Examples Questionnaire on Thesis free essay sample

When was the serenity hills establish? 2. Who is/are the owner/s of the serenity hills? 3. Where does the name of this cemetery derive from? 4. Where is the exact location of the cemetery? 5. Do you have another branch? How many and where? 6. How much was the starting capital for this cemetery? 7. How many square meters does the serenity hills has? 8. How a certain graveyard may locate? Is it base on Street/block? If yes, how many and what are the names of street/block? What are the divisions of your cemetery? . Approximately how many graveyards may occupy from this private cemetery? 10. How many are the occupied graveyards? How about the vacant? 11. How fast does the population of your cemetery increases? 12. What happens to the graveyards which are not being visited for a long time? 13. When to remove the â€Å"labi†? 14. How is the contract (occupying/buying/renting) goes? 15. How does billing sytem goes? How about the reservation system? What are the common errors for the said sytems? 16. We will write a custom essay sample on Examples Questionnaire on Thesis or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page How much is the selling rates? Do you have discounts? 17. What are the informations needed to buy a grave/lot? 18. Do you have different packages/fees? 19. How do I record the change in ownership for a grave or a buy back? 20. Why are multiple levels allowed in one grave? 21. Do you have Deeds? 22. How much is the exhumation fee? 23. Do you also have cremation? How much? 24. How do you maintain the information about all the burials? 25. What do you do with the ashes after cremation? 26. What are problems do you encounter during your manual operations? 7. Where do you keep the files of information of your customer? How do you keep it ? 28. How to apply for a cremation? What are the informations needed in the application form? 29. Is your cemetery open to all religions? Why or why not? 30. Who are the employees of the Serenity? What are their roles? 31. Do you have your company logo? What does it stands for? 32. Why do you prefer to build a cemetery in Antipolo instead of other places? 33. What are the rules and reg ulations of Serenity Hills? (visiting hours)

The Micromanager essay

The Micromanager essay The Micromanager essay The Micromanager essayIn the contemporary business environment the development of effective leadership style is crucial for the successful business development and maintenance of positive interpersonal relations within organizations. In this regard, the case of George and Shelley reveals the full extent to which the leadership style can affect not only interpersonal relations but also the professional performance of employees as well as organizational performance. In fact, George fails to elaborate the effective leadership style that turns out to have a negative impact on the performance of Shelley. As a result, she cannot perform her functions properly at the position of marketing director. Therefore, the leadership style can influence the professional performance and organizational performance that means that leaders should be able to be flexible enough to find the personal approach to each employee, while employees should also be able to adapt their performance to the leadership s tyle of the leader.George’s leadership style is authoritarian in its essence and paternalistic in a way, because he tries to keep Shelley, a recently employed marketing director, under his total control and guides all her actions (Fryer, 2004). Such leadership style is the characteristic of authoritarian leaders, who want to keep under control all the staff and the entire organization (Mohrman, 2011). In fact, George believes that he is doing good for Shelley assisting and supervising her and he is absolutely unaware of the fact that his leadership style is destructive and deteriorates not only his relations with the marketing director of the company but also threatens to the performance of the entire department. Shelley, being frustrated from his leadership style, cannot perform effectively.At the same time, such leadership style is not appropriate in relation to Shelley, who came to the company being full of aspirations that she will have an opportunity to lead the marketin g department of the company her way. Instead, she faces the permanent pressure, control and interference from the part of George. Such leadership style is inappropriate because it makes Shelley feel as if George does not trust her and does not believe that she is a well-qualified professional, worthy of being the marketing director in the company.   In such a situation, the risk of conflicts between George and Shelley emerges because Shelley cannot work as she wants, while George cannot focus on his own functions since he keeps supervising Shelley’s work tightly.In such a situation, Shelley may consider changing her relations with George. She should state clearly that she is the marketing director of the company and she is fully responsible for outcomes of her performance and performance of her department. This is why she should ask George to let her work for a month on her own without interference and supervision from the part of George and, if George turns out to be dissa tisfied with her performance and performance of her department, he could dismiss her. In other words, Shelley should ask George to ask for a chance to show her professionalism and to persuade George that she can work on her own and does not need the support of George or his excessive supervision. Moreover, such position of Shelley would show George the full extent to which Shelley is certain in her professional skills and abilities that she is ready to put her position at stake.The problem of George is his authoritarian, hand on management style which turns out to be depressing for Shelley, who feels her sense of professionalism being offended because of such excessive supervision from the part of George. George fails to establish positive interpersonal relations with Shelley that leads to the steady deterioration of her performance not because of her professional skills and abilities but because of George’s constant interference into her work.The cause of the problem is the failure of George to change his management style and adapt it to the specific employee, namely Shelley. George keeps supervising Shelley depriving her of an opportunity to manage marketing department as she wants to.The possible solution to the problem of George and Shelley’s poor interaction is the change of George’s management style, which involves granting Shelley with larger autonomy and independence in her work. In such a way, Shelley will not feel being offended because she believes that George considers her unprofessional (Chambers, 2005). At the same time, this solution will give Shelley a chance to manifest her professionalism, while George will have more time on other tasks and problems, which he can solve, aside of Shelley’s tasks and functions, which he attempts to supervise at the moment.Thus, George and Shelley should step to the next level in their professional interaction. George should let Shelley work autonomously, while Shelley should prove Ge orge that she is qualified enough to work on her own.

