You have just been appointed to head up the committee to plan the upcoming holiday party for your company, which employs around three hundred people. Susan, Mark, John, and Kathy have also been appointed to this committee. You have worked with Susan before and know that she will be a great worker. You have met Mark and Kathy, but do not know much about them. Unfortunately, you have heard that John can be difficult to work with. At any rate, you are really excited about planning this party and know that leading this committee will be a great opportunity to show your leadership skills.

Based on this scenario and your understanding of how to write internal e-mails, respond to the following:

• Create an e-mail draft you want to send to your committee members about an initial meeting to discuss the party. In the e-mail, include any information you think is appropriate to get everyone excited and on board to make this the best holiday party ever.

Then, respond to any two of the following:

• As you developed this e-mail, what did you consider including in the message? Why did you feel that was important to include?
• Were there any topics that you decided would be best not to include in this message? What were they and why did you choose not to include them?
• Were you concerned about how formal or informal this e-mail needed to be? Why?
• Is it ethical to include blind carbon copies (Bcc) in business e-mails? Give reasons for your agreement or disagreement.
• The information you have heard about John being difficult to work with has you concerned. Do you plan to communicate with him before the initial meeting? If yes, what method will you use to communicate with him? If no, why not?.

• Explain the difference between unique risk and market risk. When you diversify your portfolio by making investments across many different assets, which risk can be eliminated?
• Explain the risk aversion and the market risk premium.
• How does a bond’s call provision protect its issuer against market interest rate changes?
• Consider the following stock valuation models.
• During the last year, Blue Bell Inc. has been too constrained by the high cost of capital to make capital investments. Recently, though, capital costs have been declining, and the firm has decided to look seriously at a major expansion program. Joe Smith who is a financial manager is asked to estimate Blue Bell’s cost of capital. The following information is provided.

Constant growth model

Non-constant growth model

Free cash flow stock valuation model

Explain each model’s assumptions and appropriateness.

The firm’s tax rate is 35%.

The firm has 7% annual coupon bonds with 15 years remaining to maturity. The current price of the bond is $968.55. The bond’s yield-to-maturity is 7.35%.

The firm’s balance sheet shows $100 million long-term debt and $300 million common equity. The firm has no preferred stock.

Joe estimates a 12.6% of the cost of common stock using the CAPM and calculates the firm’s weighted average cost of capital (WACC) as follows:

Weight of long-term debt is .25 (=100/400)

Weight of common equity is .75 (=300/400)

WACC = .25 x 7% x (1 – .35) + .75 x 12.6% = 13.05%

• Find errors in Joe’s WACC calculation.
• If the firm is considering a project whose risk is quite different from the firm’s average risk, is the firm’s WACC still useful for evaluating this project? What does the manager have to do in order to correctly evaluate this project?

The Case of the Disappointed Brides

Sally and Samantha became engaged and decided to have their favorite tailor, George, design and make their wedding gowns. They set a date for the ceremony 8 months in the future. George had been making dresses and suits for them over many years and he knew their tastes and their measurements. He has a thriving business in a busy retail area. At the appointment to discuss their gowns, George informed the engaged couple that he was opposed to same sex marriage and would not make their wedding gowns.

The Trial

Sally and Samantha sued George. They brought in evidence showing that George had always made their clothes, knew they were a couple and had never expressed his concerns about their relationship. They have been unable to timely find another designer/tailor to complete their gowns.

The Arguments at Trial

Sally and Samantha’s attorney argues that George has no right to discriminate against them because of their sexual orientation, which is a protected class. In fact, the state in which they reside allows for same sex marriage, thus no law was being broken. George had taken care of their specialty clothing needs for years and his abrupt refusal, caused them emotional distress. George’s attorney argues that George is invoking his right to freedom of religion. If George made the gowns for the couple, that would constitute an endorsement of their homosexuality and that was something his religion did not allow.

Questions to Discuss

1. If you were on the jury in this case, who would you decide for and why?
2. If, instead of a homosexual couple, the request had been to make a Ku Klux Klan hood and robe, would your answer be the same? If not, why not? If yes, then why?

For Internal Controls: A Compendium of Short Cases, choose 4 of the 6 short cases and answer its respective questions below. Reponses should be well written, in paragraph form, using proper grammar and citations for any writing not your own.

Case 1

• What were your initial thoughts of Jeff Smith’s performance as Controller? Given what happened later in this case, are you surprised given your perception of Jeff Smith? Explain.
• What internal controls could have been in place to prevent this from happening?

Case 2

• Describe the flaws in RME’s credit authorization process, and what recommendations you would suggest to implement in the process.
• As the auditor, what other information (not given in the case) might you inquire about related to the overall sales cycle / process? Why would you be interested in such information?

Case 3

• Use the questions as stated in the case (answer both).

Case 4

• For purposes of evaluating internal controls, how does your client upgrading its accounting software impact your audit risk? Explain.
• Discuss the upsides and downsides of allowing remote access to the company’s system. Be sure to include internal control considerations in your responses.

Case 5

• What factors should an organization take into considerations when contemplating a keep in-house vs outsource decision for a key process? Be sure to include at least some internal control considerations in your response.
• Describe at least three internal control weaknesses related to computer and data security at AAA prior to the flood occurrence. For each weakness, make a suggestion of a control, policy, procedure, etc as to what would have promoted stronger computer security.

Case 6

• Describe how you as Controller would design the employee reimbursement process to avoid the issues that occurred related to damaged vehicles subsequent to the accident at the local plant.

Your Task

You will engage in a negotiation for a celebrity endorsement advertising campaign.

Assessment Description

You may be nominated to represent the advertising corporation and will receive email instructionsfrom the company CEO including:

1. Appointment to represent the company as their agent for the negotiation of the endorsementcontract;

2. Specific instructions about the desired endorsement contract fee and advertising campaigntimeframe;

3. Information about the projected revenue to be raised from the advertising campaign;

4. Contact details of the agent appointed to represent the celebrity.

Alternatively, you may be nominated to represent the celebrity and will receive email instructionsfrom the celebrity’s manager including:

1. Appointment to represent the celebrity as their agent for the negotiation of the endorsementcontract;

2. Specific instructions about the desired endorsement contract fee and advertising campaigntimeframe;

3. Information about the projected revenue to be raised from the advertising campaign;

4. Contact details of the agent appointed to represent the advertising company

Assessment Instructions

Stage 1: Pre-negotiation (700 words)

You must answer the following questions:

1. What is your client’s BATNA? What is your client’s reservation value?

2. What is the other party’s BATNA? What is the other party’s reservation value?

3. What is the ZOPA range? What is your strategy for creating value?

Include at least fifteen academic references in your answers to the above questions with aminimum of five references coming from academic journals..

Stage 2: Negotiation (300 words)

You must:

1. Enter negotiations with their counterpart for the endorsement contract;

2. Maintain a communications log that captures the date, method, items discussed, andoutcomes of each communication..

Stage 3: Post negotiation (400 words)

You must prepare a 1 page letter to your client advising the outcome of the negotiation.