Conducting an analysis on risk-free rate

The following post has three assignments namely;

1.Conducting an analysis on risk-free rate

You work for a firm that is trying to decide whether they want to expand their operations by buying another company that caters to a different industry. The company thinks that with the resulting synergies between the two firms, there will be enough cost savings and economies of scale to make the new venture extremely profitable. The company’s current revenue stream is $50MM with negligible costs. For the purposes of this exercise only, let us assume that the costs are zero. If they bought the company, it would initially cost them $4MM with annual ongoing costs of $1MM. The president of the firm asked you to conduct an analysis. The time period that you are looking at is one year with six month increments. The current risk-free rate is 4.00%. Your current research has shown that the standard deviation of the revenues is 55%. Does it makes sense for your firm to buy the company?

2. Working in Teams

Students in Mrs. Rickshaw’s Student Success class are required to do a half hour team presentation on a topic of their choice. Mrs. Rickshaw randomly assigns students to teams. Students have approximately four weeks to research and prepare, including two hours of class time. Marks are given based on an instructor evaluation of the presentation combined with a peer evaluation by their team members. Jane, Robert, Danny, Sharon and Liz were assigned to Team 3. During their first team meeting they introduced themselves and began to decide on a topic. After 45 minutes, they were still trying to settle on a topic. They finally settled on Money Management, however the instructor informed them that another team had already chosen that topic but Conflict Management was still available. During the last 15 minutes of class time, Robert tried to convince the group that they should present a role-play of conflict. Sharon wanted to do research and give a more detailed, informational presentation. Jane was excited by the role-play idea and suggested they make a video presentation of their own play-acting. Danny fell asleep some time before the topic was chosen and Liz sat quietly listening to the arguments of her teammates. At the end of the class no work division had occurred but the team agreed to meet in a study area at 4:15 on the following Monday. After waiting for Danny until 4:30, the team decided to start without him. Jane announced she had to leave in twenty minutes because she had to pick up her child at the day care by 5:00. Robert was ready to start script writing but Sharon wanted to discuss the content of their presentation and assign research – thinking they could write the script once they were knowledgeable. Liz just listened quietly. An argument ensued, and Jane had to leave before a decision was reached. The next meeting was to be held during their class time the next week. Before the next meeting, Robert convinced Jane that a role-play was the way to go, and together they put together a draft script, working hard to make the skit funny and entertaining. Robert confronted Danny and warned him to attend the class meeting or he wouldn’t get a part in the play. In the meantime, Sharon picked up six books from the library and printed four articles from the Internet. She prepared an outline detailing various aspects of conflict management. Liz just worried about her role in the whole project. At the class meeting, all team members were present. Robert informed the group that he and Jane had decided to do a skit, and they had a script all ready. Then he began to assign parts to his teammates. Sharon was incensed and insisted the script was short on content and demanded that they re-build the script around her outline. Robert said he wanted no part in a boring presentation. Danny did not show up to the remaining team meetings. Liz agreed to do a small part in the play. Jane promised to gather props and costumes. Sharon stubbornly insisted on preparing an informational presentation. She would have liked to have this integrated into the role-play but Robert would not agree to change his script. They planned a practice of the role-play during their math class on the morning of October 16, the day of their presentation. On the morning of October 16, Danny did not come to school and Liz forgot to bring the props. The practice ended up being more of an argument session. Danny showed up just before Student Success was to start and said “You mean it’s today?!” Liz was very nervous and felt very sick. She wasn’t sure she could do her part. The presentation began with Sharon reading her lengthy introduction and then the skit began. The skit was five minutes in length. The whole presentation left the other class members confused and it ran twelve minutes instead of the required thirty. 1) State the overall problem and the sub-issues associated with it. 2) Analyze the scenario from each person’s perspective using concepts from the text. 3) Provide solutions to the overall problem and the sub-issues you have identified using concepts from the text. Be specific and challenge yourself to truly provide in-depth solutions using your critical thinking skills.