According to James Rachels, The Elements of Moral Philosophy.  Please ensure that you answer each part of the  question . essay needs to be typewritten, in black ink, double-spaced, with one-inch margins on all sides.  You must either use MLA or CMS style.  I prefer Times New Roman font, size twelve.  Lastly, the essay needs to be at least four FULL pages in length. If you should have any questions, please let me know.

here is the quastion:

1. For most of us, our families are very important.  Although they can cause discomfort, anguish, and pain, they often infuse our lives with meaning, bring us great joy, and heighten our contentment.  When relationships with family are flourishing, it is difficult to envision life without them.  At those times we don’t really think about what we owe them or what they owe us.  According to Jane English, this is as it should be; for she holds that strong family relationships are based on love.  Explain further why English claims that grown children do not owe anything to their parents.  Discuss in detail the arguments she uses to establish this thesis.  What is your assessment of her argument?  Is moral obligation at odds with close personal relationships? 

Portfolio Project Assignment Choice #2: Employee Use of Internet At Work: Policy Proposals

Your consulting services have been requested by the CEO of a Fortune 500 company.  The CEO is concerned about the use of the internet at work and employs your consulting services to discuss her concerns. Primarily, she is concerned that employees might be abusing the internet and is wondering what repercussions the company might face in a variety of legal areas, specifically with respect to the legal environment of business, ethics, and human resources issues. She is also concerned with preventing abuse of the internet at all levels, from low-level employees to the Board of Directors.

She requests a memo from you regarding:

1. Possible torts that could be committed by employees who use the internet at work
2. Possible crimes that could be committed by employees who use the internet at work (and indicate whether the crimes are white collar or blue collar)
3. Liability of the corporation versus liability of the individual employee through commission of torts or crimes using the internet at work
4. Whether violations of the duty of care or duty of loyalty could exist through use of social media sites at work
5. Employee privacy rights or concerns that exist regarding use of the internet at work
6. Employment laws that protect the employee or the employer with respect to use of the internet at work.

Identify two policies that this CEO could put in place to curb the potential for abuse of the internet at work, with one policy that addresses low-level employees and one policy that is targeted for the board of directors. Keep in mind the business judgment rule with respect to the latter policy and discuss whether it might ever be invoked to enforce or ignore such a policy. Articulate your ideas on how to remedy the issue of corporate malfeasance that occurs through abuse of the internet at work.  Proffer some clear recommendations to the CEO about how to improve overall corporate governance by reducing the potential for abuse of the internet at work.

You must also clearly address ethical issues that arise regarding your policies; note that ethical issues might exist on behalf of the employee if your policies are not utilized, but ethical issues might exist on behalf of the employer if the polices are implemented.

The CEO intends to pass along this memo to other employees in the company who might not have a strong understanding of these concepts. Thus, you are also requested to clearly explain and define the legal concepts you raise. She also is concerned about offending employees with policy suggestions and requests you keep this in mind with your suggested policies.

This issue exists in many companies and corporations, so you are encouraged to research outside sources for data supporting policies to reduce abuse of the internet at work. Demonstrate critical thinking by analyzing, evaluating, and interpreting appropriate policies to provide an original perspective to enhance corporate legal and ethical environs as they relate to use of the internet at work.

You are expected to convey complex ideas in a clear, concise and organized fashion, using the required and recommended readings from the course for analytical support.  Although you are encouraged to cite from your textbook, you are required to cite a minimum of four scholarly sources (beyond the textbook) to support your statements. The CSU-Global Library is a good place to find these sources.

Your well-written paper should be 8-10 pages in length, not including the title or references pages.  Review the Portfolio grading rubric, which can be accessed from the Course Information page, and make sure to follow the CSU-Global Guide to Writing and APA Requirements. Please be sure to reach out to your instructor at any point in the course if you have questions about the assignment.

Introduction

You will assume that you still work as a financial analyst for Aero Faust, Inc. The company is considering a capital investment in a new machine and you are in charge of making a recommendation on the purchase based on (1) a minimum rate of return of 12% (Task 4) and (2) the firm’s cost of capital (Task 5).

As with all written work, if you quote other works, you must provide a proper APA reference citation and at least 80% of each response must be your own, original commentary.  Use quoted material to SUPPORT your opinion, not to BE your opinion.

Task 4. Capital Budgeting for a New Machine  

A few months have now passed and Aero Faust, Inc. is considering the purchase on a new machine that will increase the production of a special component significantly. The anticipated cash flows for the project are as follows:

Year 1                   $1,100,000

Year 2                   $1,200,000

Year 3                   $1,300,000

Year 4                   $1,400,000

Year 5                   $1,500,000

Year 6                   $1,600,000

You have now been tasked with providing a recommendation for the project based on the results of a Net Present Value Analysis. Assuming that the required rate of return is 12% and the initial cost of the machine is $5,500,000.