Life of Dementia Patients Research Proposal Example | Topics and Well Written Essays - 1250 words

Life of Dementia Patients - Research Proposal Example In the later stages of dementia, patients normally, exhibit signs of time disorientation in the sense that they can say the exact time or even differentiate between day or night. Secondly, at the later stages, dementia patients cannot even be able to tell their exact location, and/ or even identify people they used to know. Thirdly, dementia patients also tend to exhibit a loss of control in their own behaviors as well as emotions. Lastly, dementia patients tend to suffer from impaired problem-solving skills meaning that they cannot also be able to reason properly because of lack of sound mind. Repper and Perkins (2003) noted that for a particular case to be classified as dementia, medical practitioners recommend that the symptoms have to be persistent for a period of more than six months. According to the writings by Repper and Perkins (2003), they stated that persons who have suffered from previous physical impairments are prone to dementia more so those who had a brain injury. Bartlett and O’Connor (2007) on their part stated that most dementia patients are persons above the age of sixty-five i.e. the geriatric population but there have been reported cases of dementia occurring before the age of sixty-five. Because of the unique nature of the dementia symptoms, the nursing requirements for catering for these patients tend to be unique because it is not focused towards ensuring the patients regain their full health back but rather it is focused on enabling the patients to cope with the condition, whilst feel only an insignificant pain or inconveniences caused by the condition. Therefore, it is particularly important to investigate the roles that nurses play in ensuring that dementia patients have a better quality of life despite their condition. The extent, nature, or standard of the nursing care given to dementia patients determines the quality of life the patients have until their death occurs. In this regard, Baldwin (2008) lamented on the fact that because of the rare incidences of dementia cases, there has been a little focus on the role of nurses in providing care to dementia patients.

Competency through an academic preparation Essay - 3

Competency through an academic preparation - Essay Example I believe that my genuine interest for the profession and the proven program of Gannon University would enable me to successfully complete the program. I have completed a degree in Business Administration from Arab Open University. I also have an experience working in the industrial sector and this made me appreciate the necessity of pursuing a degree in Engineering Management to better the prospect of my career and become one of the organization leaders of Operation department in the industrial sector. I am always ready to take risk and work hard. I keep a dynamic mind and always want to update my knowledge on my area of interest. I believe these qualities would contribute much to pursue my degree without much difficulty. There are many reasons why I believe I can do well in my studies. I am systematic in addition to being a hard worker. I do not procrastinate tasks for the next day and I am not daunted by challenging tasks. In fact, the more challenging the task, the more enthusiastic I become to resolve it. My previous professional experience can prove it. This attitude of mine in dealing tasks and studies made Jubail United Petrochemicals Company (SABICs Affiliate: one of the largest Petrochemicals company in the world) to offer me a comprehensive experience when I was acting as team leader in the Department of Operation. I was involved in the project construction, commission, start up, shut down, trouble shouting, turn around and catalyst replacement of a huge Ethylene Oxide / Ethylene Glycol plant. This experience trained me to lead, analyze various situations and also to cope with emergency scenarios. I also gained knowledge in technical, safety and basic engineering knowledge which I believe are helpful in my studies. Â  

Money, Power, and Wall Street Essay Example for Free

Money, Power, and Wall Street Essay The meltdown of 2008 struck the banks when they were unable to adequately deal with the financial crisis. Banks are designed to create and protect one’s wealth, but they took advantage of the people, and let people take many loaning risks that they couldn’t afford. Banks created the credit default swap which transferred credit of fixed income products between parties. In learning about the credit default swap in class, it is understood that the buyer receives credit protection, whereas the seller guarantees the credit. Therefore, the risk of default is transferred from the holder to the seller of the swap. But swaps allowed companies to shed the risks they didn’t want to take. When the banks first created the swaps, it gave investors the opportunity to invest in bank loans. From there, banks sold derivatives on all portfolios by synthetic investment. Investors were able to invest in credit default swap and make it grow. Credit then became a more available asset which stroke employment. Now all banks wanted credit derivatives; which are privately held negotiable contracts that allow consumers to manage their exposure to credit risk. The main problem with this was they assumed risk could be eliminated, but it couldn’t. In order to regulate derivatives, Congress passed the Glass-Steagall Act in 1933 to establish deposit insurance, and implemented a number of banking regulations. As learning in class, this affected every business in America. There was now a high rating, and high yield. The big return was bankers now bought bundled mortgages. Homebuyers were able to pay double, but lending was too much; making people going bankrupt in home mortgages. Borrowers gave loans greater than the value of that loan, which made the financial bubble burst, creating a recession. With bankers ignoring all the possible risks from the beginning, they feel into a deep crash. Goldman Sachs was the only bank to make money off the bubble burst by betting against their clients.

