How does the charity letter use language to create an impact on its audience Free Essays

The Scope charity letter is an emotional, personal and heart felt letter intended to inform people about Cerebral Palsy and to persuade them donate to their worthy cause. The intended audience was the recipient of this letter, who may possibly be a parent perhaps whose child unfortunately has this terrible condition. The writer of this letter has used a range of grammatical techniques to create an impact on the reader. We will write a custom essay sample on How does the charity letter use language to create an impact on its audience? or any similar topic only for you Order Now One of the main , striking features of this text, is the Anecdote that runs throughout the letter. The short story about Abigail is told by her father which makes it very personal and informal, ‘ I’m Abigail’s dada, Ric. The fact that he introduces himself and gives his name adds more personality into the letter and is inviting the reader to read on. The effect this has upon the audience is that the reality of the letter is portrayed clearly and it makes the reader realise it isn’t just a problem for somebody else, it could happen to anyone. ‘Like any parents. ‘ Something else used, that makes the letter a lot more personal, is the use of personal pronouns. The use of the first person, personal pronouns ‘my’ and ‘I’, in the first paragraph, not only make the letter more real to the reader but also gives a sense of pride that Abigail’s father is feeling. I see that my Abigail has come on in leaps and bounds at school this year. ‘ The possessive determiner ‘my’ strongly emphasises that Ric is very proud of his daughter. Furthermore, the second person, personal pronouns toward the end of the text are also very effective, the use of the pronoun ‘you’ includes the reader into Abigail’s incredible story. This particularly impacts on the reader as they feel like they have been with Abigail on her difficult journey through learning and coping with Cerebral Palsy. This making them feel they want to help more people like Abigail, as Scope have clea rly made a huge difference. This is a rhetorical device- emotive language. It brings the emotions of the writer, and some readers, to the text and audience. Additionally, ‘As soon as we walked through the doors, we knew it was right for our daughter’ is somewhat of a hyperbole-another rhetorical device. It can be seen as a hyperbole as Abigail’s parents could not have known the school was right for their daughter until they had learned more about it. However, this is emphasising how much Scope has helped them and also sets up how much more helpful Scope became to them, later in the letter. Another hyperbole, is the bold caption ‘If it wasn’t for Scopes Ingfield Manor School, Abigail wouldn’t be†¦ Abigail! ‘ Obviously she still would be Abigail but this is used to highlight how much of a lifeline Scope had been, not just for Abigail, but to her parents also. They helped Abigail develop her own personality, even though she has a disability which can hold her back. Another rhetorical technique, used by the writer is the Tricolon. Ric describes how the school not only give the children a ‘national curriculum education’ as all schools do, but also how they ‘develop speech, movement and mobility. The use of the Tricolon here shows how much work Scope put in and how much they help people with Cerebral Palsy to learn. To add more emotion and make it even more personal, Ric uses a Tricolon to depict how Scope has personally helped his daughter to ‘develop her education, her self-esteem and her sparkling personality. Ã¢â‚¬Ë œ The use of the adjective ‘sparkling’ within the tricolon highlights that not only has Scope helped Abigail develop a personality, they have helped her create a strong one that shines through her disability. Another powerful adjective used in the letter is ‘dedicated’. This adjective shows that Scope are trying really hard to make a difference and will stop at nothing to help people like Abigail, people with this terrible disability. Together with the common noun ‘family’, the two word classes strongly emphasise that they all work together and make everyone; the family, the ‘pupil’ and even the reader feel included in their achievements as a team. The verbs used in this text guide the reader to feel that Scope is a very friendly and caring charity. The modal auxiliary verbs ‘can’ and ‘will’ express that there is hope for people with Cerebral Palsy, and Scope is it. The modal auxiliary verb ‘will’ indicates that Scope will definitely continue helping people for as long as they receive support. The dynamic verbs ‘meeting’ and ‘providing’ are in the progressive tense, showing that Scope’s work is ongoing, meaning that they have to rely on peoples donations for their work to continue. Furthermore, the verbs ‘develop’, ‘provide’, ‘share’ and ‘support’ greatly emphasise that Scope are not forceful and are there to ‘support’ people like Abigail. They do not push her but guide her and help her to become the best she can be, while making life for her and her family easier. Taking away the pressure and worry for her education and how it might be affected by Cerebral Palsy. The verb ‘support’ is particularly important as it makes the reader realise that Abigail is not an invalid, nor should she be treated as inferior to anybody else, she just needs a little help and guidance due to her disability. That is where Scope comes in. These verbs persuade the reader to help as they can empathise with Abigail. Finally the verbs ‘joking’ and ‘giggling’ lighten up the mood of the text as the reader becomes aware that Scope help bring light and happiness into these peoples lives. Although Ric himself didn’t write this letter, it would have been carefully crafted to make it sound as if he did, to make it more personal and more effective. The writer uses the grammatical techniques to make the audience aware of what it would be like in Ric’s shoes, persuading them to help, while informing them about Cerebral Palsy and how Scope enable people to overcome difficulties in learning. How to cite How does the charity letter use language to create an impact on its audience?, Essays

