Concept explainers
Kelly Jones is a financial analyst for Wolverine Manufacturing, a company that produces engine bearings for the automotive industry. Wolverine is in the process of hammering out a new labor agreement with its unionized workforce. One of the major concerns of the labor union is the funding of Wolverine’s retirement plan for its hourly employees. The union believes the company has not been contributing enough money to this fund to cover the benefits it will need to pay to retiring employees. Because of this, the union wants the company to contribute approximately $1.5 million dollars in additional money to this fund over the next 20 years. These extra contributions would begin with an extra payment of $20,000 at the end of 1 year with annual payments increasing by 12.35% per year for the next 19 years.
The union has asked the company to set up a sinking fund to cover the extra annual payments to the retirement fund. The Wolverines’ CFO and the union’s chief negotiator have agreed that AAA rated bonds recently issued by three different companies may be used to establish this fund. The following table summarizes the provisions of these bonds.
According to this table, Wolverine may buy bonds issued by AC&C for $847.88 per bond. Each AC&C bond will pay the bondholder $80 per year for the next 15 years, plus an extra payment of $1,000 (the par value) in the fifteenth year. Similar interpretations apply to the information for the IBN and MicroHard bonds. A
Wolverine’s CFO has asked Kelly to determine how much money the company would have to invest and which bonds the company should buy in order to meet the labor union’s demands.
If you were Kelly, what would you tell the CFO?
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Spreadsheet Modeling & Decision Analysis: A Practical Introduction to Business Analytics (MindTap Course List)
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- Nicole, an athletic trainer, believes if she has evidence that her program of exercise works, she can recruit more clients. She is planning to conduct a study to determine if working out for one hour per day with her fitness program causes a person to lose weight. She will track the participants’ progress over a twelve-week period. Nicole mandates that her clients at the gym participate in her study, and she asks them to each find one friend who is not a member of the gym to also participate. Each of the participants weighs in at the start and again after the twelve-week period has ended. At the conclusion of the study, she will compare the results of both groups. Unfortunately, because she has not had any formal training in research methodology, she is not certain how to label the different components in her study or identify any potential flaws. Help Nicole with the following components of this study. Identify the following issues with the study described. Ethical Concerns…arrow_forwardIn 2007 San Francisco began its Healthy San Francisco Plan designed to provide health care for all San Francisco citizens. In 2007, it was estimated that San Francisco had 82,000 uninsured citizens. Under the plan, all uninsured citizens residing in San Francisco can seek care at the city's public and private clinics and hospitals. The basic coverage includes lab work, x-rays, surgery, and preventative care. The city plans to pay for this $203 million coverage by rerouting the $104 million the city currently spends treating the uninsured in the emergency rooms, mandating business contributions, and requiring income-adjusted enrollment fees. The plan requires all businesses with more than 20 employees to contribute a percentage toward the plan. Many business owners consider this a burden and warn they will not stay in the city. The Mayor sees universal health access as a moral obligation for the city. Take one of the following positions. San Francisco has an obligation to provide its…arrow_forwardAn HR director is outsourcing recruiting efforts to a staffing organization and is charged with implementing the staffing organization project/initiative. The original plan had been to eliminate in-house staffing personnel, but, at the hiring managers' request, the HR director has decided to maintain a small in-house team of corporate recruiters who will work with the staffing organization. This will provide continuity for the hiring managers in the organization. The HR director must facilitate the integration of the staffing organization team with full-time personnel from the organization. The staffing organization team will consist of recruiters, sourcing professionals, and administrative assistants led by a staffing organization manager.The staffing organization recruiters manage the intake of open positions from the hiring managers. The in-house corporate recruiters assess open positions for fulfillment. The corporate recruiters often bypass the staffing organization manager to…arrow_forward
- An HR director is outsourcing recruiting efforts to a staffing organization and is charged with implementing the staffing organization project/initiative. The original plan had been to eliminate in-house staffing personnel, but, at the hiring managers' request, the HR director has decided to maintain a small in-house team of corporate recruiters who will work with the staffing organization. This will provide continuity for the hiring managers in the organization. The HR director must facilitate the integration of the staffing organization team with full-time personnel from the organization. The staffing organization team will consist of recruiters, sourcing professionals, and administrative assistants led by a staffing organization manager.The staffing organization recruiters manage the intake of open positions from the hiring managers. The in-house corporate recruiters assess open positions for fulfillment. The corporate recruiters often bypass the staffing organization manager to…arrow_forwardPaige Turner has been working in a law firm for the last two years and has been bullied by her manager ever since she joined. She is given targets that are impossible to complete within the given time frame. When she is unable to complete her work, her manager admonishes her in front of everyone. In addition, Paige is not invited to take part in discussions that involve making decisions about client's accounts, which are being attended by all other team members.Identify TWO (2) types of workplace discrimination that are evident in this scenario. Justify your answer.arrow_forwardMcGwire Aerospace expects to have net cash flow of $12 million. The company forecasts that its operating costs excluding depreciation and amortization will equal 75 percent of the company’s sales. Depreciation and amortization expenses are expected to be $5 million and the company has no interest expense. All of McGwire’s sales will be collected in cash, costs other than depreciation and amortization will be paid in cash during the year, and the company’s tax rate is 40 percent. What is the company’s expected sales?arrow_forward
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