many capital investments. Recently, though, capital costs have been
declining, and

What happens to the premium of option price over exercise value as the stock price rises? Why?
Why is corporate finance important to all managers? MINI CASE Assume that you have just
been hired as a financial analyst by Triple Trice Inc., a mid-sized California company that
specializes in creating

See Full Question And Answer at solutionrank.com

What is the present value of $100 to be received in 3 years if the appropriate interest rate is 10
percent? Why is corporate finance important to all managers? MINI CASE Assume that you are
nearing graduation and that you have applied for a job with a local bank. As part of the bank's
evaluation

What is the present value of the annuity? Why is corporate finance important to all managers?
MINI CASE Assume that you are nearing graduation and that you have applied for a job with a
local bank. As part of the bank's evaluation process, you have been asked to take an examination
which covers s

What factors determine a company's bond rating? Why is corporate finance important to all
managers? MINI CASE Sam Struthers and Shawna Tibbs are vice-presidents of Mutual of
Seattle Insurance Company and co-directors of the company's pension fund management
division. A major new client, the North

What is the PV of the same stream? Why is corporate finance important to all managers? MINI
CASE Assume that you are nearing graduation and that you have applied for a job with a local
bank. As part of the bank's evaluation process, you have been asked to take an examination
which covers several

What is a financial option what is the single most important characteristic of an option? Why is
corporate finance important to all managers? MINI CASE Assume that you have just been hired
as a financial analyst by Triple Trice Inc., a mid-sized California company that specializes in
creating exotic

See Full Question And Answer at solutionrank.com

Should the costs be historical (embedded) costs or new (marginal) costs? Why is corporate
finance important to all managers? MINI CASE During the last few years, Harry Davis
Industries has been too constrained by the high cost of capital to make many capital investments.
Recently, though, capital c

How are secondary markets organized? MINI CASE Assume that you recently graduated with a
degree in finance and have just reported to work as an investment advisor at the brokerage firm
of Balik and Kiefer Inc. One of the firm’s clients is Michelle Dellatorre, a professional tennis
player who has

What is market multiple analysis? Why is corporate finance important to all managers? MINI
CASE Sam Struthers and Shawna Tibbs are senior vice presidents of the Mutual of Seattle. They
are co-directors of the company’s pension fund management division, with Struthers having
responsibility for f

If equilibrium does not exist, how will it be established? Why is corporate finance important to
all managers? MINI CASE Sam Struthers and Shawna Tibbs are senior vice presidents of the
Mutual of Seattle. They are co-directors of the company’s pension fund management
division, with Struthers ha

What impact does each of the following call option parameters have on the value of a call
option? 1. Current Stock Price 2. Exercise Price 3. Option’s Term to Maturity 4. Risk-Free
Rate 5. Variability of the Stock Price Why is corporate finance important to all managers? MINI
CASE Assume that

See Full Question And Answer at solutionrank.com

Define (a) the stated, or quoted, or nominal rate, (iNom), and (b) the periodic rate (iPer). Why is
corporate finance important to all managers? MINI CASE Assume that you are nearing
graduation and that you have applied for a job with a local bank. As part of the bank's evaluation
process, you ha

How is the value of any asset whose value is based on expected future cash flows determined?
Why is corporate finance important to all managers? MINI CASE Sam Struthers and Shawna
Tibbs are vice-presidents of Mutual of Seattle Insurance Company and co-directors of the
company's pension fund manage

Boeing's bonds were rated AA- by S&P. Would you consider these bonds investment grade or
junk bonds? Why is corporate finance important to all managers? MINI CASE Sam Struthers
and Shawna Tibbs are vice-presidents of Mutual of Seattle Insurance Company and co-directors
of the company's pension fu

List some financial intermediaries. MINI CASE Assume that you recently graduated with a
degree in finance and have just reported to work as an investment advisor at the brokerage firm
of Balik and Kiefer Inc. One of the firm’s clients is Michelle Dellatorre, a professional tennis
player who has

Temp Force recently issued preferred stock. It pays an annual dividend of $5, and the issue price
was $50 per share. What is the expected return to an investor on this preferred stock? Why is
corporate finance important to all managers? MINI CASE Sam Struthers and Shawna Tibbs are
senior vice pre
See Full Question And Answer at solutionrank.com

