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In organizational buying, a list of firms believed to be qualified to supply a given item is a __________. 
 
(i) performance evaluation index 
(ii) make-buy list 
(iii) vendor-rating sheet 
(iv) suppliers' sheet 
(v) bidders' list

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Jarrod Robel
Jarrod RobelLv2
2 Mar 2020

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1. - Place the following actions in the correct chronological order for opening an options account.

I. Receive the signed options agreement from the client

II. Obtain financial information

III. Execute a transaction

IV. Receive approval of the account

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c. II, IV, I, III

d. III, II, I, IV

2. An investor purchases 10 Eastman Kodak October 60 call options. One month later, Eastman Kodak stock splits 3 for 2. After the split, the investor will own:

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3- List the following choices in the proper order for settling accounts in the event of a dissolution of a limited partnership.

I. General creditors

II. Limited partners

III. General partners

IV. Secured lenders

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Orchid Biotech Company is evaluating several different development projects for experimental drugs. Although the cash flows are difficult to forecast, the company has come up with the following estimates of the initial capital requirements and NPVs for the projects. Given a wide variety of staffing needs, the company has also estimated the number of research scientists required for each development project (all cost values are given in millions of dollars).

Project Number Initial Capital

Number of Research Scientists NPV
I $10 2 $10.1

II 15 3 19.0

III 15 4 22.0

IV 20 3 25.0

V 30 12 60.2

a. Suppose that Orchid has a total capital budget of $60 million. Calculate the profitability index for each project. How should Orchid prioritize these projects? b. Suppose that Orchid currently has 12 research scientists and does not anticipate being able to hire more in the near future. How should Orchid prioritize these projects?

You must evaluate a proposal to buy a new milling machine. The base price is $167,000, and shipping and installation costs would add another $9,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $108,550. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $6,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $38,000 per year. The marginal tax rate is 35%, and the WACC is 10%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine.

How should the $5,000 spent last year be handled?

I. The cost of research is an incremental cash flow and should be included in the analysis.

II. Only the tax effect of the research expenses should be included in the analysis.

III. Last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's life. Hence, it should not be included in the initial investment outlay.

IV. Last year's expenditure is considered an opportunity cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.

V. Last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.

I, II, III, IV or V?

What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? Round your answer to the nearest cent.
$

What are the project's annual cash flows during Years 1, 2, and 3? Round your answer to the nearest cent.
Year 1 $
Year 2 $
Year 3 $

Should the machine be purchased?

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