Torturing Words free essay sample

Every day I went to a secluded area of the school to the room with monkeys hanging on the wall. In Mrs. Haney’s private jungle, sometimes I worked alone, and sometimes there would be other children there. The other children in the room were of Spanish descent. When they came, we mostly played games instead of working on worksheets on how to pronounce words such as cat and mat. We would gather around her rectangular wooden table that occupied a majority of the room. During one of the games, I had to say fog. When I was told to repeat the word, I said, â€Å"Frog.† Mrs. Haney told me again, â€Å"Say fog.† â€Å"Frog,† I repeated. No matter how many times I tried to say fog, I was unable to. When I saw her for my other sessions, she made me say fog until I repeated it correctly. Taxi was the most troublesome word I dealt with when I was five years old. We will write a custom essay sample on Torturing Words or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page I was sitting in my parents’ room with a large bin of toys that ranged from Barbie to Polly Pocket products. I would place the doll clothing near my parents’ bed and would pretend that the clothes were in department stores. My older sister, Krupa, and I took a doll and pretended that they were actual people who were buying items from the miniature stores. In order for the dolls to travel quickly to a store, we developed a taxi service. As I attempted to say taxi, I heard laughter coming from my sister. I was embarrassed at first when I could not say taxi properly. She tried to correct me, but I never was able to pronounce the x properly. I continuously repeated the word that day and tried to prove to her that I could say it correctly. It never worked. When my sister was at school, I would practice saying taxi until, one day, I finally said it properly. Even though I had mastered fog and taxi, I struggled with speaking in front of my peers in high school, especially when I joined Mock Trial. For my first Mock Trial competition, my team went to a school in New Haven; we were stuck in a tiny classroom. The three lawyers sat in three desks that were pushed together, and the witnesses sat behind their attorney. I sat on the far left side of the table, while the most experienced attorney sat in the middle. My nervousness would not go away after I entered the room. I set all the materials I needed on the table: a packet of questions I was going to ask the witness, pictures from the crime scene that were going to be used as evidence, and an affidavit. â€Å"Do not pronounce affidavit as Aphrodite,† I kept saying to myself. During the practice trials, I always said Aphrodite instead of saying affidavit. I did not want to make that mistake in the real trial. Every second that passed, I realized that all the people next to me helped m e get this far; they forced me to talk louder, fixed my grammar, and helped me pronounce words accurately. It was my turn to call up my witness for the case. I got up from my seat and proceeded to say loudly and clearly the words I had prepared to begin my case, â€Å"The Prosecution would like to call Taylor Peterson to the stand.†

Our Town Essays - Our Town, Emily Webb, Pretty Little Liars

Our Town Our Town, by Thornton Wilder is a play that takes place in a small fictional town of Grover's Corner, New Hampshire; beginning in 1901 and ending in 1913. The play takes the audience through the cycles of life, with the purpose of getting a universal message stating that life shouldn't be taken for granted. Emily Webb, one of the most important characters in the play, is Wilder's character in which he uses to show the audience a universal message that anyone would understand and relate to. Emily is a character that is normal enough so that the audience could relate to her; and yet be different in little ways that makes people love and adore her. For example, Emily went through the most common events in a woman's life: marriage, childbirth, and death in the play. These cycles makes her common, thus relatable to the audience. Without going through common events in life, the character would seem distant and likeable to the audience. Similarly, when Emily said that she expects a man to be perfect, it makes her special. Wilder put in that scene because he believed that even though there is a basic image of an average person, to be truly average, the character must have a difference to separate the character from the crowd. If the character doesn't have any differences, then the character would be faceless; impossible for the character to take a major role in the play. Emily is portrayed uniquely in her own way, and yet is still within the boundaries of everyone else. The character Emily plays a crucial scene in the play, the part where Emily went back to her twelfth birthday. At first, Emily wanted to go back and relive the happiest day of her life, but Mrs. Gibbs stopped her and told her to visit a normal day instead. Mrs. Gibbs knew what would happen to Emily if she had relived a joyful day in her life. If Emily had went back to a special occasion, she would've been overwhelmed by the all the beauty that she didn't pay attention to. Therefore, Emily went to relive her twelfth birthday, but wasn't as happy as she thought she would have been. Emily couldn't understand why her own mother wouldn't even spare the time to look at her on her birthday. She then concluded that the living is ignorant and doesn't appreciate the small things that are in their lives every day. The character Emily is perfect just the way she is. If Wilder changed Emily, the universal message might not be as effective as it is now. Meaning that the audience wouldn't like the idea given from a character that is unlike them.