What is the future value of a 3-year ordinary annuity of $100 if the appropriate interest rate is 10
percent? Why is corporate finance important to all managers? MINI CASE Assume that you are
nearing graduation and that you have applied for a job with a local bank. As part of the bank's
evaluati

Will the effective annual rate ever be equal to the nominal (quoted) rate? Why is corporate
finance important to all managers? MINI CASE Assume that you are nearing graduation and that
you have applied for a job with a local bank. As part of the bank's evaluation process, you have
been asked to t

Is the stream an annuity? Why is corporate finance important to all managers? MINI CASE
Assume that you are nearing graduation and that you have applied for a job with a local bank. As
part of the bank's evaluation process, you have been asked to take an examination which covers
several financial

What is the future value of an initial $100 after 3 years if it is invested in an account paying 10
percent annual interest? Why is corporate finance important to all managers? MINI CASE
Assume that you are nearing graduation and that you have applied for a job with a local bank. As
part of the b

We sometimes need to find how long it will take a sum of money (or anything else) to grow to
some specified amount. For example, if a company's sales are growing at a rate of 20 percent per
year, how long will it take sales to double? Why is corporate finance important to all managers?
MINI CASE

See Full Question And Answer at solutionrank.com

Who are the providers (savers) and users (borrowers) of capital? How is capital transferred
between savers and borrowers? MINI CASE Assume that you recently graduated with a degree
in finance and have just reported to work as an investment advisor at the brokerage firm of Balik
and Kiefer Inc. On

If you bought this bond, do you think you would be more likely to earn the YTM or the YTC?
Why? Why is corporate finance important to all managers? MINI CASE Sam Struthers and
Shawna Tibbs are vice-presidents of Mutual of Seattle Insurance Company and co-directors of
the company's pension fund ma

What is the effective annual rate (EAR)? What is the ear for a nominal rate of 12 percent,
compounded semiannually? Compounded quarterly? Compounded monthly? Compounded
daily? Why is corporate finance important to all managers? MINI CASE Assume that you are
nearing graduation and that you have
What is the pure expectations theory? What does the pure expectations theory imply about the
term structure of interest rates? MINI CASE Assume that you recently graduated with a degree
in finance and have just reported to work as an investment advisor at the brokerage firm of Balik
and Kiefer Inc

What is the market interest rate on Harry Davis’ debt and its component cost of debt? Why is
corporate finance important to all managers? MINI CASE During the last few years, Harry Davis
Industries has been too constrained by the high cost of capital to make many capital investments.
Recently, th

See Full Question And Answer at solutionrank.com

Now assume that the stock is currently selling at $30.29. What is the expected rate of return on
the stock? Why is corporate finance important to all managers? MINI CASE Sam Struthers and
Shawna Tibbs are senior vice presidents of the Mutual of Seattle. They are co-directors of the
company’s p

What is the yield to maturity on a 10-year, 9 percent annual coupon, $1,000 par value bond that
sells for $887.00? That sells for $1,134.20? What does the fact that a bond sells at a discount or
at a premium tells you about the relationship between rd and the bond's coupon rate? Why is
corporate finance important to a

What would happen to the bonds' value if inflation fell, and rd declined to 7 percent? Would we
now have a premium or a discount bond? Why is corporate finance important to all managers?
MINI CASE Sam Struthers and Shawna Tibbs are vice-presidents of Mutual of Seattle Insurance
Company and co-dir

Harry Davis’ preferred stock is riskier to investors than its debt, yet the preferred's yield to
investors is lower than the yield to maturity on the debt. Does this suggest that you have made a
mistake? (Hint: think about taxes.) Why is corporate finance important to all managers? MINI
CASE Dur

Is the stock price based more on long-term or short-term expectations? Answer this by finding
the percentage of Temp Force current stock price based on dividends expected more than three
years in the future. Why is corporate finance important to all managers? MINI CASE Sam
Struthers and Shawna Tib

