School leadership. Is transformational leadership really effective in Essay

School leadership. Is transformational leadership really effective in schools - Essay Example While the former is predominantly an â€Å"instructional† style of leadership while a transformational approach tends to be more team based. In applying different models of leaders and various approaches to leadership, there has been a general consensus that school leadership differs from organizational leadership, hence a team based approach may be more suitable. School leadership essentially needs to combine leadership and management capabilities. Everard and Morris(1990) have laid out five stages of management, wherein setting goals, planning and organizing resources for the achievement of goals and implementing control and corrective procedures are important in achieving the desired objectives. In the context of transformational leadership styles, Bolman and Deal (1997) are of the view that â€Å"Poorly managed organizations with strong, charismatic leaders may soar temporarily only to crash shortly thereafter.† (Bolman and Deal,1997: xiii-xiv). In the international context, cultural implications may also need to be taken into consideration in determining what kind of leadership style would be relevant. On the basis of the above, the research question examined in this study is whether a transformational leadership style is really effective in schools?

Criticism on William faulkner on the short story A Rose for Emily Research Proposal

Criticism on William faulkner on the short story A Rose for Emily - Research Proposal Example Life was not easy for the members of the upper class either, with their clinging to obsolete customs and traditions. It will be shown that Miss Emily Grierson in Faulkner's "Rose for Emily" took advantage of her upper class upbringing at the same time becoming a victim to the same tradition of class difference. "A Rose for Emily" is a seminal work by William Faulkner in which he has portrayed the various characters in a small town in America. Set in the period between the late nineteenth to early twentieth century, the story is steeped in tradition. This short story was the first of Faulkner's stories to be published in a national publication, when it was published in the Forum in 1930. He narrates the story of Emily Grierson and her doomed love affair. Using a technique not much used in those days, Faulkner goes back and forward in time making the story very effective .Emily Grierson belonged to a wealthy upper class family which had lost all their money, but not their iron pride. Thinking her too good for the local young men, Emily's father had never allowed her to date anyone." None of the young men were quite good enough for Miss Emily and such."(Faulkner) When the father dies, Emily refuses to accept his death. Soon after, Emily's unsuitable suitor Homer Barron, who did not belong to her class arrives .He goes about with her in spite of the disapprobation of the towns' people. The minister trying to advise Emily and the minister's wife writing to Emily's cousins about the unsuitable Homer Barron, the Yankee foreman are typical of the class distinction which was prevalent in those days. The cousins arrive, and Barron is seen no more except once. Emily buys arsenic ostensibly to kill some rats, which leads the townspeople to think that she will commit suicide. After that Emily shuts herself up in her house with the old negro servant to care for her. She adamantly refuses to pay taxes citing a long expired grant by a former mayor. In a macabre end to the story, after Emily's death, the townspeople discover the skeleton of Homer Barron in the locked up bedroom upstairs, with a strand of 'long gray hair' in the pillow next to it. Faulkner has used the inherent class distinctions prevalent in the small towns of the American South to develop the story. He begins the story with Emily's death." And now Miss Emily had gone to join the representatives of those august names where they lay in the cedarbemused cemetery among the ranked and anonymous graves of Union and Confederate soldiers who fell at the battle of Jefferson." (Faulkner) Only in death did the 'august names' and the anonymous soldiers come together. Emily was a tradition in herself for the town with not many other 'august names'. Faulkner's preoccupation with heredity is evident in his works. His characters are haunted by their traditions .He draws upon his observations in Oxford, a small town in the American South where he lived. According to the Encyclopaedia Britannica, "Oxford provided Faulkner with intimate access to a deeply conservative rural world, conscious of its past and remote from the urban -industrial mainstream". (E.B.)We see the town of Jefferson portrayed by Faulkner has all the characteristics of a deeply conservative world. Emily goes on ignoring the notices to pay taxes,

Microprocessor based water level controller

Microprocessor based water level controller Microprocessor: The processor is the portion of a computer system that carries out the instructions of a computer program and is the primary element carrying out the computers function. The form, design and implementation of CPUs have changed but their fundamental operation remains the same. The microprocessor contains all the central processing unit (CPU) functions and is the ‘engine that goes into motion when you turn your computer on. The microprocessor is designed to perform arithmetic and logic operations that make use of small number holding areas called registers.The diagram of microprocessor is given as under: Also microprocessor is a multipurpose, programmable, clock-driven, register based electronic device that reads binary instructions from a storage device called memory, accepts binary data as input and processes data according to those instructions and provides as output. A microprocessor incorporates most or all of the functions of a central processing unit (CPU) on a single integrated circuit (IC). The first microprocessors emerged in the early 1970s and were used for electronic calculators, using binary-coded decimal arithmetic on 4-bit words. Other embedded uses of 4- and 8-bit microprocessors, such as terminals, printers, various kinds of automation etc, followed rather quickly. Affordable 8-bit microprocessors with 16-bit addressing also led to the first general purpose microcomputers in the mid-1970s.The most reliable circuit is water level Controller circuit which takes the task of indicating and Controlling the water level in the overhead water tanks. The LED Bar graph is use d for displaying the water level.The water level is sensed with the help of copper probes. The probes which have to be monitored are inserted into the water tank.This water-level Controller circuit is configured around the well-known 8 bit Microprocessor 8085. It continuously monitors the overhead water level and display it and also switch ‘off† the motor when the tank fills and it will automatically switch On the Motor when the water level is low. The Microprocessor will also indicate the water level over the LED display. All the input and output functions are done through the Programmable Peripheral Interface IC 8255. Product Categories for water level controller: Liquid Level Switches Liquid Level Sensors Level Sensors Level controllers Water Quality testing instruments Level Guages Ph controlllers Introduction to Water Level Controller: In most houses,water is first stored in an underground tank (UGT) and from there it is pumped up to the overhead tank (OHT) located on the roof. People generally switch on the pump when their taps go dry and switch off the pump when the overhead tank starts overflowing. This results in the unnecessary wastage and sometimes non-availability of water in the case of emergency. The simple circuit presented here makes this system automatic, i.e. it switches on the pump when the water level in the overhead tank goes low and switches it off as soon as the water level reaches a pre-determined level. It also prevents ‘dry run of the pump in case the level in the underground tank goes below the suction level. In the figure, the common probes connecting the underground tank and the overhead tank to +9V supply are marked ‘C. The other probe in underground tank, which is slightly above the ‘dry run level, is marked ‘S. The low-level and high-level probes in the overhead tank are marked ‘L and ‘H, respectively. When there is enough water in the underground tank, probes C and S are connected through water. As a result, transistor T1 gets forward biased and starts conducting. This, in turn, switches transistor T2 on. Initially, when the overhead tank is empty, transistors T3 and T5 are in cut-off state and hence pnp transistors T4 and T6 get forward biased via resistors R5 and R6, respectively. As all series-connected transistors T2, T4, and T6 are forward biased, they conduct to energise relay RL1 (which is also connected in series with transistors T2, T4, and T6). Thus the supply to the pump motor gets completed via the lower set of relay contacts (assuming that switch S2 is on) and the pump starts filling the overhead tank. Once the relay has energised, transistor T6 is bypassed via the upper set of contacts of the relay. As soon as the water level touches probe L in the overhead tank, transistor T5 gets forward biased and starts conducting. This, in turn, reverse biases transistor T6, which then cuts off. But since transistor T6 is bypassed through the relay contacts, the pump continues to run. The level of water continues to rise. When the water leve l touches probe H, transistor T3 gets forward biased and starts conducting. This causes reverse biasing of transistor T4 and it gets cut off. As a result, the relay de-energises and the pump stops. Transistors T4 and T6 will be turned on again only when the water level drops below the position of L probe. Presets VR1, VR2, and VR3 are to be adjusted in such a way that transistors T1, T3, and T5 are turned on when the water level touches probe pairs C-S, C-H, and C-L, respectively. Resistor R4 ensures that transistor T2 is ‘off in the absence of any base voltage. Similarly, resistors R5 and R6 ensure that transistors T4 and T6 are ‘on in the absence of any base voltage. Switches S1 and S2 can be used to switch on and switch off, respectively, the pump manually.You can make and install probes on your own as per the requirement and facilities available. However, we are describing here how the probes were made for this prototype. The author used a piece of non-metallic condu it pipe (generally used for domestic wiring) slightly longer than the depth of the overhead tank. The common wire C goes up to the end of the pipe through the conduit. The wire for probes L and H goes along with the conduit from the outside and enters the conduit through two small holes bored into it as shown in Fig. 2.Care has to be taken to ensure that probes H and L do not touch wire C directly. Insulation of wires is to be removed from the points shown. The same arrangement can be followed for the underground tank also. To avoid any false triggering due to interference, a shielded wire may be used. The Water Level Controller System is an Electronic Equipment which when electrically connected to the starter of any given Pump-set motor will control the operation of the pumpset depending upon the water level in the Source and Destination Storage Tanks. Advanced Automatic â€Å"WATER LEVEL CONTROLLER† unit Manufactured by M.V.Instruments is a Microprocessor based Electronic Device. This system when electrically connected to an Pumpset starter, performs the following functions automatically: Switches ON the Pump set when Water level drops below pre-set level (i.e. T2 level) in Overhead Tank. Switches OFF the Pump set when Water level in Overhead Tank becomes full (i.e. T1 level). Switches OFF the Pump set when Water level is low in Sump/Well/Borewell (i.e. S2 level). Switches ON the Pump set when there is sufficient water in the Sump/ Well / Borewell (i.e. S1 level). Switches OFF the Pump set when there is a Dry run (i.e. when Water is not being pumped into Overhead Tank due to any reason). Low Voltage and High Voltage Protection for the Pump set is incorporated. The system has Surge Voltage/Current Protection for the Pump set. All these functions are automatically performed. Manual interference is absolutely not required. Manual operation is also possible if and when required by operating the switch in Manual Position. Paragon Water Filters use a unique 5-Stage filtration system that combines the cleaning capabilities of Activated Carbon with the new technology of KDF-55: The first stage consists of a micron filter locked into place, preventing water from forming paths or channels along the sides of the unit. Once the first micron filter has removed any large particles, the water goes through a series of chambers FIVE STAGES IN ALL. The media filtration process begins with KDF-55, which uses an electrochemical process to reduce Chlorine and improve taste and odor. Water passes through progressively finer micron filters as it travels through the unit, to assure removal of particles and to separate the media so that they operate at maximum effectiveness. The final chamber contains the highest quality Granular Activated Carbon. Water tastes best when aerated with carbon, so this final stage assures that you water is as refreshing as it is clear. Principle: The Autonics Water Level Modulating controlsystem is a single element Electro-pneumaticcontrol with a pneumatic Positioner and PID/Fuzzysystem. The system comprises a Transmitter,converter module, float chamber, a feedline-modulating control valve and an electronic microprocessor based PID/FUZZY controller. Pid Fuzzy Level Controller: Description: The Autonic Water Level Modulating control system is a single element Electro-pneumatic control with apositioner and PID auto tuning system. i) A Level Transmitter with double-float chamber is mounted on the boiler shell, fitted with a coil which can be