FIN534 Financial ManagementFIN534 Week 11PART 1

Question: #421

Introduction

This is an individual project. This project is related to the Case Study project. Each student must complete an Architectural Diagram that illustrates the placement of security and other technologies within the converged network solution. The foundation for this project is the requirements analysis and proposal document that you completed for the Case Study project. The target audience will be the organization’s Chief Information Officer (CIO). The Architectural Diagram deliverable is an MS Word document. If you use a drawing tool to complete the diagram you must copy and paste the images into a Word document so that you only submit one Word document for grading.

The completed Architectural Diagram deliverable is due by 11:59 PM Eastern Time on the due date shown in the Course Schedule. See the Additional Information section of the syllabus for the penalty for late or missed assignments and projects.
The diagram is valued at 10% of the course grade.

Case Study

Company Overview
Universal Transport, Inc. (UTI) is a global logistics provider that offers fully integrated freight and supply chain services through managed warehousing and domestic and international freight forwarding. Services range from door-to-door domestic and international delivery services to total supply chain management. With branches across the United States and Europe and partners worldwide, UTI continues to expand, and it has experienced rapid growth through acquisitions.

Note: The term supply chain refers to all the elements involved in bringing an organization's products from the raw-goods stage to the customer.

The Association for Operations Management (APICS) dictionary ((http://www.apics.org/Resources/APICSDictionary.htm) defines “supply chain management (SCM)” as the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.

The Business Challenge

UTI is competing in an environment where freight transport is as much about keeping customers informed as it is about on-time delivery. The company has adopted web-based technologies for tracking freight, differentiating its services, keeping customers informed, and ensuring the on-time delivery that is UTI's hallmark. As a result, UTI enjoys a very high level of customer satisfaction.

Its mobile workforce has rapidly increased, with drivers using PDAs to scan consignments, which are then synced in real time via GPRS links to headquarters applications that track the consignments. Customers use UTI’s web services to view the progress of orders, from dispatch to warehousing to final delivery. Customers also use UTI’s web-based systems to create freight documentation and generate reports. With the EDI interface, invoices and payments are transferred directly between the customers' systems and UTI, saving both time and money.
As the company has expanded, the data flowing in the system have increased as well. Now, with more than 5,000 employees and thousands of customers worldwide, UTI is suffering from the effects of explosive growth. Demands on its wide area network (WAN) are exceeding capacity. The main data center has experienced several network outages and unscheduled downtime. The aging ISDN telephone system is failing, as the company has avoided the costly upgrades necessary to keep it operating at optimal performance. Telephone bills have increased without warning, and the voice mail system is overloaded.

The Opportunity
UTI wants to provide increased bandwidth between all 47 of its US offices and the main data center located in Chicago. There are three regional business centers that have four to eight satellite locations that need to able communicate and exchange data daily. These are located in Chicago, Kansas City, and Tampa. The company desires a reliable and secure network to accommodate its planned growth without exceeding 85% of capacity.

The company does not want to spend any more on telephone services than it does today, and its goal is to upgrade the services while protecting against escalating costs from its ISDN service provider.
Efficiency and productivity goals for this rapidly growing company are of paramount importance, and there is a desire to provide capabilities and services that incorporate technology solutions to improve in those areas as well as retain the high level of customer satisfaction. UTI is also interested in reducing travel between its sites by implementing video conferencing.

In addition, UTI wants to be able to monitor and manage data and voice service and ensure that capacity and performance is consistent with its business needs.

The Deliverable
For this assignment, you will use your proposed solution for the UTI requirements analysis. Briefly describe the proposed technology solution and list the business requirements (including security requirements) that are satisfied. This should be done on one (1) page. Then provide a diagram that illustrates the placement of various communications components within the context of developing an effective, efficient, security posture for the proposed solution for TUI's converged network.

Your deliverable will be one MS Word document that includes a 1-page business requirements summary and an architectural drawing. Your deliverable will be scored according to the scoring rubric below. Successful documents use the bolded rubric attributes as major section headings. Be sure you have incorporated all required aspects of the assignment, and that the diagram satisfies what you have described in the summary.