See Full Question And Answer at solutionrank.com

What is the firm’s current stock price? Why is corporate finance important to all managers?
MINI CASE Sam Struthers and Shawna Tibbs are senior vice presidents of the Mutual of Seattle.
They are co-directors of the company’s pension fund management division, with Struthers
having responsibili
What sources of capital should be included when you estimate Harry Davis’ weighted
average cost of capital (WACC)? Why is corporate finance important to all managers? MINI
CASE During the last few years, Harry Davis Industries has been too constrained by the high
cost of capital to make many capi

Why do stock prices change? Suppose the expected D1 is $2, the growth rate is 5 percent, and rs
is 10 percent. Using the constant growth model, what is the impact on stock price if g is 4
percent or 6 percent if rs is 9 percent or 11 percent? Why is corporate finance important to all
managers? MINI CASE

Suppose the firm has historically earned 15 percent on equity (ROE) and retained 35 percent of
earnings, and investors expect this situation to continue in the future. How could you use this
information to estimate the future dividend growth rate, and what growth rate would you get? Is
this consistent with the 5 perc

Write out a formula that can be used to value any stock, regardless of its dividend pattern. Why
is corporate finance important to all managers? MINI CASE Sam Struthers and Shawna Tibbs
are senior vice presidents of the Mutual of Seattle. They are co-directors of the company’s
pension fund mana

See Full Question And Answer at solutionrank.com

What is the future value of $100 after 5 years under 12 percent annual compounding?
Semiannual compounding Quarterly compounding Monthly compounding Daily compounding?
Why is corporate finance important to all managers? MINI CASE Assume that you are nearing
graduation and that you have applied f

How do free cash flows and the weighted average cost of capital interact to determine a
firm’s value? MINI CASE Assume that you recently graduated with a degree in finance and
have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer
Inc. One of the firm’s c

Describe briefly the legal rights and privileges of common stockholders. Why is corporate
finance important to all managers? MINI CASE Sam Struthers and Shawna Tibbs are senior vice
presidents of the Mutual of Seattle. They are co-directors of the company’s pension fund
management division, wit

If this firm were to default on the bonds, would the company be immediately liquidated? Would
the bondholders be assured of receiving all of their promised payments? Why is corporate
finance important to all managers? MINI CASE Sam Struthers and Shawna Tibbs are vice-
presidents of Mutual of Seatt

Suppose someone offered to sell you a note calling for the payment of $1,000 15 months from
today. They offer to sell it to you for $850. You have $850 in a bank time deposit which pays a
6.76649 percent nominal rate with daily compounding, which is a 7 percent effective annual
interest rate, and you plan to leave the

See Full Question And Answer at solutionrank.com

What is the firm’s expected dividend stream over the next 3 years? Why is corporate finance
important to all managers? MINI CASE Sam Struthers and Shawna Tibbs are senior vice
presidents of the Mutual of Seattle. They are co-directors of the company’s pension fund
management division, with St

List some physical location markets and some computer/telephone networks. MINI CASE
Assume that you recently graduated with a degree in finance and have just reported to work as an
investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is
Michelle Dellatorre,

1. Construct an amortization schedule for a $1,000, 10 percent annual rate loan with 3 equal
installments. 2. What is the annual interest expense for the borrower, and the annual interest
income for the lender, during year 2? Why is corporate finance important to all managers? MINI
CASE Assume tha

What is the real risk-free rate of interest (r*) and the nominal risk-free rate (rRF)? How are these
two rates measured? MINI CASE Assume that you recently graduated with a degree in finance
and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer
Inc. One

What does market equilibrium mean? Why is corporate finance important to all managers? MINI
CASE Sam Struthers and Shawna Tibbs are senior vice presidents of the Mutual of Seattle. They
are co-directors of the company’s pension fund management division, with Struthers having
responsibility for f

See Full Question And Answer at solutionrank.com

Options have a unique set of terminology. Define the following terms: (1) Call option; (2) Put
option; (3) Exercise price; (4) Striking, or strike, price; (5) Option price; (6) Expiration date; (7)
Exercise value; (8) Covered option; (9) Naked option; (10) In-the-money call; (11) Out-of-the-
money call; and

Harry Davis doesn’t plan to issue new shares of common stock. Using the CAPM approach,
what is Harry Davis’ estimated cost of equity? Why is corporate finance important to all
managers? MINI CASE During the last few years, Harry Davis Industries has been too
constrained by the high cost of capi

Suppose most investors expect the inflation rate to be 5 percent next year, 6 percent the
following year, and 8 percent thereafter. The real risk-free rate is 3 percent. The maturity risk
premium is zero for securities that mature in 1 year or less, 0.1 percent for 2-year securities, and
then the MRP increases by 0.