make according to the requirement. ii) A flanged mount fully stainless steel Control valve, fitted with a positioner and pneumatic actuator, which is mounted in the boiler feedline. iii) A microprocessor-based PID/FUZZY Level controller is mounted on the control panel. iv) An electronic Converter module is also mounted on the control panel. Operation: A positive change of water level in the boiler alters the level transmitter inductance value of coil causing an imbalance in the system. This signal is transmitted through the electronic control box and connected to PID controller. Then the microprocessor-based PID level controller transmitted anelectrical signal to the pneumatic positioner to position and adjusts the position of control valve. A additional low/high water level alarm or burner cut out contact are also provided in the microprocessor-based level controller with the adjustable setting position. Installation note: The water connection from the boiler to the float chamber should be, as short as possible and the level transmitter float chamber should be mounted close to gauge glasses. If required our technical staff will advice on individual installations. Important notice: Electronic level module and level controller must not be subjected to either vibration or excessive temperature. It is therefore recommended that they be not mounted directly on to the boiler shell. Specifications : Control valve : The V control valve has many different inserts for precision throttling control. The inserts are pinnedto the END CAPS, and are used in conjunction with any of our standard seats. They are designed tochange the flow characteristics of the valve and are offered in different shapes to meet a variety ofmodulating application. For very low Cv applications, a specially designed â€Å"Soft† V insert incorporateboth the flow element and the ball seal into one component, and maintains continuous contact with theball. This arrangement provides excellent low end accuracy (EQ%) and repeatability. Automatic Water Level Modulating Control System: Operating Principle: Transmitter: Detect the water levels in the drum and send signal to the digital controller. Digital controller With the signal given by the Transmitter and the controller will show the level on the meter (Process value) and it requite a Set Value to control the level. The signal converted and it sends to control valve to give an indication. Control Valve The control valve work depend on the signal given by controller and after done the job it send a feed back signal to controller for confirmation. The valve open is depending on supply air with the signal given by controller and the Positioner then adjustment opening of valve will be make. OTHER: The MC9200 Series Cooling Tower Controller is a microprocessor based controller of recirculating cooling water systems. The MC9200 accurately controls the level of dissolved solids based on  µS/cm, and depending on model selection, control conductivity and pH. The cooling tower controllers feature: One user selectable chemical feed timer and up to two 28-day event timers Lockable viewing window Two point calibration Dry contact water meter input capability Alarm powered dry contact relays Optional 4-20mA output capability Alarm LED, relay or optional callback status 216 alphanumeric display Convenient keypad menu access, display contrast adjustment and HOA access control Self charging capacitor to maintain time and history for up to two weeks in the event of a power loss to controller Relay, general alarm, flow alarm and power status LEDs DIN connections for conductivity sensor and I/O Prewired incoming power and relay output connections on specified models (receptacle cords) Modular flow assembly with flow switch, quick release sensors and sample port mounted on the polyethylene panel Optional remote communications capability via direct serial line or modem connection Features: 1 Chemical Feed Timer Two Point Calibration DIN connections for I/O Full 24 months warranty Ph Control Made Easy: The CHEMTROL 240 is a microprocessor-based digital controller designed to maintain the pH level in water treatment applications. Standard Features:- All Functions on Front Panel Adjustable Setpoint Adjustable Alarms Proportional Feed Overfeed Safety Timer Waterproof Cabinet Easy to install Simple to use 5-year Electronics Warranty Toll-Free Technical Support The bright LCD display shows pH readings, calibration adjustments and alarm limits. The five LED lights indicate the operating mode (OFF, Manual or Auto), feed status, out-of-range alarms and overfeed alarms. The front panel controls include setpoint, calibration, low and high alarm limits, safety timer limit and proportional feed adjustment. Feed control is either ON/OFF or Proportional. The Proportional Feed feature is particularly useful to avoid overfeeding in small bodies of water. It reduces the feed cycle time progressively as the sensor reading gets closer to the setpoint. General The controller shall provide microprocessor based control of recirculating cooling water systems. Accurately control the level of dissolved solids based on ïÆ' ¬S/cm, and depending on model selection,control conductivity and pH. Controller shall also provide: One user selectable chemical feed timer and up to two 28-day event timers. a. Lockable viewing window. b. Two point calibration. c. Dry contact water meter input capability. d. Alarm powered and dry contact relays. e. Optional 4-20mA output capability. f. Alarm LED, relay and optional remote callback status. g. 2 x 16 alphanumeric display. h. Convenient keypad menu access, display contrast 2. Adjustment and HOA relay control. a. Self charging capacitor to maintain time and history for 3. Up to two weeks in the event of a power loss to controller. a. Relay, general alarm, flow alarm and power status LEDs. b. DIN connections for conductivity sensor and I/O. c. Prewired incoming power and relay output connections 4. On specified models (receptacle cords). a. Modular flow assembly with flow switch, quick release 5. Sensors and sample port mounted on a polyethylene panel. a. Optional remote communications capability via direct 6. Serial line or modem connection. a. A full 24 months warranty. Control Functions All continuously monitored sensor input functions (conductivity, pH) will provide user definable set points for maintaining a specific value within the system. Each set point will have a user definable differential as the control band, programmable high and low alarm points and user defined limit timer for pH. Chemical Feed Timer The chemical feed timer shall be user selectable as any one of the following: Percent User will be able to select a percent ON time of a user defined cycle time. Limit Timer will run as controller bleeds until a user programmed limit time is met or the bleed is satisfied. Percent of Post-Bleed Timer will run for a user defined percentage of the bleed time after bleed is satisfied. Pulse Timer Timer initiated from dry contacting head water meter. User can define timer run time, water meter input and contact accumulation before timer initiation. Remote Communications: The controller shall have the optional capability of serial communications using PULSAworks software. The serial communications can occur either by direct RS232 port, or remotely via an optional internal modem. PULSAworks allows the user to access real-time system values and remotely change operating parameters. The user may download data history files and save files to disk. History files may be viewed and printed in table or graph form, the graph form can be user customized. The optional internal modem allows the controller to perform alarm call back for alarm condition notification to a pager or computer running. There are other various types of water level controllers in which some of them are as under: IC 8255. Digital Water Level Recorder The standard virtual make water level recorder consists of a weatherproof enclosure which contains the data logger, level sensor and power supply, and comes complete with a solar panel and data shuttle. The system is powered by rechargeable sealed maintenance free batteries with integral 12V/10W solar panel, which will easily keep the batteries charged throughout the year. Unattended recording of Water level with maximum and minimum level, Standard program and user-friendly software . Data retrieval by Data shuttle to your Computer, Suitable for mounting in a variety of locations, Memory range more than 8250 data sets extendable up to more than 16500. Digital Water Level Recorder (Pressure Type) This is a Micro controller based Automatic Water Level Recorder reflect state of the art in micro controller based instrumentation design. The Water Level sensor can be attached with this data logger for the collection of real time data automatically. The micro controller has its internal memory along with an additional 128K EEprom, a real time clock with an LCD (16 X 2) to display the instrument status. Piezo-resistive silicon strain gauge, bounded to 316 SS diaphragm, and integral cable contain a vent tube for Barometric pressure compensation. Comes with three ranges 10 meter, 35 meter 100 meter Ground Water Monitoring System: The new SEBA Data Logger type MDS Dipper-3(T3) is the consequential further development of the well proven MDS Dipper for continuous registration in ground and surface water, with special focus to the operation data security. A watch-dog-function, integrated in the MDS-DipperT3 supervises continuously the microprocessor activities and so it provides a high operation security. Undefined system conditions are recognized immediately and eliminated by the Watch-dog function. High accurate, robust ceramic pressure measuring cell for different measuring ranges (i.e. 1 bar, 2 bar, etc.) and Temperature sensor for 025 °C or 050 °C. The MDS Dipper-3(T3) is equipped with a Flash-memory (Flash-RAM). The acquired measuring data are stored in a ring memory organization. Due to the described double data storage, you have access to the complete measured data in the archive data backup, even in case of breakdown of the power supply Measuring system for the observation of groundwater measuring sites, pumping tests, construction areas, Surface water levels Made of stainless steel High data security due to additional flash-memory Watch-dog-function for high operation security Maintenance-free, battery life time >10 years, exchangeable battery Installation in tubes from 1† diameter Optional connection via Bluetooth at Extra Cost

Teams Dont Work Essay -- essays research papers

I. Introduction: I undertook this study to prove the legendary story about the Camelot…An historic example of team, effort gone awry. In the legendary story, a few events transformed Camelot from a utopia kingdom into wasteland. This isn't just idle meandering. There are corporate Camelot's, too, (such as my company MobileComm); those companies that started with such promise and fell victim to problems in their teamwork concepts. It is clear to see that team-based systems simply don't work; better controls equals better management. An emphasis on separating workers into specifically defined jobs, having centralized management control, and maintaining a structured chain of command contributes to a much better and more effective workplace situation. It makes more sense, therefore, to stick to traditional structures in the workplace. II. Review Of Literature 1. Blair, Gerard. Groups That Work, www.ee.ed.ac.uk/~gerad/Management/art0 (1998). The effectiveness of the team takes a nosedive, and the productiveness of the team is far less than the individual could have achieved had they not brought together. 2. Blair, Gerard. 'How to Build Quality into your Team'; IEE Engineering Management Journal, (1996). There are certain frameworks within which teams attempt to work. It's the inability to function within these 'frames' that in another disadvantage to teamwork. The 'forming stage'; is when first comes together. Everyone is considered and civil, and allows for everyone to participate. Discussion is slow and guarded since no one wishes to be seen as conflict. Even though it is not verbalized, it's always destructive. 3. Davidmann, Manfred. Style of Management and Leadership, (1982). Business experts have to work together to achieve their goals, and discord in one area can inconvenience many people. It is essential. Therefore, that people cooperate with each other—but organization is the more difficult it is to achieve the necessary degree of cooperation. Larger organizations are usually much less effective using a ream approach, as people tend to work against each other rather than with each other, 4. Rayner Kimball Fisher- Steven Belgard Williams. Tips for Teams (1995). Team members and team leaders typically have problems defining their own roles, making it difficult to work toward results than busying t... ... Blair, Gerard M. "How to Build Quality into your Team" IEE Engineering Management Journal. fwfwfffhttp://spindle-ee- net2.ee.ed.ac.uk/~gerard/Management/ (1996). term papers term papers Blair, Gerard M. Laying the Foundations for Effective Teamwork. term papers http://www.ee.ed.ac.uk/~gerard/Teaching/art0.html (1996). Davidmann, Manfred. Style of Management and Leadership. //www.demon.co.uk/solbaram/articles/clm2.html (1982). Fisher, Kimball-Rayner, Steven-Belgrade, William. Tips for Teams. (New York, NY: McGraw-Hill, Inc., 1995). Harshman, Carl L.-Philips, Steven L. Teaming Up. (San Diego, CA: Pfeiffer & Co., 1994). Kinlaw, Dennis. Team-Managed Facilitation. (San Diego, CA: Pfeiffer & Co., 1993). Harrington-Mackin, Deborah. Keeping the Team Going. (New York, NY: Amacom, 1996). Mosvick, Roger-Nelson, Robert B. We've Got to Start Meeting Like This. (Glenview, IL: Scott Foresman, 1987). Rayner, Steven R. Team Traps. (New York, NY: John Wiley & Sons, Inc., 1996). Rees, Fran How to Lead Work Teams. (San Diego, CA: Pfeiffer & Co., 1991). Sayles, L.R. "Leadership for the Nineties." Issues and Observations. (1990): spring, pp. 8-11.