As I Lay Dying Novel †Literature Essay

As I Lay Dying Novel – Literature Essay Free Online Research Papers As I Lay Dying Novel Literature Essay Although the novel As I Lay Dying is a work which contains numerous universal lessons as well as countless personal applications, there are a number of these which cannot be ignored. One message that appears to be very important to both the plot and the central theme is that of love. Specifically, Faulkner makes the point that love can be expressed in many ways. This aspect of the book is a major lesson that can be learned from the actions of the various Bundren family members and their relationship to Addie Bundren. Often times, people in our society suppose that, because a person, be it a family member, romantic interest, or other relation, does not express their love to someone in literal terms, i.e. saying, â€Å"I love you,† that the person feels little or no love for them. Other people can see love when it is expressed not only in literal but in related ways, such as kindness and service. Nevertheless, as Faulkner shows in this novel, love for another can be expressed in various and extraordinary fashions. To begin with, one must examine the actual love the members of the family possess for Addie. Addie Bundren extracts a promise from her family, â€Å"when Darl was born I asked Anse to promise to take me back to Jefferson when I died†¦Ã¢â‚¬  When she indeed does die, all of the members of the family go on the trek to Jefferson, but each for different reasons. This displays the inherent love they have for their mother. Dewey Dell has no love for her mother, in fact, she is only glad to go on the trip because she needs an abortion. Darl says to her, â€Å"‘You want her to die so you can get to town: is that it?’† Darl himself has no specific reason expressed in the novel to want to go to Jefferson, and although he probably really loves Addie, despite his statement, â€Å"I cannot love my mother because I have no mother,† he accompanies the family centrally for respect of the promise she has left them with. The statement he makes shows how he apparently can feel the favoritism his mother has toward her â€Å"Jewel.† Jewel is truly the only character in the novel who clearly shows outward signs of love towards Addie. Although these signs are generally symbolic and very deep, they are there. The only way Jewel knows how to express himself is through anger and violence. This he displays countless times throughout the novel, with his physical actions and his verbal assaults, such as the one against the negroes and the white man. â€Å"I can see his [Jewel’s] ears taking on a still deeper tone of furious red†¦ When we pass the negroes their heads turn suddenly with that expression of shock and instinctive outrage. ‘Great God,’ one says; ‘what they got in that wagon?’ Jewel whirls. ‘Sons of bitches,’ he says.† This passage, for example, shows how defensive Jewel gets when normal people react to the obvious reeking stench of his deceased but beloved mother. Jewel is very violent and vulgar in his love. When he, concerning his mother’s gra ve, speaks, â€Å"Who the hell cant dig a damn hole in the ground?† His father, Anse, who apparently believes in only literal love, replies, â€Å"‘It aint respectful, talking that way about her grave,’ pa says. ‘You all dont know what it is. You never pure loved her, none of you.’† This statement is ironic in that Jewel is the one who loves his mother and Anse is traveling to Jefferson not for love or even respect, but for a selfish reason: â€Å"now I can get them teeth. That will be a comfort, it will.† Additionally, Jewel shows his love for his mother through a zoological conduit- his horse. The horse is a symbol of Jewel’s love for Addie as declared, â€Å"Jewel’s mother is a horse,† countless times throughout the novel. When they depart on their trip, Anse makes the comment that â€Å"I told him not to bring that horse out of respect for his dead ma, because it wouldn’t look right, him prancing along on a durn circus animal and her wanting us all to be in the wagon with her that sprung from her flesh and blood†¦Ã¢â‚¬  Again, this is another ironic statement by Jewel’s hypocritical and disrespectful father. In truth, to Jewel, his horse represents his mother, and so, by riding it, he is much closer to her than he could ever be in the wagon next to her dead body. When the Gillespie’s barn is burning, Jewel rushes in to save his mother from burning, it is of importance to note that he rescues the horses first. â€Å"he [Jewel] leaps toward the stall where the horse screams†¦ he appears, his back arched, the muscles ridged through his garment as he drags the horse out by its head†¦He drags it on, slowly, terrifically†¦ and beats the maddened horse on out of the door.† It is only after he has done this feat that he goes back in and grabs the coffin containing Addie’s dead body. â€Å"Jewel runs crouching to the far end of the coffin and stoops to it†¦ We see his shoulders strain as he upends the coffin and slides it single-handed from the saw-horses.† Vardaman, the youngest son, although he loves his mother, is too young and inexperienced with life to understand the scope of what has happened. He wants to go to town to look at a toy train in the toy store. He says, â€Å"We are going to town. Dewey Dell says it [the toy train] wont be sold because it belongs to Santa Claus and he taken it back with him until next Christmas. Then it will be behind the glass again, shining with waiting.† He, like Jewel, also symbolically transfers his mother’s spirit into an animal; in this case, a fish. Again, because of his youth and limited experience, he does not accept the fact that his mother is gone. Instead, as he sees her dead body, he consistently talks about how the body in the box is not his mother. â€Å"My mother is not in the box. My mother does not smell like that. My mother is a fish.† Vardaman loves his mother very much, and so cannot bear the thought of his mother being gone forever. Although he never literall y talks about how he loves his mother, he always expresses it in his own way. It is often difficult to tell, from actions or words, if one person loves another. However, one very moving point that Faulkner made in this novel is that love can be expressed in more ways than simply saying, â€Å"I love you.† Although these three words can be in themselves very moving and meaningful, to many it is very important and comforting to know that the human psyche is capable of deeper and more intense feelings than what is literally apparent. Such a concept can be learned and more greatly comprehended from reading this novel. Research Papers on As I Lay Dying Novel - Literature EssayWhere Wild and West MeetHonest Iagos Truth through DeceptionComparison: Letter from Birmingham and Crito19 Century Society: A Deeply Divided EraPersonal Experience with Teen PregnancyMind TravelTrailblazing by Eric AndersonThe Spring and AutumnEffects of Television Violence on ChildrenBook Review on The Autobiography of Malcolm X