What is the difference between an ordinary annuity and an annuity due? What type of annuity is
shown below? How would you change it to the other type of annuity?

Finally, assume that Temp Force’s earnings and dividends are expected to decline by a
constant 6 percent per year, that is, g = -6%. Why would anyone be willing to buy such a stock,
and at what price should it sell? What would be the dividend yield and capital gains yield in each
year? Why is corporate finance imp

See Full Question And Answer at solutionrank.com

In 1973, Fischer Black and Myron Scholes developed the Black-Scholes Option Pricing Model
(OPM). What assumptions underlie the OPM? MINI CASE Assume that you have just been
hired as a financial analyst by Triple Trice Inc., a mid-sized California company that specializes
in creating exotic clothing.

Suppose on January 1 you deposit $100 in an account that pays a nominal, or quoted, interest
rate of 11.33463 percent, with interest added (compounded) daily. How much will you have in
your account on October 1, or after 9 months? Why is corporate finance important to all
managers? MINI CASE Assu

Suppose Temp Force is expected to experience zero growth during the first 3 years and then to
resume its steady-state growth of 6 percent in the fourth year. What is the stock’s value now?
What is its expected dividend yield and its capital gains yield in year 1 In year 4? Why is
corporate finance important to all

What is the estimated cost of equity using the discounted cash flow (DCF) approach? Why is
corporate finance important to all managers? MINI CASE During the last few years, Harry Davis
Industries has been too constrained by the high cost of capital to make many capital investments.
Recently, though

What would be the value of the bond described in part d if, just after it had been issued, the
expected inflation rate rose by 3 percentage points, causing investors to require a 13 percent
return? Would we now have a discount or a premium bond? Why is corporate finance important
to all managers? MINI CASE

See Full Question And Answer at solutionrank.com

What is interest rate (or price) risk? Which bond has more interest rate risk, an annual payment
1-year bond or a 10-year bond? Why? Why is corporate finance important to all managers?
MINI CASE Sam Struthers and Shawna Tibbs are vice-presidents of Mutual of Seattle Insurance
Company and co-dire
Should you use the nominal cost of debt or the effective annual cost? Why is corporate finance
important to all managers? MINI CASE During the last few years, Harry Davis Industries has
been too constrained by the high cost of capital to make many capital investments. Recently,
though, capital cost

What are some different types of markets? MINI CASE Assume that you recently graduated with
a degree in finance and have just reported to work as an investment advisor at the brokerage firm
of Balik and Kiefer Inc. One of the firm’s clients is Michelle Dellatorre, a professional tennis
player wh

What is the present value of the following uneven cash flow stream? The appropriate interest rate
is 10 percent, compounded annually. Why is corporate finance important to all managers? MINI
CASE Assume that you are nearing graduation and that you have applied for a job with a local
bank. As

How is the value of a bond determined? What is the value of a 10-year, $1,000 par value bond
with a 10 percent annual coupon if its required rate of return is 10 percent? Why is corporate
finance important to all managers? MINI CASE Sam Struthers and Shawna Tibbs are vice-
presidents of Mutual of

See Full Question And Answer at solutionrank.com

Will the future value be larger or smaller if we compound an initial amount more often than
annually, for example, every 6 months, or semiannually, holding the stated interest rate constant?
Why? Why is corporate finance important to all managers? MINI CASE Assume that you are
nearing graduation

Why is there a cost associated with reinvested earnings? Why is corporate finance important to
all managers? MINI CASE During the last few years, Harry Davis Industries has been too
constrained by the high cost of capital to make many capital investments. Recently, though,
capital costs have been d

How would Herzberg’s motivation theory help to explain why most people feel a good salary
is not enough to motivate someone over the long-term in a job?