Water in T. Coraghessan Boyles Greasy Lake Essay -- T. Coraghessan B

Water in T. Coraghessan Boyle's Greasy Lake Water is a powerful medium for introspection. This truth is evident in the short story, 'Greasy Lake,' by T. Coraghessan Boyle. In this story, water serves as a catalyst for self-reflection, as it propels the protagonist into a certain degree of conflict, and ultimately works to reveal and confront the character?s inner struggle. In 'Greasy Lake,' the dualism of the characters' nature is ever-present. They are self-proclaimed bad guys who 'cultivated decadence like a taste' (79). As the story progresses, however, it is revealed that just the opposite is true. While they are essentially caricatures of themselves, it is this dynamic that drives the story. Their tough exterior is just that, an exterior veneer that permeates their actions as 'dangerous characters.' The narrator is somewhat detached from the younger self of his story. It is an ironic detachment'a parody of his moral ignorance. He recalls the 'bad? antics of his youth: driving their 'parents' whining station wagons,' but doing so as bad as humanly possible, of course. He mocks both himself and his friends in his retrospection of their experience in Greasy Lake, the consummate locale of 'bad.' To the boys, the lake serves as a kind of haven for bad characters such as themselves. Truly, however, the lake is an extension of the dynamic between who the boys are and who they parade around as. It is here where the previous and false understanding about their world is shattered, and they are thrust into a moralistic reformation. Ultimately, the dichotomous nature of the protagonist is resolved by his visit to the lake, and perhaps, the lake itself. Water proves to be significantly influential as it relates to... ...ll he can do is suppress his urge to cry. The protagonist?s realization of his own maturity is ironic. Once so eager to appear ?bad,? but lacking the true essence of this word, the narrator has achieved this status at the price of his naivete, and wishes that he could return. In ?Greasy Lake,? water is a powerful entity. The lake works to reveal the true nature of the narrator and his friends. Water is in itself the most influential character of the story. It submerges the protagonist, both physically and metaphorically, in his own mentality. The lake serves as a great equalizer. It creates and resolves conflict, all to force the narrator to confront his weakness and reveal his strength. Works Cited Boyle, T. Coraghessan. ?Greasy Lake.? Doubletakes: Pairs of Contemporary Short Stories. Ed. T. Coraghessan Boyle. Boston: Wadsworth, 2004. 79-87

Case Analysis on Capital Structure Pioneer Petroleum Essay

Introduction: This landmark case seeks to break the risk-reward trade off involved in calculating Capital Cost. The object of the solution must be to minimize project risks while maximizing project opportunities available. We want a rate and a rating system that does not unnecessarily reject â€Å"the best available projects – i.e. highest net positive free cash-flows at that time.† Particularly in times of excess capacity, this will marginally contribute to increasing company wide yields, but will not necessarily match the company-wide yield imposed by investors. History of the Company and Background of the Case: Sometime in July 1991, one of the critical problems confronting management and the board of Pioneer Petroleum Corporation, hereinafter referred to as Pioneer, is about Capital Budgeting; specifically they needed to determine the Minimum Acceptable Rate of Return, or MARR, on new capital investments. Their capital budgeting approach was to accept all proposed investments with a positive net present value when cash-flows are discounted at such appropriate cost of capital. Formed in 1924 through mergers of several formerly independent firms operating in the oil refining, pipeline transportation, and industrial chemical fields, pioneer Pioneer did vertical, horizontal, and backward integrations into exploration and production of crude oil, marketing refined petroleum products, plastics, agricultural chemicals, and later diversified into real estate development. In 1985 Pioneer restructured further into hydrocarbon-based oil, gas, coal, and petrochemicals. Statement of the Problem: What rate or rating system will consider specific, inherent risks of divisions and operating sectors AND consider benefits ascribed to the single-rate Weighted Average Cost of Capital approach? How can we help Pioneer Petroleum make an objective, rational choice on the hurdle or cut-off rates for evaluation of new projects in a fully integrated conglomerate of multiple divisions; determine whether they should use the SINGLE company wide Weighted Average Cost of Capital, which reflect the rates at their face value to the company, OR proposed MULTIPLE Divisional Cost of Capital, which reflects risk-profit characteristics inherent in various divisions and operating sectors. Objectives/ Directions of the Solution 1) The decision must help the management and board of directors of Pioneer Petroleum decide on the fair and objective Hurdle Rate/s that will fairly qualify new investment projects of Pioneer Petroleum divisions 2) Whatever the recommendation ought to be consistent with facts of the case, and provide consonance, rather than inconsonance, with the efforts of both the division and central or corporate management to execute strategy, leverage on strengths, and empower the company to make investments to gain and sustain competitive advantage. 