Reviewing a link and writing about that Essay Example | Topics and Well Written Essays - 500 words

Reviewing a link and writing about that - Essay Example Fission – fusion social group is the social grouping in which chimpanzee likes to interact. This is because it allows better chances of food availability, copulation and regular association with other members. According to (Parsons.2011)â€Å" Members of the Hominidae family chimpanzees are the closest living relatives to human beings and like us, they have been found to experience emotions and retain memories† The physiology of Chimpanzee shows that full grown adult male chimpanzee can stand 1.2 meter tall and 70 kg in weight. In female it can be around 50 kg and height of 2 ft .The thumbs and big toes of chimpanzee are opposable and they walk on knuckles. Moreover Chimps have 8 wrist bones like human.The sexual behavior of chimpanzee is also worth mentioning. The sexual dimorphism of chimpanzee relates to the difference in their male and female species. Generally, the male chimpanzee is taller than female species and depict different characteristic. It is noticed that while playing, male and female chimp depicts different attitude due to their hormone differences. The male chimp carries a stick for hunting while female chimp carries stick as a doll. Chimpanzee lives in southern area of Congo River and is found to be a close relative of human being. Chimpanzees are primarily vegetarians and they eat mainly leaf, fruits, seeds and flowers. The Common Chimpanzee is both arboreal terrestrial and arboreal and they are quadrupeds which means they move with aid of leg and hands at the same time. When it comes to sexual dichromatic, the chimpanzees have mating season and they mate with their female counterpart which are shorter than them. However, human beings are the only species which has the sole aim of indulging in sex for the benefit of physical pleasure. In the case of Chimpanzee they have a patriarchal system where male chimpanzee dominate the female species. Generally, it is a fact that chimpanzee

Assign research paper Essay Example | Topics and Well Written Essays - 1000 words