What is reinvestment rate risk? Which has more reinvestment rate risk, a 1-year bond or a 10-
year bond? Why is corporate finance important to all managers? MINI CASE Sam Struthers and
Shawna Tibbs are vice-presidents of Mutual of Seattle Insurance Company and co-directors of
the company's pension

Suppose you could buy, for $1,000, either a 10 percent, 10-year, annual payment bond or a 10
percent, 10-year, semiannual payment bond. They are equally risky. Which would you prefer? If
$1,000 is the proper price for the semiannual bond, what is the equilibrium price for the annual
payment bond? Why is corporate f
See Full Question And Answer at solutionrank.com

During data collection for the transition from an old management accounting system to a new
activity-based cost management system, you see a manager’s reported time allotments. You
know that the data supplied by the manager are completely false. You confront the manager, and
she states that she is worried that if she

Based on Hofstede’s findings, which countries do you believe are most different from the
United States? Defend your answer.

1. What environmental factors could Bill Strickland have changed in his life? 2. What moral
authority does Bill Strickland speak from to struggling college students? 3. What impact did
Strickland’s mentor (Frank Ross) have on his goals, self-efficacy, and values? Bill
Strickland’s life changed and began anew on a W

When looking at the decision-making process (Figure), do you feel any one step is more
important than the others? If so, why?

What are the key features of a bond? Why is corporate finance important to all managers? MINI
CASE Sam Struthers and Shawna Tibbs are vice-presidents of Mutual of Seattle Insurance
Company and co-directors of the company's pension fund management division. A major new
client, the Northwestern Mun

See Full Question And Answer at solutionrank.com

Manoil Electronics manufactures and sells electronic components to electronics stores. The
controller is preparing her annual budget and has asked the sales group to prepare sales
estimates. All members of the sales force have been asked to estimate sales in their territory for
each of the organization’s 10 major pro

The chapter focuses on the perspective of the employee in discussing the psychological contract.
From the employer’s perspective, what is generally expected from employees in terms of the
contract?

Peterborough Medical Devices makes devices and equipment that it sells to hospitals. The
organization has a profit-sharing plan that is worded as follows: The company will make
available a profit-sharing pool that will be the lower of the following two items: 1. 40% of
income before taxes in excess of the target profit

Evaluating a compensation plan Beau Monde, Inc., a manufacturer and distributor of health and
beauty products, made the following disclosure about its compensation program: Our
compensation philosophy is based on two simple principles: (1) We pay for performance and (2)
management cannot benefit unless our shareholders
The mix of salary and commission Belleville Fashions sells high-quality women’s,
men’s, and children’s clothing. The store employs a sales staff of 11 full-time employees
and 12 part-time employees. Until recently, all sales staff were paid a flat salary and participated
in a profit-sharing plan that provided ben

See Full Question And Answer at solutionrank.com

Ethical control frameworks In December 2002, Time magazine named Cynthia Cooper, Coleen
Rowley, and Sherron Watkins as its Persons of the Year. Cynthia Cooper was vice president of
internal audit for WorldCom and informed the firm’s audit committee that the firm had
improperly treated billions of dollars as capital e

With the increase of diversity in the workplace, discuss the additional issues needing to be
addressed that may be present in today’s organizations in relation to (a) The communication
process and (b) The sending and receiving of nonverbal messages.

What are three long-term effects of globalization on businesses, workers, and consumers? Who
benefits most/least from globalization?

1. What distinguishes data falsification from gaming activities? 2. What is gain sharing?

Assume that you want to develop your global skills so that you can pursue international
assignments with your company. Identify five skills that you would want to develop, and
describe how you would go about improving these skills.

See Full Question And Answer at solutionrank.com

Discuss why organizational design and communication flow are so closely related.

Organizational culture is a difficult concept to define. How would you define the culture of an
organization you have been employed by or observed?

Why is emotional intelligence a difficult construct to measure accurately?

Assume you are about to meet and negotiate with an individual from a low-context culture. Do
you think the person will know a great deal about you before you meet with him or her? Explain.

Chow Company is an insurance company in Hong Kong. Chow hires 55 people to process
insurance claims. The volume of claims is extremely high, and all claims examiners are kept
extremely busy. The number of claims in which errors are made runs about 10%. If a claim has
an error, it must be corrected by the claims examine

See Full Question And Answer at solutionrank.com

How can McDonald’s use its powerful brand name to help improve its effectiveness? The
McDonald brothers’ first restaurant was founded in 1937 just east of Pasadena, California. It
didn’t serve hamburgers, had no playground, and offered no Happy Meals. The most popular
menu item was the hot dog. From that humble b

Describe the attitudes a manager would need to be successful and effective in managing in India,
China, and Saudi Arabia.