Faith in “Life of Pi” Essay

How deep is your faith? How strong is your will to survive if the tables were turned and misfortune rocked your boat of life? Throughout the entire novel Life of Pi by Yann Martel, the protagonist Piscine Molitor Patel develops an extreme devotion to God. As the story progresses Pi’s faith becomes stronger, allowing him to continue living a peaceful life even when things get nearly impossible. Religion keeps Pi busy, happy and most importantly†¦ alive. He develops a profound faith in God’s of 3 different religions (Hinduism, Islam and Christianity), which is put to the test when he spends 227 days stranded on a lifeboat in the Pacific Ocean. During those 227 days Pi as a character grows immensely and his beliefs are truly put to the test. Eventually the theme of faith leads to the biggest question in the novel after Pi tells two completely different stories of his survival to the Japanese insurance investigators. Which is the better story? Faith is believing what you want to believe, yet cannot prove. Sadly, many people live with this definition of faith. For some it feels liberating. It means being able to believe in anything; no explanation is required or given; it is just a matter of faith. For others, such a definition is sickening. This definition states as faith increases, reason and meaning eventually disappear. Nothing can be proved, so in other words living in faith is living in the dark. â€Å"Religion will save us,† I said. Since when I could remember, religions had always been close to my heart. â€Å"Religion?† Mr. Kumar grinned broadly. â€Å"I don’t believe in religion. Religion is darkness.†Darkness?† I was puzzled. I thought, Darkness is the last thing that religion is. Religion is light† Pi completely contradicts the statement ‘faith is living in the dark.’ Faith is not meant to be interpreted in such a way, which is something Pi realizes during the earliest stages of the novel. Pi chooses to believe what he would like to believe, even if it meant taking several concepts from 3 completely different religions and combining them to create a Utopian religion in a sense. As a child, Pi begins to read a great amount and starts embracing more than just one religion. He notices that their powerful narratives have the ability to provide meaning and dimension to life, which is where Pi’s  interest and faith in multiple religions truly begin to develop. In Pondicherry, his atheist biology teacher Mr. Kumar challenges his Hindu faith in God, this makes Pi realize the positive power of belief and the need to overcome the harshness of the universe. Piscine then becomes incredibly motivated to learn more and begins practicing Christianity and Islam, realizing these religions all share the same foundation: belief in a loving higher power. Practicing three different religions gave Pi the flexibility to choose the good and convenient aspects from each. This allowed him to practice a utopian religion where his curiosity could be satisfied, so Pi became very dedicated to each religion. He went to worship at the local mosque, mandir and church but chose to hide all of this from his parents. Pi’s faith and belief in God inspires him as a child, keeps him motivated and constantly thinking but most importantly, helps sustain him while at sea. While Pi is in middle the ocean on the lifeboat after the sinking of the TsimTsum, he turns to faith and religion to keep busy and give himself hope. Throughout the novel we see that faith and religion is something Pi turns to in order to keep himself occupied, especially during his 227 days at sea. On that stormy night, cruising on a ship in the middle of the ocean, Pi lost everything, everything that meant something to him, his family, his protection, the feeling of safety and love. In other words, everything that could give him a hint of hope had disappeared in a matter of seconds. In exchange for all of that he was left stranded on a life boat in the Pacific Ocean surrounded with fierce zoo animals. Even though he had no way of being sure that he would be saved, he still pushed himself to believing that somehow he will be able to overcome the crises that he had fallen in. He prayed to God even though he had no proof He was there but he believed that God really was listening. He believed because he had no other choice. In a situation such as this one, Pi needed a miracle. On the lifeboat, prayer becomes a daily routine for the cast away. Each day Pi wakes up, prays, feeds Richard Parker and inspects the raft and lifeboat, which helps him maintain his mental sanity by keeping busy. His religious rituals allow him to feel a sense of calmness and give him the will to go on. â€Å"They brought me comfort, that is certain. But it was hard, oh, it was hard. Faith in God is  an opening up, a letting go, a deep trust, a free act of love- but sometimes it was so hard to love.† (page 231) Pi admits that it was hard to put his trust in God when it seemed like He wasn’t listening, but continues praying, staying faithful and practising his religious rituals throughout the entire 227 days. On a superficial level, Pi’s faith contributes to his survival by providing daily rituals. On a deeper level, Pi’s faith contributes to his survival through answered prayers. Several times during his experience on the life boat Pi calls to deities during life threatening situations. â€Å"My heart stopped and then beat triple speed. I turned. â€Å"Jesus, Mary, Muhammad and Vishnu!† I saw a sight that will stay with me for the rest of my days. Richard Parker had risen and emerged. He was not fifteen feet from me. Oh, the size of him! The hyena’s end had come, and mine.’† Here, Pi who is on the point of death. Richard Parker, a deadly animal, could have easily killed Pi. However, due to Pi’s prayer, he is saved. A rat â€Å"appeared out of nowhere† and Pi is able to fling at Richard Parker who accepts the rat as an â€Å"offering† and flops back down on the bottom of the lifeboat. Pi’s prayer along with many others had been answered due to the immense amount of faith and dedication Pi shows throughout the novel. Pi has the faith to go on. Even in the most difficult situations, he realizes that in order to survive or even have the will to survive he must put his trust in God and have faith that things will get better. Pi stays strong and courageous and never has the attitude of defeat, he believes that he will get off the lifeboat eventually. Pi has faith in everything around him, giving him more motivation to continue on with his daily life on the boat.   Throughout the course of this entire novel, Pi’s faith is put to the test. At the beginning of the novel, an older Pi states that he can tell a story that will make the author believe in God, which is true in many ways. Yann Martel creates two stories on Pi’s survival in the Pacific while talking to the Japanese insurance investors. One story involving the zoo animals that was very long, fantastical and elaborate and the other that was incredibly brutal and deals directly with issues such as human brutality and  cannibalis m. The story with Richard Parker and the zoo animals is told in great depth for 318 pages of the novel, but after the insurance investigators flat out tell Pi â€Å"We do not believe your story† Pi recreates another more believable, yet more gruesome story. In Pi’s second story he retells the first one but using humans instead. He hints that the zebra is the Japanese sailor (innocent and defeated), Pi’s mother is the orang-utan,(motherly and caring) the hyena is the cook (pure example of evil in humans) and Pi is Richard Parker. In his second story, the cook is a pure example of evil in humans, which is something that many choose to believe that such a thing does not exist. The first story Pi tells is a much more powerful, inspiring story but the second is more believable in many ways. So where does God come in? How can this story make someone believe in God? In a way, Richard Parker represents God. At the end of the novel, when Pi has told his long story to two Japanese insurance investigators but they refuse to believe him, Pi tells a shorter, ugly version that is much more believable, but many hate to believe. Then Pi asks the investigators which story they prefer. Many want to believe in the story where Richard Parker existed because it’s a better story than the one of madness, murder and cannibalism but that is where faith comes in. Faith that Pi was telling the truth the whole time. So what about the prediction at the beginning, that the story will make anyone believe in God? Yann Martel uses the desire to believe in Richard Parker as a stand in for God, creating an analogy, that the readers and audience must make on their own. Pi desperately wants to believe in God. The whole point of the novel is to trick the reader into the question, which is the better story?. Of course everyone prefers Richard Parker to be real. The theme is to accept that belief in God is the better story, just how Richard Parker is hoped to be real. Yann Martel states people prefer religion over reality because the story of God is a better story than reality.The novel is an elaborate metaphor to explain why people believe in God. It doesn’t say that God exists. It just says people prefer to belief in God because it’s a better story than how we see reality directly. Conclusion: During the course of life of Pi, the theme of faith occurs often. Whether it is keeping Pi educated, alive or even kept in the back of  people’s minds long after the novel ends. Faith gives Pi the power to go on, even when he feels as if everything is hopeless. So, without Pi’s faith in God that he developed near the beginning he would not have made it through the 227 long, hard days as sea. And whichever story is right, the better story will always be the one with Richard Parker because faith is God and God is faith.

Case Solutions for Corporate Finance Ross, Westerfield, and Jaffe 9th Edition

Case Solutions Corporate Finance Ross, Westerfield, and Jaffe 9th edition CHAPTER 2 CASH FLOWS AT WARF COMPUTERS The operating cash flow for the company is: (NOTE: All numbers are in thousands of dollars) OCF = EBIT + Depreciation – Current taxes OCF = $1,332 + 159 – 386 OCF = $1,105 To calculate the cash flow from assets, we need to find the capital spending and change in net working capital. The capital spending for the year was: | |Capital spending | | |   |Ending net fixed assets |$2,280 | |   |– Beginning net fixed assets |1,792 | |   |+ Depreciation | 159 | |   | Net capital spending |$ 647 | And the change in net working capital was: |   |Change in net working capital | |   |Ending NWC |$728 | |   |– Beginning NWC | 586 | |   | Change in NWC |$142 | So, the cash flow from assets was:    |Cash flow from assets | | |   |Operating cash flow |$1,105 | |   |– Net capital spending |647 | |   |– Change in NWC | 142 | |   | Cash flow from assets |$316 | The cash flow to creditors was: |   |Cash flow to creditors |   | |   |Interest paid | $95 | |   |– Net New Borrowing | 20 | |   | Cash flow to Creditors | $75 | The cash flow to stockholders was:    |Cash flow to stockholders |   | |   |Dividends paid | $212 | |   |– Net new equity raised | –29 | |   | Cash flow to Stockholders | $241 | The accounting cash flow statement of cash flows for the year was:    |Statement of Cash Flows | |   |Operations | | |   |Net income |$742 | |   |Depreciation |159 | |   |Deferred taxes |109 | |   |Changes in assets and liabilities | | |   | Accounts receivable |(31) | |   | Inventories |14 |   | Accounts payable |17 | |   | Accrued expenses |(99) | |   | Other |(9) | |   |Total cash flow from operations |$902 | |   |   | | |   |Investing activities | | |   | Acquisition of fixed assets |$(786) | |   | Sale of fixed assets |139 | |   |Total cash flow from investing acti vities |$(547) | |   |   | | |   |Financing activities | | |   | Retirement of debt |$(98) | |   | Proceeds of long-term debt |118 | |   | Notes payable |5 | |   | Dividends |(212) | |   | Repurchase of stock |(40) | |   | Proceeds from new stock issues |11 | |   |Total cash flow from financing activities |$(216) | |   |   | | |   |Change in cash (on balance sheet) |$39 | Answers to questions 1. The firm had positive earnings in an accounting sense (NI > 0) and had positive cash flow from operations and a positive cash flow from assets. The firm invested $142 in new net working capital and $647 in new fixed assets. The firm was able to return $241 to its stockholders and $75 to creditors. 