3) The recommended project rate and rating system must be simple, objective and fair. 4) It must consider specific, inherent risks of divisions and operating sectors 5) It must also address the interest of stockholders to maximize return on their equity or investments. Case Facts and Assumptions: 1) It is the Policy of the board to balance the source of funds, or to keep the funded debt and equity ratio at 50:50 . Debt and Equity financial ratios are: a. D-E ratio for refining is 1.5:1, b. D-E for the exploration is 0.8:1. 2) The Income Tax Rate is given at 34%. 3) Revenue is $15.6 billion 4) Net income $1.5 billion. 5) It is given that dividends increased by 10% in 1990 and 1991, and therefore we will assume to use the higher target equity yields of 2.7 (add the 10%), rather than 2.45 the actual yield of 1989. 6) The company’s Corporate Debt was A-rated; this means it is deemed to carry much low risk than the general investing or borrowing public. 7) Capital Expenditure budget are enormous, $3.1 billion in 1990 and $4.5 billion in 1991, underscoring the significance of appropriate and accurate weights and calculations for Cost of Capital. Strengths and Opportunities. Pioneer was one of the primary producers of Alaskan Crude. The company’s gasoline are among the cleanest burning fuels. By 1990, total revenues exceeded $15.6 Billion and net income over $1.5 Billion. Pioneer supplied its own raw material for domestic petroleum liquids production and was also one of the most cost-efficient refiners of the West Coast and had an extensive West Cost presence. The company has clean, efficient running plants positioned to meet strict environmental guidelines capitalize on less polluted products. Capital expenditure investments ran at $3.1 Billion, with forecasted expenditures of almost $4.5 Billion in 1991. Pioneer was also heavily invested in Environmental projects. Its chemical unit produced 1/3 of the world’s supply of methyl tertiary butyl ether, MTBE, an ingredient making its gasoline one of the cleanest burning in the industry. The MTBE market had been growing with the global trends towards sustained development of the environment. Refining its cost of capital calculations will not only preserve its much-needed capital, but it also unlocks new capital — and maximizes existing capital — to capitalize on such huge opportunities, particularly the passing of the 1990 Clean Air Act with which came tremendous area in which Pioneer might capitalize on its eco-strengths. Weaknesses and Threats: To meet Pioneer expected to invest $3 Billion additional to meet the new law’s standards among other new environmental regulations. Its multinational status makes it vulnerable to foreign currency exchange risks, political risks, interest rate volatility, cultural risks, and transfer pricing and other transnational risks involving a complex network of sources, sinks and of moneys, products and services. Its fully integrated set-up requires spreads itself quite thinly, and requires seamless transnational collaboration and cross-border coordination to work. Management wanted synergy among global divisions to optimize overall performance, and obviously to decrease these complex risks. Methodology: The weighted cost of capital approach is applied, first apportioned pro rata based the usual cost of the fund source: i.e. debt and/or equity. The cost of debt would be prevailing interest rates, and the cost of equity would be â€Å"foregone† earnings on capital invested as equity – i.e. earnings per share over market value per share. The second approach is similar, but with multiple cutoff rates. First it is broken down by Divisional Cost of Capital – i.e. calculated using a weighted average cost of capital approach, but this time for each division or operating sector; before further drilling down by cost per fund source. Calculations would follow three (3) steps: a) First an estimate would be made of the usual capital structure, or debt to equity proportions, of independently financed firms operating in each sector. b) Given these proportions by sector, for each operating sector, the costs of capital – divisional debt and equity – would then be estimated in accordance with the concepts followed by the company in estimating its own cost of capital. This means Divisions are to use the WACC rules followed by the company, in estimating its own Weighted Average Cost of Capital. To describe this approach in a financial function: The Weighted Average Cost of Capital = WACC = sum of Divisional costs of capital = Sum total of [Divisional Costs of Debt plus Divisional Costs of Equity]3 Decision Alternatives for Selection of Marginally Attractive Rates of Return: Management and the board are choosing between two alternative approaches: 1) The Single WACC Rate, company-wide Weighted Cost of Capital approach, where specific rates weighted were those based on the sources of fund, debt and equity, in estimated proportion of future funds sourced; AND 2) Multiple Cut-off or Multiple Hurdle Rates for Divisional Costs of capital, involving determining the rates or weighted costs of capital for each main Operating Sector. 