Approaches to control Cite two settings or jobs where each of the following approaches to
control would be appropriately applied. Identify what you feel is the definitive characteristic of
the setting that indicates the appropriateness of the approach to control that you have identified:
a. Preventive control b. Monito

Budget slack Mike Shields was having dinner with one of his friends at a restaurant in Memphis.
His friend, Woody Brooks, a local manager of an express mail service, told Mike that he
consistently overstated the amount of resources needed in his budget requests for his division. He
also told Mike that year after year h

Why is religion often incorrectly ignored in discussions and analyses of business, negotiations,
and culture?

See Full Question And Answer at solutionrank.com

Why is it so important that organizations keep trying to encourage productive mentoring

relationships between senior- and junior-level employees? What are some of the challenges
associated with mentoring programs?

What do advocates claim about the influence of spirituality on the performance of employees?

Think of a time when you held fast to a decision even after learning that it was probably a wrong
or faulty decision. How long did you persist with your original (faulty) decision? Looking back
now, when should you have modified your decision? What could have convinced you to do so?
Describe.

Methods of setting budgets Megan Espanoza, manager of the Wells Division of Mars, Inc., a
large credit card company, recently received a memorandum describing the company’s new
budgeting process for the coming year. The new process requires Megan and the other division
managers to submit a budget proposal outlining t

1. What two broad technical considerations must designers of management and control systems
address? 2. What is meant by gaming a performance indicator?

See Full Question And Answer at solutionrank.com

1. What barriers to effective communication do you detect in this case? 2. Is anyone

“wrong” in this situation? By what other means could Randell have requested the
information from Tom Ballard? What do you think of Tom Ballard’s reaction? Why? Leigh
Randell is supervisor of in-flight services at the Atlanta base

What environmental forces are the most different as we move through the decade of 2010 to
2020 when compared with the 1950s and 1960s? The McDonald brothers’ first restaurant
was founded in 1937 just east of Pasadena, California. It didn’t serve hamburgers, had no
playground, and offered no Happy Meals. The most po

In the selection of job candidates, what should a manager know about the self-efficacy concept?

Assume that you are about to ask your supervisor for a raise. Which communication medium or
channel would you use? What steps would you take to decrease the amount of noise that can
decrease the effectiveness of your message?

Evaluating system performance Suppose that you are the manager of a production facility in a
business that makes plastic items that organizations use for advertising. The customer chooses
the color and quantity of the item and specifies what is to be imprinted on the item. Your job is
to ensure that the job is complete

See Full Question And Answer at solutionrank.com

In what ways does organizational culture influence a company’s effectiveness and

performance?

Under what circumstances should both quantitative and qualitative performance measures be
used to evaluate employee, work group, and divisional performance? Provide examples to
support your answer.

1. What is the most motivating type of budget with respect to targets? 2. What is a stretch target?

Can domestic cultural diversity in the United States help American firms better understand and
deal with global cultural diversity? Explain.

Think back to a time when you knew a manager, coach, or teacher/professor who was an
exceptionally good communicator. Why was this person so effective at communication?
Describe.

See Full Question And Answer at solutionrank.com

Why is it accurate to conclude that the study and application of OB are multidisciplinary?

1. What is incentive compensation? 2. What is an intrinsic reward?

Identify the three main socialization stages. Which of these stages is most important for
developing high-performing employees? Explain.
What has occurred historically to warrant referring to the management of organizational behavior
as a blending of art and science?

Describe how a manager who worked for 15 years in Los Angeles would apply a contingency
management approach when he’s transferred to a similar managerial position in the
firm’s Barcelona, Spain, office.

See Full Question And Answer at solutionrank.com

If you found yourself in Robert Adams’s situation (see opening vignette), would you take the
three-year expatriate assignment? The virtual expatriate assignment? Or, would you decline both
opportunities and remain a domestic employee at the home office?

How does a national culture differ from what is referred to as an organization’s culture?
Which “culture” exerts more influence over the behavior of a global company’s
employees?