2. The financial cash flows present a more accurate picture of the company since it accurately reflects interest cash flows as a financing decision rather than an operating decision. 3. The expansion plans look like they are probably a good idea. The company was able to return a significant amount of cash to its shareholders during the year, but a better use of these cash flows may have been to retain them for the expansion. This decision will be discussed in more detail later in the book. CHAPTER 3 RATIOS AND FINANCIAL PLANNING AT EAST COAST YACHTS 1. The calculations for the ratios listed are: Current ratio = $14,651,000 / $19,539,000 Current ratio = 0. 75 times Quick ratio = ($14,651,000 – 6,136,000) / $19,539,000 Quick ratio = 0. 44 times Total asset turnover = $167,310,000 / $108,615,000 Total asset turnover = 1. 54 times Inventory turnover = $117,910,000 / $6,136,000 Inventory turnover = 19. 22 times Receivables turnover = $167,310,000 / $5,473,000 Receivables turnover = 30. 57 times Total debt ratio = ($108,615,000 – 55,341,000) / $108,615,000 Total debt ratio = 0. 49 times Debt-equity ratio = ($19,539,000 + 33,735,000) / $55,341,000 Debt-equity ratio = 0. 96 times Equity multiplier = $108,615,000 / $55,341,000 Equity multiplier = 1. 96 times Interest coverage = $23,946,000 / $3,009,000 Interest coverage = 7. 96 times Profit margin = $12,562,200 / $167,310,000 Profit margin = 7. 51% Return on assets = $12,562,200 / $108,615,000 Return on assets = 11. 57% Return on equity = $12,562,000 / $55,341,000 Return on equity = 22. 70% 2. Regarding the liquidity ratios, East Coast Yachts current ratio is below the median industry ratio. This implies the company has less liquidity than the industry in general. However, the current ratio is above the lower quartile, so there are companies in the industry with lower liquidity than East Coast Yachts. The company may have more predictable cash flows, or more access to short-term borrowing. The turnover ratios are all higher than the industry median; in fact, all three turnover ratios are above the upper quartile. This may mean that East Coast Yachts is more efficient than the industry in using its assets to generate sales. The financial leverage ratios are all below the industry median, but above the lower quartile. East Coast Yachts generally has less debt than comparable companies, but is still within the normal range. The profit margin for the company is about the same as the industry median, the ROA is slightly higher than the industry median, and the ROE is well above the industry median. East Coast Yachts seems to be performing well in the profitability area. Overall, East Coast Yachts’ performance seems good, although the liquidity ratios indicate that a closer look may be needed in this area. Below is a list of possible reasons it may be good or bad that each ratio is higher or lower than the industry. Note that the list is not exhaustive, but merely one possible explanation for each ratio. | |Ratio |Good |Bad | | |Current ratio |Better at managing current accounts. |May be having liquidity problems. | | |Quick ratio |Better at managing current accounts. May be having liquidity problems. | | |Total asset turnover |Better at utilizing assets. |Assets may be older and depreciated, requiring | | | | |extensive investment soon. | | |Inventory turnover |Better at inventory management, possibly due to |Could be experiencing inventory shortages. | | | |better procedures. | | | |Receivables turnover |Better at collecting receivables. |May have credit terms that are too strict. | | | |Decreasing receivables turnover may increase | | | | | sales. | | |Total debt ratio |Less debt than industry median means the company|Increasing the amount of debt can increase | | | |is less likely to experience credit problems. |shareholder returns. Especially notice that it | | | | |will increase ROE. | | |Debt-equity ratio |Less debt than industry median means the company|Increasing the amount of debt can increase | | | |is less likely to experience credit problems. |shareholder returns. Especially notice that it | | | | |will increase ROE. | | |Equity multiplier |Less debt than industry median means the company|Increasing the amount of debt can increase | | | |is less likely to experience credit problems. |shareholder returns. Especially notice that it | | | | |will increase ROE. | | |Interest coverage |Less debt than industry median means the company|Increasing the amount of debt can increase | | | |is less likely to experience credit problems. |shareholder returns. Especially notice that it | | | | |will increase ROE. | | |Profit margin |The PM is slightly above the industry median, so|May be able to better control costs. | | | |it is performing better than many peers. | | | |ROA |Company is performing above many of its peers. |Assets may be old and depreciated relative to | | | | |industry. | | |ROE |Company is performing above many of its peers. Profit margin and EM could still be increased, | | | | |which would further increase ROE. | If you created an Inventory to Current liabilities ratio, East Coast Yachts would have a ratio that is lower than the industry median. The current ratio is below the industry median, while the quick ratio is above the industry median. This implies that East Coast Yachts has less inventory to current liabilities than the industry median. Because the cash ratio is lower than the industry median, East Coast Yachts has less inventory than the industry median, but more accounts receivable. 3. To calculate the internal growth rate, we first need to find the ROE and the retention ratio, so: ROE = NI / TE ROE = $12,562,200 / $55,341,000 ROE = . 2270 or 22. 70% b = Addition to RE / NI b = $5,024,800 / $12,562,200 b = 0. 40 or 40% So, the sustainable growth rate is: Sustainable growth rate = (ROE ? b) / [1 – (ROE ? b)] Sustainable growth rate = [0. 2270(. 40)] / [1 – 0. 2270(. 40)] Sustainable growth rate = . 0999 or 9. 99% The sustainable growth rate is the growth rate the company can achieve with no external financing while maintaining a constant debt-equity ratio. At the sustainable growth rate, the pro forma statements next year will be:    |Income statement |   |   |   | |   |Sales |$184,018,615 |   |   |   | |   |COGS |129,685,224 |   |   |   | |   |Other expenses |21,990,725 |   |   |   | |   |Depreciation |5,460,000 |   |   |   | |   |EBIT |$26,882,666 |   |   |   | |   |Interest 3,009,000 |   |   |   | |   |Taxable income |$23,873,666 |   |   |   | |   |Taxes (40%) |9,549,466 |   |   |   | |   |Net income |$14,324,199 |   |   |   | |   |   | |   |   |   | |   |Dividends |$8,594,520 |   |   |   | |   |Add to RE |5,729,680 |   |   |   | |   |Balance sheet | |   |Assets |   |Liabilities & Equity | |   |Current Assets | |   |Current Liabilities | | |   | Cash |$3,345,793 |   | Accounts Payable |$7,106,236 | |   | Accounts rec. 6,019,568 |   | Notes Payable |14,384,050 | |   | Inventory |6,748,779 |   | Total CL |$21,490,286 | |   | Total CA |$16,114,140 |   |   | | |   |   | |   |Long-term debt |$33,735,000 | |   | | |   |   | | |   | | |   |Shareholder Equity | | |   | |   | Common stock |$5,200,000 | |   |Fixed assets | |   | Retained earnings |55,870,680 | |   | Net PP&E |$103,347,828 |   | Total Equity |$61,070,680 | |   |   | |   |   | | |   |Total Assets |$ 119,461,968 |   |Total L&E |$116,295,966 | So, the EFN is: EFN = Total assets – Total liabilities and equity EFN = $119,461,968 – 116,295,966 EFN = $3,166,002 The ratios with these pro forma statements are: Current ratio = $16,114,140 / $21,490,286 Current ratio = 0. 75 times Quick ratio = ($16,114,140 – 6,748,779) / $21,490,286 Quick ratio = 0. 44 times Total asset turnover = $184,018,615 / $119,461,968 Total asset turnover = 1. 54 times Inventory turnover = $129,685,224 / $6,748,779 Inventory turnover = 19. 22 times Receivables turnover = $184,018,615 / $6,019,568 Receivables turnover = 30. 57 times Total debt ratio = ($116,295,966 – 61,070,680) / $116,295,966 Total debt ratio = 0. 49 times Debt-equity ratio = ($21,490,286 + 33,735,000) / $61,070,680 Debt-equity ratio = 0. 90 times Equity multiplier = $119,460,968 / $61,070,680 Equity multiplier = 1. 96 times Interest coverage = $26,882,666 / $3,009,000 Interest coverage = 8. 93 times Profit margin = $14,324,199 / $184,018,615 Profit margin = 7. 78% Return on assets = $14,324,199 / $119,461,968 Return on assets = 11. 99% Return on equity = $14,324,199 / $61,070,680 Return on equity = 23. 45% The only ratios that changed are the debt ratio, the interest coverage ratio, profit margin, return on assets, and return on equity. The debt ratio changes because long-term debt is assumed to remain fixed in the pro forma statements. The other ratios change slightly because interest and depreciation are also assumed to remain constant as well. 4. Pro forma financial statements for next year at a 20 percent growth rate are: |   |Income statement |   |   |   | |   |Sales |$200,772,000 |   |   |   | |   |COGS |141,492,000 |   |   |   | |   |Other xpenses |23,992,800 |   |   |   | |   |Depreciation |5,460,000 |   |   |   | |   |EBIT |$29,827,200 |   |   |   | |   |Interest |3,009,000 |   |   |   | |   |Taxable income |$26,818,200 |   |   |   | |   |Taxes (40%) |10,727,280 |   |   |   | |   |Net income |$16,090,920 |   |   |   | |   |   | |   |   |   | |   |Dividends |$9,654,552 |   |   |   | |   |Add to RE |6,436,368 |   |   |   |    |Balance sheet | |   |Assets |   |Liabilities & Equity | |   |Curren t Assets | |   |Current Liabilities | | |   | Cash |$3,650,400 |   | Accounts Payable |$7,753,200 | |   | Accounts rec. |6,567,600 |   | Notes Payable |15,693,600 | |   | Inventory |7,363,200 |   | Total CL |$23,446,800 | |   | Total CA |$17,581,200 |   |   | | |   | |   |Long-term debt |$33,735,000 | |   | | |   |   | | |   | | |   |Shareholder Equity | | |   |   | |   | Common stock |$5,200,000 | |   |Fixed assets | |   | Retained earnings |56,577,368 | |   | Net PP&E |$112,756,800 |   | Total Equity |$61,777,368 | |   |   | |   |   | | |   |Total Assets |$130,338,000 |   |Total L&E |$118,959,168 | So, the EFN is: EFN = Total assets – Total liabilities and equity EFN = $130,338,000 – 118,959,168 EFN = $8,753,040 5. Now we are assuming the company can only build in amounts of $30 million. We will assume that the company will go ahead with the fixed asset acquisition. In this case, the pro forma financial stat ement calculation will change slightly. Before, we made the assumption that depreciation increased proportionally with sales, which makes sense if fixed assets increase proportionally with sales. This is not the case now. To estimate the new depreciation charge, we will find the current depreciation as a percentage of fixed assets, then, apply this percentage to the new fixed assets. The depreciation as a percentage of assets this year was: Depreciation percentage = $5,460,000 / $93,964,000 Depreciation percentage = . 0581 or 5. 81% The new level of fixed assets with the $30 million purchase will be: New fixed assets = $93,964,000 + 30,000,000 = $123,964,000 So, the pro forma depreciation as a percentage of sales will be: Pro forma depreciation = . 0581($123,964,000) Pro forma depreciation = $7,203,221 We will use this amount in the pro form income statement. So, the pro forma income statement will be:    |Income statement |   |   |   | |   |Sales |$200,772,000 |   |   |   | |   |COGS |141,492,000 |   |   |   | |   |Other expenses |23,992,800 |   |   |   | |   |Depreciation |7,203,221 |   |   |   | |   |EBIT |$28,083,979 |   |   |   | |   |Interest |3 ,009,000 |   |   |   | |   |Taxable income |$25,074,979 |   |   |   | |   |Taxes (40%) |10,029,992 |   |   |   | |   |Net income |$15,044,988 |   |   |   | |   |   | |   |   |   | |   |Dividends |$9,026,993 |   |   |   | |   |Add to RE |6,017,995 |   |   |   | The pro forma balance sheet will remain the same except for the fixed asset and equity accounts. The fixed asset account will increase by $30 million, rather than the growth rate of sales. |   |Balance sheet | |   |Assets |   |Liabilities & Equity | |   |Current Assets | |   |Current Liabilities | | |   | Cash |$3,650,400 |   | Accounts Payable |$7,753,200 | |   | Accounts rec. 6,567,600 |   | Notes Payable |15,693,600 | |   | Inventory |7,363,200 |   | Total CL |$23,446,800 | |   | Total CA |$17,581,200 |   |   | | |   |   | |   |Long-term debt |$33,735,000 | |   | | |   |   | | |   | | |   |Shareholder Equity | | |   |   | |   | Common stock |$5,200,000 | |   |Fixed assets | |   | Retained earnings |56,158,995 | |   | Net PP&E |$123,964,000 |   | Total Equity |$61,358,995 | |   | |   |   | | |   |Total Assets |$141,545,200 |   |Total L&E |$118,540,795 | So, the EFN is: EFN = Total assets – Total liabilities and equity EFN = $141,545,200 – 118,540,795 EFN = $23,004,405 Since the fixed assets ha ve increased at a faster percentage than sales, the capacity utilization for next year will decrease. CHAPTER 4 THE MBA DECISION 1. Age is obviously an important factor. The younger an individual is, the more time there is for the (hopefully) increased salary to offset the cost of the decision to return to school for an MBA. The cost includes both the explicit costs such as tuition, as well as the opportunity cost of the lost salary. 