3) Hybrid or Combination thereof – taking the positive aspects or advantages of both methods; i.e. for example, the requirements of stockholders for return on equity on the one hand, AND the requirements of divisions or operating sectors to address specific local risks, and implications on local incentives. Case Analysis and Discussion. The two alternative approaches â€Å"purpose and benefits† are culled from the case, as follows: 1) The single, company-wide Weighted Cost of Capital approach, where specific rates weighted were those based on the sources of fund, debt and equity, in estimated proportion of future funds sourced; this gave a WACC rate of 9.0%. Proponents of the single rate might argue as follows: a. It is far simpler to calculate. b. It covers the actual rate or â€Å"cost of the source of funds† at face value of bonds or notes payable, or statements of stock or equity; c. It appears to be more conservative than divisional rates because it does not consider economies of scale of fully integrated conglomerates that benefit the divisions or subsidiaries in ways that not reflected in the divisional costs of capital or rates. d. The problem or effect of such diversification benefits on the rate is that Divisional Rates calculated independently, may be considered lower – in reality. Why charge sunk costs, one might ask to the division. The problem here is that the hurdle rate may be too high for many â€Å"projects,† and therefore unduly rejected; when in fact they ought to be accepted. IF they are accepted by competitors with similar integration benefits, perhaps, they will benefit from marginal income and grab this benefit from Pioneer’s subsidiaries. e. Pioneer’s shareholders expected the company to invest funds in the highest return projects available. f. Proponents of the single corporate rate argued that those advocating multiple rates were those who were not able to compete effectively for new funds, when measured against the corporate group’s â€Å"actual cost of capital.† g. Single-proponent advocates lacked confidence in the fairness and integrity of the process of selection of divisional rates. For example, the transport division had â€Å"unrealistically low hurdle rates† considering experience in tanker investments had been â€Å"disastrous for many companies.† There were also still some areas of ambiguity, such as how to treat environmental projects (or for this matter, central HQ projects over which Divisions have little or no control). h. Another concern was how the benefits of full integration – acquired through very costly mergers and acquisitions — would be considered in divisional rates. IF divisions lowered their rates, this might not be enough to cover central requirements. i. Reduced risk, economies of scale and other diversification premiums — remained unaccounted for in the proposed divisional costs of capital approach. There were considerably less risks for instance in subsidiaries of an integrated firm like Pioneer, than for independent petroleum dealers or non-members of the group. This being the case, was it fair to demand such a high hurdle rate given that the risks were much lower at some divisions than others? 2) Multiple Cut-off or Multiple Hurdle Rates for Divisional Costs of capital, involving determining the rates or weighted costs of capital for each main Operating Sector. The divisional rate approach seems far more complex, but proponents of divisional costs of capital argued included the following purposes and advantages of this scheme: a. The proponents of multiple divisional hurdle rates argued that a single companywide cost of capital (WACC) â€Å"subsidized the higher-risk divisions† at the expense of lower risk divisions. b. Because the cost of capital was too high for the low-risk divisions, too few low-risk investments were made. c. On the other hand, in the high-risk divisions too much investment occurred because the hurdle rate was too low. As evidence, proponents of multiple rates noted that Pioneer was the only major company that continued to invest heavily in exploration and development, and that it lagged behind its competitors in marketing and transportation inv estment. d. The divisional rates approach – there was nothing new in the calculations – except that sector rates would reflect the risks inherent in each of the operating sectors of the conglomerate. e. Evaluation of future capital expenditure or investments in each of the main operating areas of the company would be