One writer on management theory states that management is aptly defined as “getting work
done through other people.” Compare this concept of management with the one proposed in
this chapter.

In your opinion, should managers attempt to motivate employees with different ethnic
backgrounds all in the same manner? Why or why not?

Based on equity theory, why is it important that decisions about pay or compensations programs
have be perceived as fair?

See Full Question And Answer at solutionrank.com

What is the relationship between employee satisfaction and customer satisfaction?

Choosing what to reward During the late 1970s, Harley-Davidson, the motorcycle manufacturer,
was losing money and was very close to bankruptcy. Management believed that one of the
problems was low productivity and, as a result, asked middle managers to speed up production.
The employees who made the motorcycles were to

Why is expectancy theory described as the most complex and difficult to measure theory of work
motivation?

Gain sharing Sakura Snack Company manufactures a line of snack foods, such as cheese
crackers, granola bars, and cookies. The production workers are part of a gain-sharing program
that works as follows: A target level of labor costs is set that is based on the achieved level of
production. If the actual level of labor
1. Which principles of globalization did NR and his colleagues follow when they were growing
Infosys into a global powerhouse? 2. According to Hofstede’s research, India has a high
score on the power distance dimension. To what degree could this high score help to explain
Infosys Technology’s success in the global

See Full Question And Answer at solutionrank.com

This chapter suggested that effectiveness can be viewed from the individual, group, and
organizational perspectives. Is it possible for an individual manager to be effective even if her
group isn’t effective? Similarly, can an organization be effective even if several of its
employees are not effective? Explain and g

1. What is goal congruence? 2. What is data falsification?

Why would it be interesting to examine and compare the needs, discussed by McClelland, in
young, middle-aged, and older people in the United States, Japan, Germany, Poland, Egypt,
Argentina, and Sweden?

Distributing a bonus pool Four broad approaches to distributing the proceeds of a bonus pool in a
profit-sharing plan are listed here: 1. Each person’s share is based on salary. 2. Each person
receives an equal share. 3. Each person’s share is based on position in the organization
(larger payments to people at high

Are quality and taste important to you when selecting a restaurant? Explain. The McDonald
brothers’ first restaurant was founded in 1937 just east of Pasadena, California. It didn’t
serve hamburgers, had no playground, and offered no Happy Meals. The most popular menu
item was the hot dog. From that humble beginnin

See Full Question And Answer at solutionrank.com

Describe a situation in which you’ve been the receiver in a one-way communication process.
Give some reasons certain individuals might not like it. Why might some people prefer it?

Denver Jack’s is a large toy manufacturer. The company has 100 highly trained and skilled
employees who are involved with six major product lines, including the production of toy
soldiers, dolls, and so on. Each product line is manufactured in a different city and state. Denver
Jack has decided to make all of the pro

Salary and job responsibilities Marie Johnston, the manager of a government unemployment
insurance office is paid a salary that reflects the number of people she supervises and the number
of hours that her subordinates work. Required (a) What do you think of this compensation
scheme? What incentives does this compensat

Suppose that you are the owner/manager of a house-cleaning business. You have 30 employees
who work in teams of three. Teams are dispatched to the homes of customers where they are
directed by the customer to undertake specific cleaning tasks that vary widely from customer to
customer. Your employees are unskilled wor

Characteristics of MACS design: participation and education Explain how participating in

decision making and being educated to understand information received in an organization
contribute toward employee empowerment in MACS design.

See Full Question And Answer at solutionrank.com

You are a management accountant working in the controller’s office. Rick Koch, a very
powerful executive, approaches you in the parking lot and asks you to do him a favor. The favor
involves falsifying some of his division’s records on the main computer. The executive states
that if you do not do as he asks, he wil

Why is it so difficult to change an organizational culture that is considered strong or influential

in affecting the behavior of employees?

Compensation tied to Balanced Scorecard, degree of difficulty of target achievement Discuss

Case 2-48.

In your opinion, which barrier to communication is the most frustrating? What can you do to
deal with it in an effective manner?

Answer the following two questions about the organization units listed below: • What
behavior should be rewarded? • What is an appropriate incentive compensation system? a. A
symphony orchestra b. A government welfare office c. An airline complaint desk d. A control
room in a nuclear power–generating facility e.