Solution: #441

FIN534 Financial Management /FIN534 Week 11PART 1

Question 1

Which of the following statements is most correct, holding other things constant, for XYZ Corporation's traded call options?

The higher the strike price on XYZ's options, the higher the option's price will be.

Assuming the same strike price, an XYZ call option that expires in one month will sell at a higher price than one that expires in three months.

If XYZ's stock price stabilizes (becomes less volatile), then the price of its options will increase.

If XYZ pays a dividend, then its option holders will not receive a cash payment, but the strike price of the option will be reduced by the amount of the dividend

The price of these call options is likely to rise if XYZ's stock price rises

Question 2

Suppose you believe that Florio Company's stock price is going to decline from its current level of $82.50 sometime during the next 5 months. For $5.10 you could buy a 5-month put option giving you the right to sell 1 share at a price of $85 per share. If you bought this option for $5.10 and Florio's stock price actually dropped to $60, what would your pre-tax net profit be?

-$5.10

$19.90

$20.90

$22.50

$27.60

Question 3

Which of the following statements is CORRECT?

If the underlying stock does not pay a dividend, it does not make good economic sense to exercise a call option prior to its expiration date, even if this would yield an immediate profit.

Call options generally sell at a price greater than their exercise value, and the greater the exercise value, the higher the premium on the option is likely to be.

Call options generally sell at a price below their exercise value, and the greater the exercise value, the lower the premium on the option is likely to be.

Call options generally sell at a price below their exercise value, and the lower the exercise value, the lower the premium on the option is likely to be.

Because of the put-call parity relationship, under equilibrium conditions a put option on a stock must sell at exactly the same price as a call option on the stock.

Question 4

Which of the following statements is CORRECT?

An option's value is determined by its exercise value, which is the market price of the stock less its striking price. Thus, an option can't sell for more than its exercise value.

As the stock’s price rises, the time value portion of an option on a stock increases because the difference between the price of the stock and the fixed strike price increases.

Issuing options provides companies with a low cost method of raising capital.

The market value of an option depends in part on the option's time to maturity and also on the variability of the underlying stock's price.

The potential loss on an option decreases as the option sells at higher and higher prices because the profit margin gets bigger.

Question 5

An option that gives the holder the right to sell a stock at a specified price at some future time is

a put option.

an out-of-the-money option.

a naked option.

a covered option.

a call option.

Question 6

Other things held constant, the value of an option depends on the stock's price, the risk-free rate, and the

Variability of the stock price

Option's time to maturity

Strike price

Strike price

All of the above

None of the above

Question 7

As a consultant to Basso Inc., you have been provided with the following data: D1 = $0.67; P0 = $27.50; and g = 8.00% (constant). What is the cost of common from reinvested earnings based on the DCF approach?

9.42%

9.91%

10.44%

10.96%

11.51%

Question 8

With its current financial policies, Flagstaff Inc. will have to issue new common stock to fund its capital budget. Since new stock has a higher cost than reinvested earnings, Flagstaff would like to avoid issuing new stock. Which of the following actions would REDUCE its need to issue new common stock?

Increase the percentage of debt in the target capital structure.

Increase the proposed capital budget.

Reduce the amount of short-term bank debt in order to increase the current ratio.

Reduce the percentage of debt in the target capital structure.

Increase the dividend payout ratio for the upcoming year.

Question 9

Which of the following statements is CORRECT?

The percentage flotation cost associated with issuing new common equity is typically smaller than the flotation cost for new debt.

The WACC as used in capital budgeting is an estimate of the cost of all the capital a company has raised to acquire its assets.

There is an "opportunity cost" associated with using reinvested earnings, hence they are not "free."

The WACC as used in capital budgeting would be simply the after-tax cost of debt if the firm plans to use only debt to finance its capital budget during the coming year.

The WACC as used in capital budgeting is an estimate of a company'...