appraised pro rata based on the appropriate rate of return for that industry sector; f. For evaluation of actual financial performance — say, for incentives and bonuses — multiple cutoff rates would fairly represent the rates charged to each of the various profit centers for capital they employed or â€Å"borrowed from headquarters† so to speak; g. The proponents for multiple divisional hurdle rates also argued that the companywide cost of capital was too low, and that investments should be required to earn at least as much as an investment in common stocks. The average return since 1980 on the S&P index of common stocks of 16.25% substantially exceeded the 9% companywide cost of capital (see Exhibit 2). If Pioneer was serious about competing over the long run in industries with such disparate risk-profit characteristics, it was absolutely essential to relate internal target rates of return to the individual businesses. It was argued by proponents of the multiple divisional cutoff rates that for subsidiaries and sister firms of integrated firms like Pioneer, the inter-company-benefits mitigated the risks involved with large refinery investments. Thus in some cases rates lower than companywide rates of return were justified. There was a â€Å"diversification premium† which ought to be allocated back or deducted from the subsidiary discount rates, as calculated previously in proportion to the relation between the investment in each subsidiary and, say, the company’s total asset. Formula used for Weighted average cost of capital is WACC = K(d) + K(e) = Kd(1-t)*DEd + Ke*DEe Pioneer’s original calculations for WACC are summarized as follows From Exhibit 1 The case mentions however, that the interest used is a coupon of 12%, assuming it retains an A rating, and a 34% tax rate, this represented a 7.92% cost after tax. According to Investopedia, coupon is defined as the interest rate stated on a bond when it’s issued. The coupon is typically paid semiannually. This is also referred to as the â€Å"coupon rate† or â€Å"coupon percent rate†. The divisional cost of capital would then be calculated using a WACC approach for each Operating sector; i.e. as though each sector were an independent company competing in its own industry -Note that the same WACC formula above is used to estimate divisional cost of capital, except it is not company wide, WACC rates in specific operating sectors such as business.. The divisional perspective overlooked that each business was also part of an integrated company with â€Å"risk diversification benefits,† economies of scale and other integration benefits, say of a large refinery. The case pointed out the weakness of a single-rate policy. On the one hand, very few low risk investments were made, precisely because of the high rate of return on investment required by the pre-assessment. The hurdle rate was too steep for â€Å"low risk divisions.† Too few passed the gauntlet, so to speak. On the other hand, too much money was invested in high-risk divisions, because the hurdle rate on those operating sectors, was too low. Some members of top management felt that Company-wide cost of capital rates was too low, and investments should be required to earn at least as much as Common stocks – or over 14%. A couple of corrections need to be suggested on the single rate WACC of Pioneer. WACC = Kd + Ke Cost of equity, Ke. Note that â€Å"after prolonged debate,† Pioneer (management and board) decided to use 10%, which was the equivalent of $6.15 Earnings per Share divided by $63 Market Price per share. Using current earnings yield of their stock as the cost of both new equity stock and retained earnings.† In other words the 10% used was based on â€Å"actual† dividend yield and not the â€Å"projected† or the â€Å"required rate of return† for the company’s stock. Given a dividend growth rate of 10%, a share Market Price of $63, the next target dividend at $2.70 ( = $2.45 plus 10%), and the ratio of Equity to Debt at 50:50, then the cost of equity is therefore calculated as follows: Cost of equity: Ke = ((Target Dividend Value/Market Price)+Growth in dividends)*DEe = ((2.70/63) + 0.1)*(50%) = 14.3%. Cost of debt, Kd It seems the actual interest rate afforded Pioneer was not actually given in the case. What was used by management was the 12% coupon rate on bonds. Since Pioneer was an â€Å"A-rated† client, or deemed to carry very â€Å"low risk,† then this status ought to translate into a significantly lower cost of money or interest rate. To my understanding, a coupon rate would be like the hotel â€Å"rack rate† which would be much higher than what an A-rated client like Pioneer would be accommodated with. Let us assume a prime interest rate of 9%. Allow me to note that this assumption is just for the case exercise, but such information ought to be readily be available in the real world. The cost of debt is therefore: Cost of debt: Kd = Interest Rate * (1-Tax Rate) = 9% (1 – 34%) = 5.94%. Due to the 50-50 debt to equity capital structure, the actual cost of debt is 2.65%. The WACC is summarized as follows: The