Assign research paper - Essay Example The lack of specificity in the way the themes, motifs and elements of the story are presented leaves the readers room for in-depth thinking and reflection as to how it can be related to a concrete experience. This paper explores the features of the story that suggest an important substance to what also happens in reality. The story begins with a statement of utter absurdity chronicling the transformation of a hardworking salesman into a monster. Looking at this particular portion of the story, it can be inferred that it contains a certain level of irrationality. Realistically, the transformation is not possible. This suggests that the novel works in an arbitrary, disordered universe, which goes beyond the frontiers of the laws of nature. Also, there is no clear mention of the apparent cause of the transformation like a curse from a black magic – which, in reality, is also in question as to whether it exists or not – that could have explained the metamorphosis. The story simply talks about a supernatural phenomenon. Nevertheless, examining through the undertones of the plot, it also suggests about a situation in which a hardworking person has gotten an illness thereby incapacitating him or her to continue working. In this perspective, there is a causative factor to the â€Å"transformat ion† that can be taken into account: working so hard may cause harm to the human body, which, in turn, can put someone out of action because of an injury, degenerative disease or a mental dysfunction. However, the idea of injury or catching a degenerative disease does not seem to validate the supporting details of the story: the family members do not display any hint of worry or shock but rather are ashamed or disgusted about the transformation of Gregor. In other words, there must be something in what happens to Gregor that causes embarrassment to the family and this poses less of gravity. While it cannot be a psychological or mental sickness

