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BUSI 4940 Exam 2 questions with correct answers graded A+
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BUSI 4940 Exam 2 questions with correct answers graded A+
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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?
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