2. Perhaps the most important nonquantifiable factors would be whether or not he is married and if he has any children. With a spouse and/or children, he may be less inclined to return for an MBA since his family may be less amenable to the time and money constraints imposed by classes. Other factors would include his willingness and desire to pursue an MBA, job satisfaction, and how important the prestige of a job is to him, regardless of the salary. 3. He has three choices: remain at his current job, pursue a Wilton MBA, or pursue a Mt. Perry MBA. In this analysis, room and board costs are irrelevant since presumably they will be the same whether he attends college or keeps his current job. We need to find the aftertax value of each, so: Remain at current job: Aftertax salary = $60,000(1 – . 26) = $44,400 His salary will grow at 3 percent per year, so the present value of his aftertax salary is: PV = C {[1/(r – g)] – [1/(r – g)] ? [(1 + g)/(1 + r)]t} PV = $44,400{[1/(. 065 – . 03)] – [1/(. 065 – . 03)] ? [(1 + . 03)/(1 + . 065)]40} PV = $935,283. 49 Wilton MBA: Costs: The direct costs will occur today and in one year and include tuition, books and supplies, health insurance, and the room and board increase. So the total direct costs are: PV of direct expenses = ($65,000 + 3,000 + 3,000 + 2,000) + ($65,000 + 3,000 + 3,000 + 2,500) / 1. 065 PV of direct expenses = $141,544. 60 The indirect costs are the lost salary, so the value of the indirect costs are: PV of indirect costs (lost salary) = $44,400 / (1. 065) + $44,400(1 + . 03) / (1 + . 065)2 PV of indirect costs (lost salary) = $82,010. 18 The financial benefits are the bonus to be paid in 2 years and the future salary. PV of aftertax bonus paid in 2 years = $20,000(1 – . 31) / 1. 0652 = $12,166. 90 Aftertax salary = $10,000(1 – . 31) = $75,900 His salary will grow at 4 percent per year. We must also remember that he will now only work for 38 years, so the present value of his aftertax salary is: PV = C {[1/(r – g)] – [1/(r – g)] ? [(1 + g)/(1 + r)]t} PV = $75,900{[1/(. 065 – . 04)] – [1/(. 065 – . 04)] ? [(1 + . 04)/(1 + . 065)]38} PV = $1,804,927. 68 Since the first salary payment will be received three years from today, so we need to discount this for two years to find the value today, which will be: PV = $1,804,927. 68 / 1. 0652 PV = $1,591,331. 25 So, the total value of a Wilton MBA is: Value = –$141,544. 60 – 82,010. 18 + 12,166. 90 + 1,591,331. 25 = $1,379,943. 36 Mount Perry MBA: The direct costs will occur today and include tuition, books and supplies, health insurance, and the room and board increase. So the total direct costs are: Total direct costs = $80,000 + 4,500 + 3,000 + 2,000 = $89,500. Note, this is also the PV of the direct costs since they are all paid today. The indirect costs are the lost salary, so the value of the indirect costs are: PV of indirect costs (lost salary) = $44,400 / (1. 065) = $41,690. 14 The financial benefits are the bonus to be paid in 1 year and the future salary. PV of aftertax bonus paid in 1 year = $18,000(1 – . 29) / 1. 065 = $12,000 His aftertax salary at his new job will be: Aftertax salary = $80,000(1 – . 29) = $65,320 His salary will grow at 3. 5 percent per year. We must also remember that he will now only work for 39 years, so the present value of his aftertax salary is: PV = C {[1/(r – g)] – [1/(r – g)] ? [(1 + g)/(1 + r)]t} PV = $65,320{[1/(. 065 – . 035)] – [1/(. 065 – . 035)] ? [(1 + . 035)/(1 + . 065)]35} PV = $1,462,896. 46 Since the first salary payment will be received two years from today, so we need to discount this for one year to find the value today, which will be: PV = $1,462,896. 46 / 1. 065 PV = $1,373,611. 70 So, the total value of a Mount Perry MBA is: Value = –$89,500 – 41,690. 14 + 12,000 + 1,373,611. 70 = $1,254,421. 56 4. He is somewhat correct. Calculating the future value of each decision will result in the option with the highest present value having the highest future value. Thus, a future value analysis will result in the same decision. However, his statement that a future value analysis is the correct method is wrong since a present value analysis will give the correct answer as well. 5. To find the salary offer he would need to make the Wilton MBA as financially attractive as the as the current job, we need to take the PV of his current job, add the costs of attending Wilton, and the PV of the bonus on an aftertax basis. Note, this assumes that the singing bonus is constant. So, the necessary PV to make the Wilton MBA the same as his current job will be: PV = $935,283. 49 + 1414,544. 60 + 82,010. 18 – 12,166. 90 = $1,146,671. 37 This PV will make his current job exactly equal to the Wilton MBA on a financial basis. Since the salary will not start for 3 years, we need to find the value in 2 years so that it is the present value of growing annuity. So: Value in 2 years = $1,146,671. 37(1. 0652) = $1,300,583. 34 Since his salary will still be a growing annuity, the aftertax salary needed is: PV = C {[1/(r – g)] – [1/(r – g)] ? [(1 + g)/(1 + r)]t} $1,300,583. 34 = C {[1/(. 065 – . 04)] – [1/(. 065 – . 04)] ? [(1 + . 04)/(1 + . 065)]38} C = $54,691. 54 This is the aftertax salary. So, the pretax salary must be: Pretax salary = $54,691. 54 / (1 – . 31) = $76,263. 10 6. The cost (interest rate) of the decision depends on the riskiness of the use of funds, not the source of the funds. Therefore, whether he can pay cash or must borrow is irrelevant. This is an important concept which will be discussed further in capital budgeting and the cost of capital in later chapters. CHAPTER 5 BULLOCK GOLD MINING 1. An example spreadsheet is: [pic] 2. Since the NPV of the mine is positive, the company should open the mine. We should note, it may be advantageous to delay the mine opening because of real options, a topic covered in more detail in a later chapter. 3. There are many possible variations on the VBA code to calculate the payback period. Below is a VBA program from http://www. vbaexpress. com/kb/getarticle. php? kb_id=252. Function PAYBACK(invest, finflow) Dim x As Double, v As Double Dim c As Integer, i As Integer x = Abs(invest) i = 1 c = finflow. Count Do x = x – v v = finflow. Cells(i). Value If x = v Then PAYBACK = i Exit Function ElseIf x < v Then P = i – 1 Z = x / v PAYBACK = P + Z Exit Function End If i = i + 1 Loop Until i > c PAYBACK = â€Å"no payback† End Function CHAPTER 6, Case #1 BETHESDA MINING To analyze this project, we must calculate the incremental cash flows generated by the project. Since net working capital is built up ahead of sales, the initial cash flow depends in part on this cash outflow. So, we will begin by calculating sales. Each year, the company will sell 500,000 tons under contract, and the rest on the spot market. The total sales revenue is the price per ton under contract times 500,000 tons, plus the spot market sales times the spot market price. The sales per year will be:    | |Year 1 |Year 2 |Year 3 |Year 4 | |   |Contract |$47,500,000 |$47,500,000 |$47,500,000 |$47,500,000 | |   |Spot |10,800,000 |16,200,000 |20,700,000 |8,100,000 | |   |Total |$58,300,000 |$63,700,000 |$68,200,000 |$55,600,000 | The current aftertax value of the land is an opportunity cost. The initial outlay for net wor king capital is the percentage required net working capital times Year 1 sales, or: Initial net working capital = . 05($58,300,000) = $2,915,000 So, the cash flow today is:    |Equipment |–$85,000,000 | |   |Land |–7,000,000 | |   |NWC |–2,915,000 | |   |Total |–$94,915,000 | Now we can calculate the OCF each year. The OCF is: | | |Year 1 |Year 2 |Year 3 |Year 4 |Year 5 |Year 6 | |   |Sales |$58,300,000 |$63,700,000 |$68,200,000 |$55,600,000 | | | |   |VC |19,220,000 |21,080,000 |22,630,000 |18,290,000 | | | |   |FC |4,300,000 |4,300,000 |4,300,000 |4,300,000 |$2,800,000 |$7,500,000 | |   |Dep. 12,155,000 |20,825,000 |14,875,000 |10,625,000 | | | |   |EBT |$22,625,000 |$17,495,000 |$26,395,000 |$22,385,000 |–$2,800,000 |–$7,500,000 | |   |Tax |8,597,500 |6,648,100 |10,030,100 |8,506,300 |1,064,000 |2,850,000 | |   |NI |$14,027,500 |$10,846,900 |$16,364,900 |$13,878,700 |–$1,736,000 |–$4,650,000 | |   |+ Dep. |12,155,000 |20,825,000 |14,875,000 |10,625,000 |0 |0 | |   |OCF |$26,182,500 |$31,671,900 |$31,239,900 |$24,503,700 |–$1,736,000 |–$4,650,000 | Years 5 and 6 are of particular interest. Year 5 has an expense of $2. 8 million to reclaim the land, and it is the only expense for the year. Taxes that year are a credit, an assumption given in the case. In Year 6, the charitable donation of the land is an expense, again resulting in a tax credit. The land does have an opportunity cost, but no information on the aftertax salvage value of the land is provided. The implicit assumption in this calculation is that the aftertax salvage value of the land in Year 6 is equal to the $7. 5 million charitable expense. Next, we need to calculate the net working capital cash flow each year. NWC is 5 percent of next year’s sales, so the NWC requirement each year is: |   | |Year 1 |Year 2 |Year 3 |Year 4 | |   |Beg. NWC |$2,915,000 |$3,185,000 |$3,410,000 |$2,780,000 | |   |End NWC |3,185,000 |3,410,000 |2,780,000 | | |   |NWC CF |–$270,000 |–$225,000 |$630,000 |$2,780,000 | The last cash flow we need to account for is the salvage value. The fact that the company is keeping the equipment for another project is irrelevant. The aftertax salvage value of the equipment should be used as the cost of equipment for the new project. In other words, the equipment could be sold after this project. Keeping the equipment is an opportunity cost associated with that project. The book value of the equipment is the original cost, minus the accumulated depreciation, or: Book value of equipment = $85,000,000 – 12,155,000 – 20,825,000 – 14,875,000 – 10,625,000 Book value of equipment = $26,520,000 Since the market value of the equipment is $51 million, the equipment is sold at a gain to book value, so the sale will incur the taxes of: Taxes on sale of equipment = ($26,520,000 – 51,000,000)(. 38) = –$9,302,400 And the aftertax salvage value of the equipment is: Aftertax salvage value = $51,000,000 – 9,302,400 Aftertax salvage value = $41,697,600 So, the net cash flows each year, including the operating cash flow, net working capital, and aftertax salvage value, are: |   |Time |Cash flow | |   |0 |–$94,915,000 | |   |1 |25,912,500 | |   |2 |31,446,900 |    |3 |31,869,900 | |   |4 |68,981,300 | |   |5 |–1,736,000 | |   |6 |–4,650,000 | So, the capital budgeting analysis for the project is: Payback period = 3 + $5,685,700/$68,981,300 Payback period = 3. 08 years Profitability index = ($25,912,500/1. 12 + $31,446,900/1. 122 + $31,869,900/1. 123 + $68,981,300/1. 124 – $1,736,000/1. 125 – $4,650,000/1. 126) / $94 ,915,000 Profitability index = 1. 174 To calculate the AAR, we divide the average net income by the average book value. Since the cash flows from the project extend for two years past the end of mining operation, we will include an average book value of zero for the last two years. So, the AAR is: AAR = [($14,027,500 + 10,846,900 + 16,364,900 + 13,878,000 – 1,736,000 – 4,650,000) / 6] / [(85,000,000 + 72,845,000 + 52,020,000 + 37,145,000 + 26,520,000 + 0) / 7] AAR = . 1485 or 14. 85% The equation for IRR is: 0 = –$94,915,000 + $25,912,500/(1 + IRR) + $31,446,900/(1 + IRR)2 + $31,869,900/(1 + IRR)3 + $68,981,300/(1 + IRR)4 – $1,736,000/(1 + IRR)5 – $4,650,000/(1 + IRR)6 Using a spreadsheet or financial calculator, the IRRs for the project are: IRR = 19. 1%, –74. 64% MIRR = 12. 94% NPV = –$94,915,000 + $25,912,500/1. 12 + $31,446,900/1. 122 + $31,869,900/1. 123 + $68,981,300/1. 124 – $1,736,000/1. 125 – $4,650,000/1. 126 NPV = $16,472,777. 67 In the final analysis, the company should accept the project since the NPV is positive. CHAPTER 6, C ase #2 GOODWEEK TIRES, INC. The cash flow to start the project is the $120 million equipment cost and the $11 million required for net working capital, yielding a total cash outflow today of $131 million. The research and development costs and the marketing test are sunk costs. We can calculate the future cash flows on a nominal basis or a real basis. Since the depreciation is given in nominal values, we will calculate the cash flows in nominal terms. The same solution can be found using real cash flows. Since the price and variable costs increase by 1 percent, and the inflation rate is 3. 