1.    What is the project’s IRR? Show your calculations and display your answer to the nearest TWO decimal places (like this: 12.34%).  (10 pts)

2.    What is the project’s NPV? Show your calculations and display your answer to the nearest whole dollar (With no decimals – like this: $12).  (10 pts)

3.    Should the company accept this project and why (or why not)? (5 pts)

4.    Explain how depreciation will affect the present value of the project.  (5 pts)

5.    Explain each of the following as and provide examples as they might relate to this proposal. (5 pts each)

a.    Sunk Cost

b.    Opportunity cost

c.    Erosion

6.    What is a sensitivity analysis and how might it help identify project-specific risks and market risks related to this project? (10 pts)

Task 5: Cost of Capital

Aero Faust, Inc. is now considering that the appropriate discount rate for the new machine should be the cost of capital and would like to determine it. You will assist in the process of obtaining this rate.  

1.    Compute the cost of debt. Assume Aero Faust, Inc. is considering issuing new bonds. Select current bonds from one of its main competitors, Raytheon, Boeing, Lockheed Martin, or the Northrop Grumman Corporation as a benchmark return for the new bonds.   

You may use a number of sources to get bond information about a comparable firm to use as a benchmark.  We recommend Morningstar. But Morningstar is a little difficult to navigate so you will find it much easier to search directly from your search engine (Google or Yahoo) for the desired firm’s bonds and selecting Morningstar from the list of web pages.  (For example, search for “Boeing bonds Morningstar.”)

Here is a sample of the correct page for an unrelated company, Briggs & Stratton (BBG), manufacturer of Simplicity garden tractors. 

Scroll down to see a list of bonds issued by your benchmark company.

Briggs has only issued one bond which matures in 2020.  The aerospace firm you select will have many.  Select the one with the longest maturity date.  You may assume that new bonds issued by Aero Faust, Inc. are of similar risk and will require the same return.

a.    In the Briggs & Stratton example above, what is the coupon rate? (5 pts)

b.    What is Briggs & Stratton Yield to Maturity (YTM)? (5 pts)

c.    Provide a screen shot of the competitor’s bond page you selected. (5 pts)

d.    What is the YTM of the competitor’s bond you have selected?  (5 pts).

e.    Assume that the competitor you selected has a marginal tax rate of 33%.  Calculate the after-tax cost of debt.  Show your calculations and display your answer to the nearest TWO decimal places (like this: 12.34%).  (5 pts)

f.      Explain why you should use the YTM and not the coupon rate as the required return for debt. (5 pts)

2.    The cost of common equity may be derived using the CAPM model. For beta, use the average beta of three competitors. You may obtain the betas from LexisNexis (in the course Home tab, select “Student Resources,” then select “Library,” “Databases,” then “LexisNexis.”)  You can also get the information you need from Google Finance or Yahoo Finance.

a.    Provide a screen shot of the benchmark competitor you selected. (5 pts)

b.    Assume the risk free rate to be 2.5% and the average market return to be 6.5%. Using the CAPM model, what is the cost of common equity?  show your calculations and display your answer to the nearest TWO decimal places (like this: 12.34%). (10 pts)

c.    Explain the advantages and disadvantages to use the CAPM model as the method to compute the cost of common equity. Compare and contrast this method with the dividend growth model approach. (10 pts)

3.    One method to calculate the required rate of return on preferred stock is to use the Gordon Model, also called the Dividend Growth Model.  But with preferred stock, dividends are always the same and never change.  The growth factor is, therefore, zero. 

a.    Using the dividend growth model with zero growth, assuming the dividend paid on preferred stock is $4.50 and the current value of the stock is $80 per share; compute the cost of preferred equity. Show your calculations and display your answer to the nearest TWO decimal places (like this: 12.34%).  (10 pts)

b.    What other means could we use to compute the cost of preferred equity? Explain. (5 pts)

4.    Assuming that the market value weights of these capital sources are 25% bonds, 45% common equity and 30% preferred equity, what is the weighted cost of capital of the firm? Show your calculations and display your answer to the nearest TWO decimal places (like this: 12.34%).  (10 pts)

5.    Should the firm use this WACC for all projects? Explain and provide examples as appropriate. (5 pts)

6.    Re-compute the net present value of the project using the cost of capital you found in Task 5 Question 4 above. Show your calculations.  Do you still believe that your earlier recommendation for accepting or rejecting the project was appropriate?  Why or why not? (10 pts) 

Provide a scenario where a company would enter a foreign market using the following modes of entry. Be sure to provide one scenario for each mode:

•Exporting

•Licensing

•Franchising

•Creating a turnkey project

•Establishing joint ventures

•Setting up a wholly-owned subsidiary

Give justification for your choices using the advantages or disadvantages for each mode discussed in course readings.