new WACC is 10.12%, as against the 9% estimated by Pioneer management. This means that companywide, projects that show a rate of return lower than 10.12% will not be approved. This is somewhat double edged, because it might mean that some projects which are less viable, but viable nevertheless, will be unduly rejected. It is suggested that rather than rejecting let there be a cap set on investments, and more flexibility be given on rates of return – sometimes this may be subject to abuse and manipulation. There are other countless foretelling signs of project success of failure than just numbers. As shown in this case, the hurdle rate WACC may vary, depending on the assumptions; for instance, if the debt to equity proportion changes, then the 50:50 â€Å"policy† might be irrelevant. Conclusions and Recommendations: FLEXIBILITY CUTOFF Rate Stop Loss Limits Forecasting Understand Risks, but also Opportunities Best-selling author of â€Å"Rich Dad, Poor Dad,† Robert Kiyosaki wrote, â€Å"Risk is a function of Ignorance.† It is always risky if it is not clear or understood. Unless objectively determined based on facts, a single, companywide rate of return used for expediency’s sake, is just as risky as a multiple-cut divisional cost of capital rate, that supposedly considers local risks of specific divisions or operating sectors. Conclusion and Recommendation Capital Structure2 is the mix (or proportion) of a firm’s permanent long-term financing represented by debt, preferred stock, and common stock equity, greatly affected by specific costs of capital or assigned hurdle rates, say in assessing weighted average costs of capital. CORE ISSUE – Hurdle rates2 are measures of the cost of capital, combined debt and equity, which a company targets for its projects to achieve in the planning period. The hurdle rate’s significance cannot be over-emphasized. If it is set too highly, it may spell tremendous losses in opportunities, or rejection of perfectly viable projects. This can also cause demoralization on the part of division personnel, who are rated based on such high hurdle rates. This means it is more difficulty to achieve, and thereby affecting managers and employees’ performance appraisals, bonuses and incentives. On the other hand, if we set hurdle rates too low [ in the game of golf, we might call this practice â€Å"sand-bagging,† or reporting a higher, more forgiving handicap to increase chances of achieving it ], this would be a major disservice to investors who expect maximum returns on their investments. They expect integrity in leadership, fair stewardship and good governance on the part of the board and senior management whom they have elected to run company affairs in their behalf. One limitation of classical estimates on Hurdle rates or Costs of Capital is that (1) investment and asset management decisions are held constant and (2) they consider only debt-versus-equity financing, which are not necessarily the only sources of financing. Recommendation: HYBRID SINGLE-MULTIPLE HURDLE RATE The solution must address specific legitimate needs of the different players, specifically the Stockholders, the Division heads, and top Management. Stockholders require better total returns on equity, and proponents of the Single rate assume that â€Å"the only way to achieve better overall returns on equity is to set company wide hurdle rates or weighted average costs of capital. They actually are not as concerned as division heads are, that some divisions are subsidizing others. This is not a sustainable practice. Pretty soon the winners who subsidize the losers will not find enough incentive to perform, and eventually leave. Division heads will be split into to. Winners, or Performers, and Losers, or non-performers. Top management must listen to winners and ought to reward them, outrageously, if they are to keep performing for the long term. This means that for winner industries, the practice of attaining a â€Å"hurdle rate† which in players’ perception is â€Å"too low†Ã¢â‚¬ ¦ becomes a disincentive over time. On the other hand, in â€Å"non-performing† divisions, good players that find the â€Å"hurdle rates† too high, are totally disillusioned and demoralized when standards are lowered to accommodate them. On a wider scope, Pioneer Petroleum needs to find a fair way to â€Å"allocate central costs in accordance with responsibilities† and to determine â€Å"strategic and financial measures† – including, but not limited to the Cost of Capital – between the central or corporate headquarters and its divisions and subsidiaries. This leads to less inter-departmental and inter-company conflicts, and more cooperation and synergy, which are necessary to for any breakthroughs to happen, i.e. in the direction of better project execution, better decisions and a more positive working environment. The recommended solution may be described as follows. 1) The policy we recommend is simply: Company Wide WACC = Sum of Divisional WACCs = Sum of [ Local Costs of Debt plus Local Costs of Equity] 2) The 50:50 capital structure does not seem like a well founded â€Å"policy† and must be revisited. The objective must also include maximization of risks and returns, and not to literally â€Å"balance† debt to equity capital structure. 