5 percent, the nominal growth in both variables is: (1 + R) = (1 + r)(1 + h) R = [(1. 01)(1. 0325)] – 1 R = . 0428 or 4. 28% To analyze this project, we must calculate the incremental cash flows generated by the project. We will calculate the real cash flows, although using nominal cash flows will result in the same NPV. The sales of new automobiles will grow by 2. 5 percent per year, and there are four tires per car. Since the company expects to capture 11 percent of the market, the number of tires sold in the OEM market will be: |   | |Year 1 |Year 2 |Year 3 |Year 4 | | |Automobiles sold |5,600,000 |5,740,000 |5,883,500 |6,030,588 | |   |Tires for automobiles sold |22,400,000 |22,960,000 |23,534,000 |24,122,350 | |   |SuperTread tires sold |2,464,000 |2,525,600 |2,588,740 |2,653,459 | The number of tires sold in the replacement market will grow at 2 percent per year, and Goodweek will capture 8 percent of the market. So, the number of tires sold in the replacement market will be: |   | |Year 1 |Year 2 |Year 3 |Year 4 | |   |Total tires sold in market |14,000,000 |14,280,000 |14,565,600 |14,856,912 | |   |SuperTread tires sold |1,120,000 |1,142,400 |1,165,248 |1,188,553 | The tires will be sold in each market at a different price. The price will increase each year at the inflation rate, so the price each year will be:    | |Year 1 |Year 2 |Year 3 |Year 4 | |   |OEM |$38. 00 |$39. 24 |$40. 51 |$41. 83 | |   |Replacement |$59. 00 |$60. 92 |$62. 90 |$64. 94 | Multiplying the number of tires sold in each market by the respective price in that market, the revenue each year will be: |   | |Year 1 |Year 2 |Year 3 |Year 4 | |   |OEM market |$93,632,000 |$99,091,916 $104,870,213 |$110,985,458 | |   |Replacement market |66,080,000 |69,592,152 |73,290,975 |7 7,186,390 | |   |Total |$159,712,000 |$168,684,068 |$178,161,188 |$188,171,848 | Now we can calculate the incremental cash flows each year. We will calculate the nominal cash flows. Doing so, we find: |   | |Year 1 |Year 2 |Year 3 |Year 4 | |   |Revenue |$159,712,000 |$168,684,068 |$178,161,188 |$188,171,848 | |   |Variable costs |78,848,000 |84,151,806 |85,026,717 |87,024,208 | |   |Mkt. nd general costs |26,000,000 |26,845,000 |27,717,463 |28,618,280 | |   |Depreciation |20,020,000 |34,300,000 |24,500,000 |17,500,000 | |   |EBT |$34,844,000 |$23,387,262 |$40,917,008 |$55,029,360 | |   |Tax |13,937,600 |9,354,905 |16,366,803 |22,011,744 | |   |Net income |$20,906,400 |$14,032,357 |$24,550,205 |$33,017,616 | |   |OCF |$40,926,400 |$48,332,357 |$49,050,205 |$50,517,616 | Net working capital is a percentage of sales, so the net working capital requirements will change every year. The net working capital cash flows will be:    | |Year 1 |Year 2 |Year 3 |Year 4 | |    |Beginning |$9,000,000 |$23,956,800 |$25,302,610 |$26,724,178 | |   |Ending |23,956,800 |25,302,610 |26,724,178 |0 | |   |NWC cash flow |–$14,956,800 |–$1,345,810 |–$1,421,568 |$26,724,178 | The book value of the equipment is the original cost minus the accumulated depreciation. The book value of equipment each year will be:    |   |Year 1 |Year 2 |Year 3 |Year 4 | |   |Book value of equipment |$119,980,000 |$85,680,000 |$61,180,000 |$43,680,000 | Since the market value of the equipment is $54 million, the equipment is sold at a gain to book value, so the sale will incur the taxes of: Taxes on sale of equipment = ($46,680,000 – 54,000,000)(. 40) = $4,128,000 And the aftertax salvage value of the equipment is: Aftertax salvage value = $54,000,000 – 4,128,000 Aftertax salvage value = $89,872,000 So, the net cash flows each year, including the operating cash flow, net working capital, and aftertax salvage value, are:    |Time |Cash fl ow | | |   |0 |–$149,000,000 | | |   |1 |25,969,600 | | |   |2 |49,986,547 | | |   |3 |47,628,637 | | |   |4 |127,113,794 | | So, the capital budgeting analysis for the project is: Payback period = 3 + $28,415,213 / $127,113,794 Payback period = 3. 22 years The discounted cash flows are:    |Time |Discounted cash flow | |   |0 |–$149,000,000 | |   |1 |22,406,903 | |   |2 |34,978,941 | |   |3 |30,592,703 | |   |4 |70,446,422 | Discounted payback period = 3 + $61,021,454 / $70,446,422 Discounted payback period = 3. 27 years The required return for the project is in nominal terms, so the profitability index is: Profitability index = ($25,969,600/1. 15 + $49,986,547/1. 152 + $47,628,637/1. 153 + $96,714,733/1. 154) / $149,000,000 Profitability index = 1. 63 The equation for IRR is: 0 = –$149,000,000 + $25,969,600/(1 + IRR) + $49,986,547/(1 + IRR)2 + $47,628,637/(1 + IRR)3 + $96,714,733/(1 + IRR)4 Using a spreadsheet or financial calculator, the IRR for the project is: IRR = 18. 35% AAR = [(20,926,400 + 14,032,357 + 24,550,205 + 33,017,606)/4] / [($140,000,000 + 119,980,000 + 85,860,000 + 61,1180,000 + 43,680,000)/5} AAR = 25. 67% NPV = –$149,000,000 + $25,696,600/(1. 15) + $46,986,547/(1. 15)2 + $47,628,637/(1. 15)3 + $127,113,794/(1. 15)4 NPV = $9,424,967. 81 In the final analysis, the company should accept the project since the NPV is positive. CHAPTER 7 BUNYAN LUMBER, LLC The company is faced with the option of when to harvest the lumber. Whatever harvest cycle the company chooses, it will follow that cycle in perpetuity. Since the forest was planted 20 years ago, the options available in the case are 40-, 45-, 50, and 55-year harvest cycles. No matter what harvest cycle the company chooses, it will always thin the timber 20 years after harvests and replants. The cash flows will grow at the inflation rate, so we can use the real or nominal cash flows. In this case, it is simpler to use real cash flows, although nominal cash flows would yield the same result. So, the real required return on the project is: (1 + R) = (1 + r)(1 + h) 1. 10 = (1 + r)(1. 37) r = . 0608 or 6. 08% The conservation funds are expected to grow at a slower rate than inflation, so the real return for the conservation fund will be: (1 + R) = (1 + r)(1 + h) 1. 10 = (1 + r)(1. 032) r = . 0659 or 6. 59% The company will thin the forest today regardless of the harvest schedule, so this first thinning is not an incremental cash flow, but future thinning is part of the analysis since the thinning schedule is determined by the harvest schedule. The cash flow from the thinning process is: Cash flow from thinning = Acres thinned ? Cash flow per acre Cash flow from thinning = 5,000($1,000) Cash flow from thinning = $5,000,000 The real cost of the conservation fund is constant, but the expense will be tax deductible, so the aftertax cost of the conservation fund will be: Aftertax conservation fund cost = (1 – . 35)($250,000) Aftertax conservation fund cost = $162,500 For each analysis, the revenue and costs are: Revenue = [? (% of grade)(harvest per acre)(value of board grade)](acres harvested)(1 – defect rate) Tractor cost = (Cost MBF)(MBF per acre)(acres) Road cost = (Cost MBF)(MBF per acre)(acres) Sale preparation and administration = (Cost MBF)(MBF acre)(acres) Excavator piling, broadcast burning, site preparation, and planting costs are the cost of each per acre times the number of acres. These costs are the same no matter what the harvest schedule since they are based on acres, not MBF. Now we can calculate the cash flow for each harvest schedule. One important note is that no depreciation is given in the case. Since the harvest time is likely to be short, the assumption is that no depreciation is attributable to the harvest. This implies that operating cash flow is equal to net income. Now we can calculate the NPV of each harvest schedule. The NPV of each harvest schedule is the NPV of the first harvest, the NPV of the thinning, the NPV of all future harvests, minus the present value of the conservation fund costs. 40-year harvest schedule:    |Revenue |$42,194,250 | |   |Tractor cost |9,870,000 | |   |Road |3,525,000 | |   |Sale preparation & admin |1,269,000 | |   |Excavator piling |750,000 | |   |Broadcast burning |1,500,000 | |   |Site preparation |725,000 | |   |Planting costs |1,125,000 | |   |EBIT |$23,430,250 | |   |Taxes |8,200,588 | |   |Net income (OCF) |$15,229,663 | The PV of the first harvest in 20 years is: PVFirst = $15,229,663/(1 + . 0608)20 PVFirst = $4,681,788 Thinning will also occur on a 40-year schedule, with the next thinning 40 years from today. The effective 40-year interest rate for the project is: 40-year project interest rate = [(1 + . 0608)40] – 1 40-year project interest rate = 958. 17% We also need the 40-year interest rate for the conservation fund, which will be: 40-year conservation interest rate = [(1 + . 0659)40] – 1 40-year conservation interest rate = 1,183. 87% Since we have the cash flows from each thinning, and the next thinning will occur in 40 years, we can find the present value of future thinning on this schedule, which will be: PVThinning = $5,000,000/9. 5817 PVThinning = $521,825. 80 The operating cash flow from each harvest on the 40-year schedule is $15,229,663, so the present value of the cash flows from the harvest are: PVHarvest = [($15,229,663/9. 5817)] / (1 + . 0608)20 PVHarvest = $488,615. 51 Now we can find the present value of the conservation fund deposits. The present value of these deposits is at Year 20 is: PVConservation = –$162,500 – $162,500/11. 8387 PVConservation = –$176,226. 22 And the value today is: PVConservation = –$175,226. 22/(1 + . 0659)20 PVConservation = –$49,182. 52 So, the NPV of a 40-year harvest schedule is: NPV = $4,681,788 + 521,825. 80 + 488,615. 51 – 49,182. 52 NPV = $5,643,046. 36 45-year harvest schedule:    |Revenue |$49,232,800 | |   |Tractor cost |11,480,000 | |   |Road |4,100,000 | |   |Sale preparation & admin |1,476,000 | |   |Excavator piling |750,000 | |   |Broadcast burning |1,500,000 | |   |Site preparation |725,000 | |   |Planting costs |1,125,000 | |   | EBIT |$28,076,800 | |   |Taxes |9,826,880 | | |Net income (OCF) |$18,249,920 | The PV of the first harvest in 25 years is: PVFirst = $18,249,920/(1 + . 0608)25 PVFirst = $4,177,464 Thinning will also occur on a 45-year schedule, with the next thinning 45 years from today. The effective 45-year interest rate for the project is: 45-year project interest rate = [(1 + . 0608)45] – 1 45-year project interest rate = 1,321. 11% We also need the 45-year interest rate for the conservation fund, which will be: 45-year conservation interest rate = [(1 + . 0659)45] – 1 45-year conservation interest rate = 1,666. 38% Since we have the cash flows from each thinning, and the next thinning will occur in 45 years, we can find the present value of future thinning on this schedule, which will be: PVThinning = $5,000,000/13. 2111 PVThinning = $378,470. 46 The operating cash flow from each harvest on the 45-year schedule is $18,249,920, so the present value of the cash flows from the harvest are: PVHarvest = [($18,249,920/13. 21111)] / (1 + . 0608)25 PVHarvest = $316,209. 37 Now we can find the present value of the conservation fund deposits. The present value of these deposits is at Year 25 is: PVConservation = –$162,500 – $162,500/16. 6638 PVConservation = –$174,800. 29 And the value today is: PVConservation = –$174,800. 29/(1 + . 0659)25 PVConservation = –$35,458. 26 So, the NPV of a 45-year harvest schedule is: NPV = $4,177,464 + 378,470. 46 + 316,209. 37 – 35,458. 26 NPV = $4,836,685. 86 50-year harvest schedule:    |Revenue |$52,024,993 | |   |Tractor cost |12,110,000 | |   |Road |4,325,000 | |   |Sale preparation & admin |1,557,000 | |   |Excavator piling |750,000 | |   |Broadcast burning |1,500,000 | |   |Site preparation |725,000 | |   |Planting costs |1,125,000 | |   |EBIT |$29,932,993 | |   |Taxes |10,476,547 | |   |Net income (OCF) |$19,456,445 | The PV of the first harvest in 30 years is: PVFirst = $19,456,445/(1 + . 0608)30 PVFirst = $3,316,238 Thinning will also occur on a 50-year schedule, with the next thinning 50 years from today. The effective 50-year interest rate for the project is: 50-year project interest rate = [(1 + . 0608)50] – 1 50-year project interest rate = 1,808. 52% We also need the 50-year interest rate for the conservation fund, which will be: 50-year conservation interest rate = [(1 + . 0659)50] – 1 50-year conservation interest rate = 2,330. 24% Since we have the cash flows from each thinning, and the next thinning will occur in 50 years, we can find the present value of future thinning on this schedule, which will be: PVThinning = $5,000,000/18. 