See Full Question And Answer at solutionrank.com

What factors serve to make Maslow’s hierarchy of needs theory so intuitively attractive to
practicing managers despite its obvious flaws?

If you were a training director responsible for instructing managers in the techniques of
management, how would you evaluate your training program’s effectiveness? Is the goal
model of effectiveness useful? Is the systems model useful?

Should a manager of a small firm (say, 25 employees) be concerned about establishing an

organization structure? Explain.

What contribution does the concept multiple constituency make to our understanding of
organizational effectiveness? In particular, does the concept make it easier or harder for a
manager to know when she has accomplished effective performance for her group or
organization? Explain.
Feedback helps employees form perceptions of their self-efficacy on the job. Based on what you
learned in this chapter, why is important that employees develop a sense of self-efficacy?
Explain.

See Full Question And Answer at solutionrank.com

Motivating desired performance DMT Biotech is a biotechnology research and development

company that designs products for the needs of life science researchers. The company consists of
an administrative unit, a research laboratory, and a facility used to develop prototypes of and
produce new products. The major costs in

Many individuals carry a variety of personal communication devices with them wherever they go
(e.g., a smart phone). Assuming these individuals leave their devices turned on 24/7, do you see
any disadvantages associated with this continuous accessibility? Any advantages? Describe.

The study and application of OB has been described as multidisciplinary in nature. Why is it
multidisciplinary? Explain.

Is the “Big Five” model of personality worthwhile in terms of helping explain individual
differences?

What should managers of diverse workforces know about differences in values among
individuals?

See Full Question And Answer at solutionrank.com

Knox Company manufactures consumer products such as cleansers, air fresheners, and
detergents. During a recent quarter, the value of the products made was $50 million, and the
labor costs were $3 million. The company has decided to use a Scanlon plan with this quarter
being used to establish the base ratio for the plan

Why did Toyota wait so long to publically acknowledge and replace the faulty accelerator
pedals? Toyota is an extremely successful automaker that has built a reputation for quality by
fostering a culture of continuous improvement and long-term relationships with employees,
vendors, customers, and other key stakeholders

1. What is an extrinsic reward? 2. What is a cash bonus?

How can you apply the motivation theories in this chapter to explain the behavior of the
entrepreneurs introduced in this case? For most people, going to work means working for
someone else; a select few choose to become entrepreneurs. While TV advertisements depict the
good life associated with “being your own boss,

As a future manager, which of the theories presented in this chapter will be of most use to you in
motivating your employees? Explain.
See Full Question And Answer at solutionrank.com

Why is it important to understand that a manager must infer the motivation level of
subordinates?

Budgets are usually set through one of three methods: participation, authority, or consultation.
Required Write an essay stating the circumstances under which each method is most appropriate.
If you disagree with a particular method, justify your answer.

Hoechst Celanese, a pharmaceutical manufacturer, has used a profit-sharing plan, the Hoechst
Celanese Performance Sharing Plan, to motivate employees. To operationalize the plan, the
Hoechst Celanese executive committee set a target earnings from operations (EFO). This target
was based on the company’s business plans

Describe the major differences between Maslow’s need hierarchy and Alderfer’s ERG
explanation of motivation.

What are some pros and cons of tying an individual’s pay to performance?

See Full Question And Answer at solutionrank.com

What’s the meaning of the notion that, even when differences between the sexes exist,
there’s overlap between them? Explain this in terms of absenteeism rates and turnover rates.

When do you think these entrepreneurs will retire? Use the theories in the chapter to justify your
response. For most people, going to work means working for someone else; a select few choose
to become entrepreneurs. While TV advertisements depict the good life associated with
“being your own boss,” the reality may

A growing number of Americans work for internationally-owned firms that operate in the United
States. Do you think that these American employees are being influenced by the international
owner’s approach to management and the culture of the country of the owner?

Some people believe that perception is a more important explanation of behavior than is reality.
Why is this assumption about perception made?

If the process of organizational socialization is inevitable, why is it important that it be managed?

See Full Question And Answer at solutionrank.com

What is meant by the term a culture-bound theory of motivation?

What can a newly assigned expatriate manager do to avoid or diminish the intensity and negative
effects of culture shock? Explain.