Read the closing case below. Prepare a response to the following questions:

•GM entered the Chinese market at a time when demand was very limited. Why? What was the strategic rational?

•Why did GM enter through a joint venture with SAIC? What are the benefits of this approach? What are the potential risks here?

•Why did GM not simply license its technology to SAIC? Why did it not export cars from the United States?

•Why has the joint venture been successful to date?

Closing case General Motors in China

    The late 2000s were not kind to General Motors. Hurt by a deep recession in the United States and plunging vehicle sales, GM capped off a decade where it had progressively lost market share to foreign rivals such as Toyota by entering Chapter 11 bankruptcy. Between 1980, when it dominated the U.S. market, and 2009, when it entered bankruptcy protection, GM saw its U.S. market share slip from 44 percent to just 19 percent. The troubled company emerged from bankruptcy a few months later a smaller enterprise with fewer brands, and yet—going forward—some believe that the new GM could be a much more profitable enterprise. One major reason for this optimism was the success of its joint ventures in China.

    GM entered China in 1997 with a $1.6 billion investment to establish a joint venture with the state-owned Shanghai Automotive Industry Corp. (SAIC) to build Buick sedans. At the time the Chinese market was tiny (fewer than 400,000 cars were sold in 1996), but GM was attracted by the enormous potential in a country of more than 1 billion people that was experiencing rapid economic growth. GM forecast that by the late 2000s some 3 million cars a year might be sold in China. While it explicitly recognized that it had much to learn about the Chinese market, and would probably lose money for years to come, GM executives believed it was crucial to establish a beachhead and to team up with SAIC  387388(one of the early leaders in China’s emerging automobile industry) before its global rivals did. The decision to enter a joint venture was not a hard one. Not only did GM lack knowledge and connections in China, but also Chinese government regulations made it all but impossible for a foreign automaker to go it alone in the country.

    While GM was not alone in investing in China—many of the world’s major automobile companies entered into some kind of Chinese joint venture during this time period—it was among the largest investors. Only Volkswagen, whose management shared GM’s view, made similar-size investments. Other companies adopted a more cautious approach, investing smaller amounts and setting more limited goals.

    By 2007, GM had expanded the range of its partnership with SAIC to include vehicles sold under the names of Chevrolet, Cadillac, and Wuling. The two companies had also established the Pan-Asian Technical Automotive center to design cars and components not just for China, but also for other Asian markets. At this point, it was already clear that both the Chinese market and the joint venture were exceeding GM’s initial expectations. Not only was the venture profitable, but it was also selling more than 900,000 cars and light trucks in 2007—an 18 percent increase over 2006, placing it second only to Volkswagen in the market among foreign nameplates. Equally impressive, some 8 million cars and light trucks were sold in China in 2007, making China the second largest car market in the world, ahead of Japan and behind the United States.

    Much of the venture’s success could be attributed to its strategy of designing vehicles explicitly for the Chinese market. For example, together with SAIC it produced a tiny minivan, the Wuling Sunshine. The van costs $3,700, has a 0.8-liter engine, hits a top speed of 60 mph, and weighs less than 1,000 kg—a far cry from the heavy SUVs GM was known for in the United States. For China, the vehicle was perfect, and some 460,000 were sold in 2007, making it the best seller in the light truck sector.

    It is the future, however, that has people excited. In 2008 and 2009, while the U.S. and European automobile markets slumped, China’s market registered strong growth. In 2009, some 13.8 million vehicles were sold in the country, surpassing the United States to become the largest automobile market in the world; in 2010, the figure was close to 18 million. GM and its local partners sold 1.8 million vehicles in 2008, which was a record and represented a 67 percent increase over 2007. At this point, there were 40 cars for every 1,000 people in China, compared to 765 for every 1,000 in the United States, suggesting China could see rapid growth for years to come. In 2010, GM sold 2.35 million cars in China, more than the 2.22 million it sold in the United States!

Sources: S. Schifferes, “Cracking China’s Car Market,” BBC News, May 17, 2007; N. Madden, “Led by Buick, Carmaker Learning Fine Points of Regional China Tastes,” Automotive News, September 15, 2008, pp. 186–90; “GM Posts Record Sales in China,” Toronto Star, January 5, 2010, p. B4; and “GM’s Sales in China Top US,” Investor’s Business Daily, January 25, 2011, p. A1