0852 PVThinning = $276,468. 34 The operating cash flow from each harvest on the 50-year schedule is $19,456,445, so the present value of the cash flows from the harvest are: PVHarvest = [($19,456,445/18. 0852] / (1 + . 0608)30 PVHarvest = $183,367. 60 Now we can find the present value of the conservation fund deposits. The present value of these deposits is at Year 30 is: PVConservation = –$162,500 – $162,500/23. 3024 PVConservation = –$171,485. 25 And the value today is: PVConservation = –$171,485. 25/(1 + . 0659)30 PVConservation = –$25,283. 50 So, the NPV of a 50-year harvest schedule is: NPV = $3,316,238 + 276,469. 34 + 183,367. 60 – 25,283. 50 NPV = $3,750,790. 98 55-year harvest schedule:    |Revenue |$54,516,748 | |   |Tractor cost |12,670,000 | |   |Road |4,525,000 | |   |Sale preparation & admin |1,629,000 | |   |Excavator piling |750,000 | |   |Broadcast burning |1,500,000 | |   |Site preparation |725,000 | |   |Planting costs |1,125,000 | |   | EBIT |$31,592,748 | |   |Taxes |11,057,462 | |   |Net income (OCF) |$20,535,286 | The PV of the first harvest in 35 years is: PVFirst = $20,535,286/(1 + . 0608)35 PVFirst = $2,606,233 Thinning will also occur on a 55-year schedule, with the next thinning 55 years from today. The effective 55-year interest rate for the project is: 55-year project interest rate = [(1 + . 0608)55] – 1 55-year project interest rate = 2,463. 10 We also need the 55-year interest rate for the conservation fund, which will be: 55-year conservation interest rate = [(1 + . 0659)55] – 1 55-year conservation interest rate = 3,243. 60% Since we have the cash flows from each thinning, and the next thinning will occur in 55 years, we can find the present value of future thinning on this schedule, which will be: PVThinning = $5,000,000/24. 6310 PVThinning = $202,995. 97 The operating cash flow from each harvest on the 55-year schedule is $20,535,286, so the present value of the cash flows from the harvest are: PVHarvest = [($20,535,286/24. 6310] / (1 + . 0608)35 PVHarvest = $105,810. 96 Now we can find the present value of the conservation fund deposits. The present value of these deposits is at Year 35 is: PVConservation = –$162,500 – $162,500/32. 4360 PVConservation = –$169,097. 37 And the value today is: PVConservation = –$169,097. 37/(1 + . 0659)35 PVConservation = –$18,121. 00 So, the NPV of a 55-year harvest schedule is: NPV = $2,606,233 + 202,995. 97 + 105,810. 96 – 18,121. 00 NPV = $2,896,918. 96 The company should use a 40-year harvest schedule since it has the highest NPV. Notice that when the NPV began to decline, it continued declining. This is expected since the growth in the trees increases at a decreasing rate. So, once we reach a point where the increased growth cannot overcome the increased effects of compounding, harvesting should take place. There is no point further in the future which will provide a higher NPV. CHAPTER 8 FINANCING EAST COAST YACHT’S EXPANSION PLANS WITH A BOND ISSUE 1. A rule of thumb with bond provisions is to determine who the provisions benefit. If the company benefits, the bond will have a higher coupon rate. If the bondholders benefit, the bond will have a lower coupon rate. a. A bond with collateral will have a lower coupon rate. Bondholders have the claim on the collateral, even in bankruptcy. Collateral provides an asset that bondholders can claim, which lowers their risk in default. The downside of collateral is that the company generally cannot sell the asset used as collateral, and they will generally have to keep the asset in good working order. b. The more senior the bond is, the lower the coupon rate. Senior bonds get full payment in bankruptcy proceedings before subordinated bonds receive any payment. A potential problem may arise in that the bond covenant may restrict the company from issuing any future bonds senior to the current bonds. c. A sinking fund will reduce the coupon rate because it is a partial guarantee to bondholders. The problem with a sinking fund is that the company must make the interim payments into a sinking fund or face default. This means the company must be able to generate these cash flows. d. A provision with a specific call date and prices would increase the coupon rate. The call provision would only be used when it is to the company’s advantage, thus the bondholder’s disadvantage. The downside is the higher coupon rate. The company b

Sufi brotherhoods Essays

Sufi brotherhoods Essays Sufi brotherhoods Essay Sufi brotherhoods Essay Brief 195749: Comparison and Contrasting the Organizations and Activities of Two Modern Sufi Brotherhoods Sufism, like other mystical motions in the Abrahamic spiritual household, is an esoteric religion which varies from group to group. Furthermore, the assorted Sufi brotherhoods in being today differ greatly from each in both their reading of the Qur’an and Hadith. Like many other monotheistic mysterious traditions, Sufi motions take on the civilization of the population in which they were introduced, doing even subdivisions of the same brotherhood hard to place save for those who identify themselves as such. The Mevlevi Brotherhood, founded by the Sufi poet and religious leader Jalaluddin Rumi ( 1207-1273 ) are most normally recognized in the Western universe as â€Å"whirling dervishes, † a group of mystics who search for Allah through a series of supplication assorted with poesy, dance, and music. Other groups such as the Naqshbandi Brotherhood are esoteric but branched out from the Deobandi Movement of Sufism in South and Central Asia. Typically more political than mo st other Sufis, the Naqshbandi were linked to anti-Bolshevik runs in Afghanistan every bit good as the modern Chechen Resistance. Factors impacting the development of differences among Sufis include the countries in which they were founded and the planetary place of Islamic Caliphates at the clip of their several initiation. Where Mevlevis are mostly cloistered, unpolitical craftsmans, the Naqshbandi are more politically charged and remain devoted to strict Quranic reading. Muslim mysticism and the nature of Sufism at big is hard to specify. An abstract motion in comparing to both the mainstream patterns of Sunni and Shiite Islam, the huge bulk of Sufi orders follow the instructions of a shaykh ( besides normally termed â€Å"sheikh, † â€Å"maulana, † and â€Å"mevlana† ) or respected figure believed to disciples of several brotherhoods to be morally and spiritually in melody with the instructions of Islam. The patterns of Sufi groups deviate from the spiritual rites of conventional Islam’s ablutions and traditions, giving the mystical motion a sense of reformism and reinterpretation. For this ground, Sufi groups’ esoteric patterns have long been suspected by many to be dissident and inherently un-Islamic. M.T. Stepaniants’Sufi Wisdomdescribes the world’s assorted Sufi groups as holding â€Å"exercised considerable influence on the cultural and socio-political life of Muslims, † a merchandise of à ¢â‚¬Å"elite consciousness and a popular religion† [ 1 ] . If any signifier of common organisation can be ascribed to the mysterious motion, it is an organisation that has been â€Å"a signifier of societal protest against the dominant political system every bit good as the legalized spiritual philosophy that warranted and sanctioned the system, † used to â€Å"quell, lenify, and quash societal activity† [ 2 ] . Some Sufi orders meet in order to reform and analyze Islam in new methods to redefine common readings of the Quran and the Hadith and necessitate silent attachment to the five pillars of Islam: regular supplication, the recitation of religion, charity, fasting during the holy month of Ramadan, and pilgrims journey to the holy metropolis of Mecca. Other orders find followings of all chevrons, many of whom do non profess to be Muslim and retain their individuality as non-Muslims despite following the instructions of an elevated Muslim leader. Some Sufis are cloistered abstainers that devote their lives to other-worldly chases, and others lead regular lives without abdicating worldly purposes and activities. Despite these pronounced differences, Sufism at big â€Å"counterpoised irrationalism to rational believing while it besides stood Forth as a assortment of spiritual free-thought non infrequently immediate with philosophic theorizing† ; most groups, ascetic or non, â€Å"persuade searchers of ‘the Path’ to abdicate everyday attentions and bodily appetencies, and to integrate esoteric self-discipline† [ 3 ] . Even the term â€Å"Sufism† is disputed, with some bookmans indicating to the beginnings of the rubric holding to make with the Grecian termsophos, or wisdom, and others imputing the motion to a signifier of utmost spiritual piousness represented by the woolen frock of the Islamic pilgrim, known as theâ€Å"shuf.†Stepaniants links the thoughts of Islamic mysticism and roots of several motions to everything from Islam to â€Å"Neo-Platonism, Zoroastrianism, Buddhism, and the like† [ 4 ] . The Naqshbandi One of the larger Sufi orders, or tarika ( disambiguation includes â€Å"tariqa† and â€Å"terika† ) of the Muslim religion, the Naqshbandi follow the instructions of Bahauddin Naqshband Bukari ( 1318-1389 ) . Like many other Sufi motions, the Naqshbandi originated in Central Asia. Unlike other orders, the Naqshbandi are non easy distinguishable physically or dogmatically from mainstream Sunni Muslims. As noted by Idries Shah inThe Way of the Sufi, the Naqshbandi â€Å"never publically adopted any typical frock, and because their members neer carried on attention-attracting activities, bookmans have non been able to retrace the history of the order, and it has frequently been hard to place its members† [ 5 ] . Shah continues to depict the tradition of the Naqshbandi as one to work â€Å"entirely within the societal model of the civilization in which they operate, † hence deriving the group the reputation of â€Å"being chiefly Muslim pietists† [ 6 ] . The Naqshbandi, though following the instructions of their namesake, branched off into several smaller groups, with many of their members fall ining the ranks of other Sufi groups. This mobility is extremely characteristic of Sufis, whose loose definitions and associations enable them to stay Sufis of assorted organisations every bit good as practicians of assorted Muslim subgroups. The ambiguity of the Naqshbandi pattern and instructions enabled the group to last assorted overzealous counter-movements aimed at the devastation of the Sufi universe. The comparatively progressive motion of the Naqshbandi â€Å"emphasized a shar’ist ( Shariah, or Islamic Law-based ) orthopraxy, political activism, extension of the faith, and a strong Sunni orientation [ which ] came to tag the Naqshbandi in a manner that proved unequivocal in the mystical path’s subsequent history† [ 7 ] . The group is highly rooted in the chase of worldly personal businesss within the model of the Islamic religion. This includes the kingdom of political relations, a sector in which most Sufis daring non condescend to endeavor. As antecedently mentioned, the Naqshbandi were non wholly esoteric, accommodating to the civilization in which they lived. The group emphasized both â€Å"self-cultivation and formal rite, and backdown from and engagement in society† [ 8 ] . There is doubtless a step of self-negation in such an observation, but it is predicated upon irrevocably Sufi patterns. The Naqshbandi were non self-aggrandising, though they did believe themselves to hold an almost-exclusive apprehension of the Islamicdeen, or religion. Because they endeavoured to take portion in society’s gestures, the Naqshbandi were in big portion a extension of the Islamic proselytizing tradition. Not necessitating the repudiation of secular patterns and the acceptance of the cloistered life style was a big property to the success of the brotherhood and its endurance today. Unlike their cloistered Sufi opposite numbers, leaders of the Naqshbandi order â€Å"enjoyed households and the stuff wealth accrued from the contributions of their followings, † besides going committed to political â€Å"involvement and societal alteration based on Islamic principles† most prevalently demonstrated in their anti-Russian missions in Afghanistan and Chechnya [ 9 ] . Anti-Russian ( ulterior anti-Soviet post-1917, and so once more anti-Russian post-1994 ) Naqshbandi activism in the Caucasus has spanned the last century as the mo st noteworthy characteristic of Naqshbandi international activity, who prior to the autumn of the Romanov dynasty were