3) An evaluation and rating system must be set up to allow managers to think global, but to act local. This means we do a Hybrid system of Corporate-and-Divisional hurdle rates, maximizing the benefits of both, and ascribing responsibility for the rate, where it is rightfully assigned. For example, the division management is responsible for maximizing its return rate, given the resources it is allowed access to, and given the authority and responsibility in its portfolio. Division managers are not responsible for a â€Å"company-wide rate† just as much as it does not have any control over other companies, or over corporate financial, operating or marketing strategy. 4) The total company-wide Rates of Returns (e.g. 10-15%) on Inv estments or capital expenditure, are the responsibility of top management, and to achieve this, there are other ways, besides imposing this global rate on every single operating division or subsidiary. 5) A fair system of multiple hurdle rates ought to reflected the specific risk-profit idiosyncrasies of its business divisions and operating sectors in which the company’s subsidiaries operated. 6) Using multiple hurdle rates will actually combine the strengths of performers in both â€Å"winner† and â€Å"loser† industry divisions. Fact is, the latter are not actually â€Å"losers†; just lower yields but still positive yields, which might be descriptive of industry performance. The key hurdle rates to accommodate this, might therefore be industry-specific MARRs or WACCs. As mentioned, the rate or rating system must consider specific, inherent risks of divisions and operating sectors – and at the same time – consider benefits ascribed to the single-rate Weighted Average Cost of Capital approach. 7) Aside from just calculating a â€Å"fair† rate, as financial advisors, we must equip Pioneer Petroleum top management with a better designed, more objective and more rational (less emotional) rating system; to help them rationally choose the corporate-and-divisional hurdle rates for evaluation of new projects in a fully integrated conglomerate of multiple divisions; determine whether they should use the SINGLE company wide Weighted Average Cost of Capital, which reflect the rates at their face value to the company, OR proposed MULTIPLE Divisional Cost of Capital, which reflects risk-profit characteristics inherent in various divisions and operating sectors. 8) The above rating system will help the management and board of directors of Pioneer Petroleum decide – every year – on the fair and objective Hurdle Rate/s that will fairly qualify new investment projects of Pioneer Petroleum divisions. a. It considers specific, inherent risks of divisions and operating sectors b. It addresses the interest of stockholders to maximize return on their equity or investments, which is ultimately the responsibility of TOP corporate management. c. It still uses the familiar Weighted Average Cost of Capital approach in calculating both single-company wide HURDLE rate, and divisional YIELD and HURDLE rates. d. Finally the solution MAXIMIZES OPPORTUNITY available in that it does not unnecessarily reject â€Å"the best available net positive cashflow projects at that time† which contribute to increasing company wide yields, but do not necessarily match the company wide yield. I believe this solution is easy to execute. It clarifies what rates to use as hurdle rates to truly evaluate . The solution must be win-win and acceptable proponents of both single and multiple rates References: 1â€Å"Pioneer Petroleum Corporation,† Case on Divisional Cost of Capital. Copyright  © 1991 by the President and Fellows of Harvard College. Harvard Business School Case 292-011. 2â€Å"Capital Structure.† Chapter 17, Fundamentals of Financial Management, 12/e  © Pearson Education Limited 2004; Slides by: Gregory A. Kuhlemeyer, Ph.D., Carroll College, Waukesha, WI 3â€Å"Investors need a good WACC.† Bill McLure, Investopedia Contributor, www.investopedia.com, http://www.investopedia.com/articles/fundamental/03/061103.asp 4â€Å"Definition of Weighted Average Cost of Capital.† Bill McLure, Investopedia Contributor, http://www.investopedia.com/terms/w/wacc.asp 5â€Å"Which is a better measure for capital budgeting, IRR or NPV?† Rob Renaud, Spotting Profitability with ROCE. http://www.investopedia.com/ask/ViewFAQPrintable.aspx?url=%2fask%2fanswers%2f05%2firrvsnpvcapitalbudgeting.asp ‘Accounts Receivable and Inventory Management’ Chapter 10, Fundamentals of Financial Management, 12/e,  © Pearson Education Limited 2004, Slides Created by: Gregory A. Kuhlemeyer, Ph.D. Carroll College, Waukesha, WI ‘Debt and Stocks,’ Chapter 20, Fundamentals of Financial Management, 12/e,  © Pearson Education Limited 2004, Finance Decisions and Investments,  © 2012 Lecture Notes by Dean Atty Joe-Santos Bisquera, LLB, CPA, MBA, De La Salle University College of Business – Graduate School