Exam (elaborations)
BUSI 4940 Exam 2 questions with correct answers graded A+
- Course
- Institution
BUSI 4940 Exam 2 questions with correct answers graded A+
[Show more]
Content preview
BUSI 4940 Exam 2You are the CEO of a table lamp manufacturing company. Investment bankers have approached you with
the opportunity to acquire a competitor firm for $350 million. You will need to raise capital to complete
the acquisition, and you have been told that the hurdle rate of the investors you would use to do this
transaction is 14%. Your company's current WACC is 7%. Your team ran variety of forecasts, and you
expect that transaction would generate a 14.7% IRR and an NPV of $62 million using WACC as your
discount rate. All else equal, what should be your decision regarding the transaction?
A. Do the deal
B. Ask your investors to reconsider what their hurdle rate expectations are
C. Recalculate the forecasts using a lower WACC
D. Don't do the deal
A
The letter "I" in the VRIS framework stands for ____.
A. Identification
B. Indemnity
C. Individual
D. Imitability
D
Capabilities typically come from:
A : individual resources.
B : one unique resource.
,C : several outstanding resources used independently.
D : combining organizational resources
D
The reputation of Amazon as being one of the best places to shop online would be considered a ____
category of resource.
A. Barrier to entry
B. Global
C. Tangible
D. Intangible
D
The Ken Cory Company's main product is a tiny portable hidden camera that is only one cubic inch in
size, and the video can be viewed on the internet from nearly any location in the world. Their device is
very new and is still working out some problems, but there are no other tiny portable hidden cameras
like it in the world that work through the internet and it should be very difficult to imitate by
competitors.
Investors told the Ken Cory Company they expected to earn a risk-adjusted return of 14% on their
investment, and the device has already shown that it's profitable having provided an 11% return on
investment. From a VRIS perspective, which of the following is a correct description of the Ken Cory
Company's situation?
A. The device is valuable and rare and a source of competitive advantage
B. The device is not considered to be valuable and therefore needs to be improved or sold off
C. The device is valuable, rare, and difficult to copy, but has a lot of substitutes so the company has a
temporary competitive advantage
D. The device is valuable but not rare, so the company is experiencing competitive parity
B
, Which of the following is most likely to lead to an "Incompetency" for a company?
A. Being at a competitive disadvantage to a stronger company in the industry
B. Having a short-term competitive advantage that is easily copied
C. Having problem with not income that threatens the company's ability to pay common shareholders a
dividend
D. Having a liquidity problem threatening the company's ability to pay debt holders
D
All of the following are tangible resources EXCEPT:
A. production equipment.
B. distribution centers.
C. employees.
D. a company's available cash.
E. they are all tangible resources.
E
Which of the following is NOT a factor affecting the future sustainability of a competitive advantage?
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller BravelRadon. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $17.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79271 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now