entrenched in the battle for independency: â€Å"The Russian businessperson and socialist revolutions of 1917 farther aggravated the place of the Sufis in the North Caucasus. The most detrimental factor was the Bolsheviks’ unbelieving war against Islam and Sufism in peculiar. Harmonizing to some beginnings most Naqshbandis who were concealing in the mountains of Dagestan and Chechnya welcomed the February businessperson revolution of 1917. They hoped that the revolution would convey about the political independency of the North Caucasus. Those Naqshbandis were active participants in the popular rebellion which resulted in the constitution of a ‘North Caucasic Emirate’† [ 10 ] . The tradition of Naqshbandi political association carried over into the first and 2nd Chechen Wars, marked by the moral force of the struggle with Moscow. At first, the Naqshbandi served the intent of fusion, pulling the Ingush, Dagestani, and Chechen peoples bound by a common religion. Their strong Sunni association besides drew support from the larger Muslim universe, with pre-1994 support coming from Iran, Saudi Arabia, and others. By the clip the Chechens had their first presidential election, nevertheless, the rise of Wahabbism in the part prompted the Naqshbandi, comparative centrists in Quranic reading, to divide off from the Chechen political mainstream. Acknowledging the danger of a extremist patriot, patently-Wahabbi authorities sponsored by General Dudayev, the â€Å"first Chechen Mufti, Muhammad Bashir, a Naqshbandi, refused to endorse Dudayev during the elections, † making a rift in Chechen society that remains today [ 11 ] . Curiously plenty, the Naqshbandi shayk hs and their adherents began as military leaders and recruiters to the opposition motion, contending a Russian presence they deemed to be imperialist. As spiritual motions opposite the Naqshbandi tradition evolved, nevertheless, so did their commitments. In order to wrest spiritual control from the turning figure of Chechen Wahabbis who opposed the assignment of Moscow-backed Ahmed Kadyrov, the Naqshbandis rallied in support of the immature leader, back uping â€Å"federal forces while the Wahabbis allied themselves with the unreconcilable Chechen extremist patriots who refused any duologue with Moscow† [ 12 ] . Spiritually, the Naqshbandi brotherhood is â€Å"characterized by its accent on a soundless ‘remembrance of God’ as opposed to the more conventional pattern of reiterating a expression aloud† [ 13 ] . In hisMystic Islam, Julian Baldick inside informations the Sufi art of repeat in the chase of God. Many Sufi groups will pattern routine recitations, normally consisting anyplace from individual words and phrases to full transitions from the Quran and prescriptions taken from the Hadith. Certain Deobandi brotherhoods will declaim names of God ( known in Urdu aszikrand in Arabic asdhikr) , reiterating discrepancies of the 99 known names of Allah ( Allah the Magnificent, Allah the Merciful, Allah the Protector, etc ) in order to comprehend the construct of the Godhead more clearly. Contrary to this pattern, the Naqshbandi are alone in the sense of quiet observation, practising a mental recitation that resembles the intonation of â€Å"Aum† in Hindu speculation. Baldick notes the comparative isolation of the Naqshbandi from other groups, reflecting on the character of separation many Muslims contend renders the Naqshbandi â€Å"as a mere spiritual association as opposed to other brotherhoods more normally referred to as ‘orders’† [ 14 ] . The Naqshbandi are in many senses Orthodox reformers within a far more structured model than most. The Mevlevis Possibly the most celebrated Sufis outside the Islamic universe, the Mevlevis, known more normally as â€Å"Whirling Dervishes† represent the more controversial of the Sufi brotherhoods. Like the Naqshbandi, the Mevlevis ( afterlife referred to as â€Å"dervishes† ) did non necessitate a cloistered life style from their followings. Many dervishes had households and occupations, attendedJuma’a( Friday flushing ) supplications at local mosques, practising their alone reading of Islam in Lodges non unlike those of Masons. The nature of Mevlevi Sufism differed greatly, based on the instructions of the celebrated poet Rumi, whose instructions in universalism and the integrity of world attracted followings including Jews, Buddhists, Hindus, Christians, and Zoroastrians. Dervishes typically follow the heralded and oft-described â€Å"greatest Sufi poet† as a â€Å"friend of God† instead than a adult male of conservative piousness in the Naqshbandi-style â €Å"remembrance of God† [ 15 ] . This lies in stark comparing to the utmost fear exhibited by most within the crease of Sunni Islam ; the near-deification of Rumi is a point of acrimonious contention at best, and at worst is an exercising of unorthodoxy. Besides contrary to Naqshbandi tradition, dervishes have a distinguishable manner of frock, made familiar in their celebrated ceremonials of dance and music. Like Rumi, the typical dervish in supplication frocks in a big xanthous chapeau typifying the mortality of adult male, and ( depending on the brotherhood ) fluxing cloaks over white dress reminiscent of the frock of a Muslim pilgrim, orhajji.Today’s dervishes, no longer organized as they were in the yearss of the Ottoman Empire now that modern Turkey has banned Sufism ( due to Naqshbandi resistance to secularisation by Mustafa Kemal Ataturk ) , do non congregate Thursday darks in the Lodges they used to busy. Today’s dervishes are mostly public presentation instrumentalists and terpsichoreans, touring the universe to play music, recite poesy, and take portion in the what is known as thesema. Harmonizing to dervish tradition, Rumi himself was â€Å"aware of the motion and sound in all of the planet† and hence instructed his followings, Muslim or non, to partake in thesema, a â€Å"whirling dance of the dervishes as an look of the cosmic joy experienced by the coincident consequence of obliteration and glorification† [ 16 ] . Due to the other-worldly traditions of the Mevlevi, most Moslems throughout history found it easy to individual them out as misbelievers with their irregular frock and pattern. Presently, there is no purely organized Mevlevi order of dervishes ; the clip of â€Å"groupsemasand communalzikrhas long since past† [ 17 ] . Their ceremonials, nevertheless, remain integral as those staying travel as performing artists. Unlike the Naqshbandi, who scorn music and vocalizing, the dervishes still appreciate music, utilizing it non unlike American Gospel vocalizing. This is strongly kindred to the art of theqawwali, or South Asiatic Sufi vocal of devotedness. Where the Naqshbandi stanchly identified with Sunni Islam, condemning the Shiites as heretic, dervishes saw no differentiation in the great Islamic split that created the two religious orders. Theological oppositions of the dervishes frequently categorized them with the Shiites, whose many traditions paralleled the Mevlevi cosmopolitan connexion with the remainder of the universe. Songs, poesy, and the publicity of art were prevailing in the Mevlevi traditions every bit good as in Shiite Islam. Like Shiites , Mevlevis still execute â€Å"the holy ablutions of the Muslim faith† before â€Å"entering the Hall of Celestial Sounds, † or dervish â€Å"lodges† [ 18 ] . The dervishes pushed the bounds and stenosiss of Sunni Islam in about every regard in the worship of Allah ; Baldick states â€Å"that there was plentifulness of institutionalised mystical libertinism† every bit early as the 16th century every bit good as â€Å"documentary grounds of the playing of out musical instruments by dervishes, and besides grounds of widespread ingestion of vino and drugs by dervishes† [ 19 ] . Though non alone to Sufi orders, the ingestion of vino and drugs was purely forbidden in both mainstream Shi’a and Sunni Islam. Where the Naqshbandi held purely to dietary limitations prescribed in the Quran, Hadith, and Shariah Law, the dervishes found comparative freedom and yet faced small reverberation on history of their supposed moral aberrance. Unlike the Naqshban di who sought chiefly to change over people to their Islam, the dervishes under Rumi prayed in integrity with everyone and everything in the universe. Throughout history, the Whirling Dervishes â€Å"continued to retain the particular fondness of the powerful, † appealing to their sense of self-aggrandisement through dervish supplications â€Å"not merely for the opinion dynasty but for the expansive vizier, the military and civil decision makers, and the scholar-jursits† [ 20 ] . The Naqshbandi, on the other manus, when in dissension with a governing dynasty in respects to political relations or spiritualty, frequently found themselves exiled. Unfortunately for the dervishes, nevertheless, gaining the fondnesss of the powerful did non pardon them from unfavorable judgment whether in the kingdom of dietetic carelessness or sexual aberrance. Rumi himself was rumoured to hold kept a male lover throughout his life. Harmonizing to most Muslims, â€Å"many dervishes are th oroughly immoral and habitually intoxicated ; † decried by many in the Naqshbandi brotherhood as misbelievers but besides vehemently defended by others [ 21 ] . Rumi’s histories of â€Å"gazing at beardless boys† led to anti-Sufi cabal accusal of the Mevlevis’ â€Å"sexual misconduct and licentious behaviour† [ 22 ] . The fear of human existences is the most evident between Shiites and the Mevlevi ; the two revere their leaders as idols of virtuousness and religious piousness. The Naqshbandi, though in fear of theirshaykhs, follow their leaders as religious instructors more kindred to the Sunni Muslim construct of the typical Mullah, or prayer leader. Clergy in Sunni Islam, after all, requires minimum instruction as the age ofijtihad, or Islamic Jurisprudence, has long since ended. The Mevlevi, though technically a Sunni group, mirror the Shiites in their reinterpretation of the Quran and the comparative lax attack to Hadith and certain Shariah Torahs. Where the Naqshbandi and the Mevlevi spiritually overlap, nevertheless, is the order of prioritizing of spiritual traditions. Using the illustration of the gap of Chechen duologue with Moscow to fiddle the extremist patriots and Wahabbis, it becomes apparent that while strict in some respects, the Naqshbandi mediate their ardor for faith with the wo rld of secular political relations and the value of human life. The Chechen patriots and Wahabbis would contend to see an independent Islamic Chechnya governed by Shariah jurisprudence, cognizing such an enterprise would be the lives of infinite 1000s. The Chechen Naqshbandi, nevertheless, were willing to extenuate the being of an Islamic Caliphate out of their people’s best involvements. As schools of esoteric Muslims, Sufi orders are comprised followings who profess to reform Islam, pattern a â€Å"true† Islam, and besides about contradict the definitions of what it is to be a Muslim. Like any other international faith, Islam finds alteration in every portion of the universe it is practiced. Where Sufis differ, nevertheless, is their reading that spans every state where Islam finds following. From the Naqshbandi return to â€Å"true Islam† to the Mevlevi cosmic, cosmopolitan attack to God, mystical Islam proves to be as varied and the traditional entry before Allah. Whether perceived as groups of work forces fighting to better understand the nature of religion and the Godhead or a school of idea rectifying the aberrance of the yesteryear, Sufi orders such as the Mevlevi and Naqshbandi both strive to convey adult male closer to his Creator. Bibliography Allievi, Stefano and Jorgen S. Nielsen. ( 2003 )Muslim Networks and TransnationalCommunities in and Across Europe. Atabaki, Touraj and Sanjyot Mehendale. ( 2004 )Cardinal Asia and the Caucasus:Transnationalism and Diaspora. New York: Taylor A ; Francis Routledge. Baldick, Julian. ( 2000 )Mystic Islam: An Introduction to Sufism. New York: New YorkU P. Ernst, Carl W. and Annemarie Schimmel. ( 1992 )Ageless Garden: Mysticism, History,and Politicss at a South Asiatic Sufi Center. Capital of new york: State U of New York P. Esposito, John L. ( 1998 )Islam and Politicss. Syracuse: Syracuse U P. Friedlander, Shems, and Nezih Uzel. ( 1992 )The Whirling Dervishs: Bing an Historyof the Sufi Order Known As the Mevlevis and Its Founder the Poet and MysticMevlana Jalalu’ddin Rumi. Capital of new york: State U of New York P. Shah, Idries. ( 1977 )The Way of the Sufi. London: Penguin Books. Stepaniants, M. T. ( 1994 )Sufi Wisdom. Capital of new york: State U of New York P.