QUESTION 6: (20 Marks) 6a The China Harbour Engineering Company (CHEC) is considering bidding for a...

  
 
 

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QUESTION 6: (20 Marks) 6a The China Harbour Engineering Company (CHEC) is considering bidding for a noncancelable contract to build the new toll road known as the North- South Highway which will directly connect the Jamaican capital Kingston, in the south with the resort beach city of Ocho Rios, in the north, reducing a two-hour drive to less than a half hour drive. CHEC estimates that construction would involve a cash outlay of USD$350,000,000 at the end of each of the next three years. CHEC also has the ability to speed up construction by working an extra shift. In this case there will be a cash outlay of USD$550,000,000 at the end of the first year and second year. The following discount factors data were also provided by CHEC's Finance department: YEAR 2 3 4 45 5 Discount Factors 10% 12% 15% 0.909091 0.892857 0.869600 0.826446 0.797194 0.756100 0.751315 0.711780 0.657500 0.683013 0.635518 0.571800 0.620921 0.567427 0.497200 QUESTION 6 Cont'd: (20 Marks) REQUIRED i. If the CHEC's opportunity cost of capital is 12%. What is the minimum bid that should put forward for this construction project? Show computations to support your answer. (4 marks) ii. If the CHEC is awarded the contract, should they speed up construction by working the extra shift? Assume that the opportunity cost of capital is 12%. Show computations to support your answer. (4 marks) 6b Three former classmates of the International Strategic Masters in Marketing got together to discuss their new endeavors. i. Colene has joined a new company as the marketing manager. The company is introducing a novel concept to Trinidad and Tobago - A virtual summer camp. The company would be using existing technologies that are currently used by the children for online learning and by their parents for online meetings. The camp would offer a variety of activities for the children and the child/parent would decide which activities to participate in. The activities include dance, karate, fundamentals of football, fundamentals of cricket and Art. There would also be a movie day with a variety of movies being shown. The children would interact with the other campers and instructors in virtual breakout rooms. The company is also working on plans for a Christmas and Easter camp. QUESTION 6 Cont'd: (20 Marks) T&T's Virtual Extra-Curricular Activity Centre for Kids and Young Teens! Led by passionate instructors and in the company of new friends, your child will explore passions, discover strengths and realize potential... ii. Indira decided to offer online revision classes for S.E.A students. She assumes that this would not be a novel idea to students or their parents as they have been involved in online learning for a few months and by now have ironed out any initial issues. Once S.E.A is completed she will begin to offer online revision classes for CXC students. Individualised online S.E.A lessons and Personal approach - Student support - 6:1 student to tutor ratio - All textbooks, stationery and classroom material included - Daily revision and reinforcement to instill healthy, positive and independent study habits/techniques and test-taking strategies - Habitual student support and feedback For more information, call TODAY! A little bit goes a long way! Which subject is your child struggling with? Tell us. QUESTION 6 Cont'd: (20 Marks) iii. Linda has been helping her cousin with his business. Her cousin sells downloaded movies and television series (illegally downloaded) burnt to DVDs. Her cousin's business was facing difficult times due to all the new technologies such as the amazon fire stick and other streaming services. Linda is helping her cousin work on a marketing plan. Buy 2, Get 1 Free CLOUD ATIAS I. PIZZON Harry Poffers ARGO BEAUTIFUL CREATURES TIMATE JORD RING THE EXPRES Required What pricing issues would Colene face, and what pricing objectives and strategy would you recommend to her? (4 Marks) What pricing issues would you expect to be currently facing Indira and Linda, and what pricing strategies would be appropriate for each to consider. (8 Marks) QUESTION 6: (20 Marks) 6a The China Harbour Engineering Company (CHEC) is considering bidding for a noncancelable contract to build the new toll road known as the North- South Highway which will directly connect the Jamaican capital Kingston, in the south with the resort beach city of Ocho Rios, in the north, reducing a two-hour drive to less than a half hour drive. CHEC estimates that construction would involve a cash outlay of USD$350,000,000 at the end of each of the next three years. CHEC also has the ability to speed up construction by working an extra shift. In this case there will be a cash outlay of USD$550,000,000 at the end of the first year and second year. The following discount factors data were also provided by CHEC's Finance department: YEAR 2 3 4 45 5 Discount Factors 10% 12% 15% 0.909091 0.892857 0.869600 0.826446 0.797194 0.756100 0.751315 0.711780 0.657500 0.683013 0.635518 0.571800 0.620921 0.567427 0.497200 QUESTION 6 Cont'd: (20 Marks) REQUIRED i. If the CHEC's opportunity cost of capital is 12%. What is the minimum bid that should put forward for this construction project? Show computations to support your answer. (4 marks) ii. If the CHEC is awarded the contract, should they speed up construction by working the extra shift? Assume that the opportunity cost of capital is 12%. Show computations to support your answer. (4 marks) 6b Three former classmates of the International Strategic Masters in Marketing got together to discuss their new endeavors. i. Colene has joined a new company as the marketing manager. The company is introducing a novel concept to Trinidad and Tobago - A virtual summer camp. The company would be using existing technologies that are currently used by the children for online learning and by their parents for online meetings. The camp would offer a variety of activities for the children and the child/parent would decide which activities to participate in. The activities include dance, karate, fundamentals of football, fundamentals of cricket and Art. There would also be a movie day with a variety of movies being shown. The children would interact with the other campers and instructors in virtual breakout rooms. The company is also working on plans for a Christmas and Easter camp. QUESTION 6 Cont'd: (20 Marks) T&T's Virtual Extra-Curricular Activity Centre for Kids and Young Teens! Led by passionate instructors and in the company of new friends, your child will explore passions, discover strengths and realize potential... ii. Indira decided to offer online revision classes for S.E.A students. She assumes that this would not be a novel idea to students or their parents as they have been involved in online learning for a few months and by now have ironed out any initial issues. Once S.E.A is completed she will begin to offer online revision classes for CXC students. Individualised online S.E.A lessons and Personal approach - Student support - 6:1 student to tutor ratio - All textbooks, stationery and classroom material included - Daily revision and reinforcement to instill healthy, positive and independent study habits/techniques and test-taking strategies - Habitual student support and feedback For more information, call TODAY! A little bit goes a long way! Which subject is your child struggling with? Tell us. QUESTION 6 Cont'd: (20 Marks) iii. Linda has been helping her cousin with his business. Her cousin sells downloaded movies and television series (illegally downloaded) burnt to DVDs. Her cousin's business was facing difficult times due to all the new technologies such as the amazon fire stick and other streaming services. Linda is helping her cousin work on a marketing plan. Buy 2, Get 1 Free CLOUD ATIAS I. PIZZON Harry Poffers ARGO BEAUTIFUL CREATURES TIMATE JORD RING THE EXPRES Required What pricing issues would Colene face, and what pricing objectives and strategy would you recommend to her? (4 Marks) What pricing issues would you expect to be currently facing Indira and Linda, and what pricing strategies would be appropriate for each to consider. (8 Marks)

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1 i If the CHECs opportunity cost of capital is 12 What is the minimum bid that should put forward f... View the full answer