Conflicts Of Interest Between Managers Owners And Creditors Finance Essay

Conflicts Of Interest Between Managers Owners And Creditors Finance Essay Managers, owners and creditors usually have the same fundamental objective that is to see the business prosper in the companies. But when companies are in financial distress, conflicts of interest between managers, owners and creditors arise. The reason to answer this problem is just because managers have different goals from owners and creditors. As we know, managers are usually hired to run a business of companies on behalf of owners. Thus, some problems can arise between managers and owners because interest of ownership is separated from interest of control especially when companies fall into financial distress. Managers may pursue some goals that bring benefits to them but may not be beneficial to the owners. Owners have their own shares and they think that their shares value will be increased. They have right to indirectly control of the operating decisions that influence the companies cash flows and others. Besides, creditors are the party who provide capital to companies at rates based on the riskiness of companies assets and on companies capital structure of debt and equity financing. Conflict of interest between owners and creditors is that owners want to borrow money at the lowest rate whereas creditors decide the rate based on the risks of companies investment projects and companies themselves. The more risks compan ies have, the more required rate on the firms debt will be paid. When a company faces financial distress and may be going to bankruptcy, there are usually two solutions to settle. The first solution is reorganization and continuation as a going concern. Managers usually like this solution as they can exercise control over what goes on during the company. The second solution is liquidation and selling off of the assets of the company. Managers usually do not like this solution and may resist whereas creditors like this solution as they stand to get their money from the liquidation value first. However, managers may not want this to happen and they may seek to bribe the creditors with a promise of getting more money than they should if the latter agree to the first solution. This is not in the interest of the owners. Conflicts of interest between managers, owners and creditors always exist even when the company is profitable. Therefore, the company has a cash surplus. Managers would want this money as a financial bonus and the shareholders would want this money as a stock dividend whereas creditors get paid a fixed amount and they get paid before the owners get paid. II: In a personal financial situation, give an example of opportunity cost. In a personal financial situation, opportunity cost of any investment is the return one could earn on the next best alternative. A simple way, we can understand that opportunity is the benefit you could have received by taking an alternative action. All investments of a company involve opportunity cost. A dollar today is worth more than a dollar in one year because the dollar today can be invested and will increase more than a dollar in one year. The dollar you can get after one year carries an opportunities cost equal to the return on the forgone investment. Thus, opportunity cost is the forgoing cost and when there are a number of business alternatives. The decision makers always select the alternative which has the highest opportunity cost because if the decision maker selects any other alternative he or she has lost the opportunity. Companies usually use opportunity cost to evaluate a capital Investment project. The company can compare between the projected return and the return it would earn on the highest yielding alternative investment involving similar risk. For example, a company has a free amount of money in the bank that earning interest 10% after 1 year. If this company uses this amount of money to invest a project, it will get 15% profit after 1 year. In this example, opportunity costs of this company are 5% (15%-10%). Decision makers of a company always have to consider choosing the way which can give them the maximum benefit that can cover all costs. They use opportunity cost to analyze a project and the simplest way to estimate the opportunity cost is to compare the present choice with the next best alternative that could be made. However, it is not easy to make comparison because many alternatives do not have a market price or very difficult to calculate into money. Question III: In America, Vietnam or any other country, what is appropriate question to ask when evaluating an investment opportunity? Explain why. When evaluating an investment opportunity in America, Vienam or any other country, the appropriate question that company usually concern is what is the discount rate? The discount rate is rate of return that recognizes the time value of money. It is calculated based on cash flow expected in future from the investment. Management of a company always compares the discount rate of many projects to choose which projects with maximum return or wealth for the companys stockholders. The discount rate is also related to a risk factor that recognizes the uncertainty associated with achieving future profit forecasts. The risky projects can bring high discount rate to investors. However, it is not easy to determine the appropriate discount rate because it is calculated by using discounted cash flow techniques. Besides, the appropriate discount rate is influenced by some main factors. The first factor is related to macroeconomic conditions such as inflation, interest rates and country risksà ¢Ã¢â€š ¬Ã‚ ¦Vietnam has higher country risks than America because Vietnamese policies can be changed very fast. The second factor is matter of the industry such as avera ge of profit ratio in the industry The third factor is the company policy which related to capital structure. Otherwise, there are some factors related to projects themselves. Evaluating the factors helps investors define discount rate and therefore they have an overview of the investment opportunity. Besides, management have to foresee the estimated future benefits are large enough to justify the current expenditure as well as the proposed investment based on capital budgeting. It is the most cost-effective way to achieve their goals. The discount rate to be applied can be based on the facts and circumstances of a particular case as well as the analysis of the likelihood of achieving forecasted lost profits. Companies have to assess the relevant factors in determining an appropriate discount rate that help them build a stronger case in support of their damage position. Question IV: Discuss the true economic cost to Daimler-Benz (Mercedes) when it purchased Chrysler in 1998. How did that workout? In May, 1998, Daimler-Benz and Chrysler Corporation, two of the worlds leading car manufacturers, agreed to combine their businesses. Daimler-Benz purchased the Chrysler Corporation at $37.3 billion. The former Chrysler Corporation was given autonomy to manufacture mass-market cars and trucks while the Germans firm continued to build luxury cars. Thus, purposes of this business for Daimler-Benz is to access to the North American market for automobiles without diluting the image of its Mercedes-Benz brand. Otherwise, with acquiring Chrysler they can get production capacity outside Germany and opportunity to learn from Chryslers envied process of making decisions quickly and bringing new vehicles to market promptly. However, the true cost to purchase the Chrysler is not $37.3 billion because the Chrysler has $15.5 billion in interest-bearing debt that makes the total price to purchase is $52.8 billion ($37.2 million + $15.5 million). Thus, Chryslers assets need to make future cash flow worth at least $52.8 billion. Therefore, the true economic cost to Daimler-Benz when it purchased Chrysler is over $52.8 billion. After purchasing Chrysler, Daimler-Benz firm had to bear many extra expenses related to changes in many factors such as leaderships, business strategy, culture clash and management styles. The Daimler is different from the Chrysler different in businesses. The Daimlers core competency is high-valued, technically advanced cars and focuses on development of luxury cars whereas Chrysler focused on mass market and considered as a very cost effective company. Moreover, European culture is far different from American style and there may appear conflict of management style in a short time. Thus, it is difficult to the business and cash flow for DaimlerChrysler in the future. Therefore, DaimlerChrysler faced failures in operating. Despite significant short and medium term expected synergies, DaimlerChrysler has been negative profits after the deal. In 2001, DaimlerChrysler got loss of $5.8 bi llion which was the biggest loss in German business history. In 2007, The Chrysler was bought of 80.1% (about $7.4 billion) by Cerberus Capital Management LP. This price is much cheaper than the price ($37.3 billon) when Daimler purchased Chrysler in 1998. After 9 years, this deal marked the divorce of Daimler and Chrysler. Question V: A sporting good manufacturer has decided to expand into a related business. Management estimates that to build and staff a facility of the desired size and to attain capacity operations would cost $275 million in present value terms. Alternatively, the company could acquire an existing firm or division with the desired capacity. One such opportunity is the division of another company. The book value of the divisions asset is $140 million and its earnings before interest and tax are presently $30 million. Publicly traded comparable companies are selling a narrow range around 12 times current earnings. The companies have debt-to-asset ratios averaging 40 percent with an average interest rate of 10 percent. Using a tax rate of 34 percent, estimate the minimum price the owner of the division should consider for its sale. Multiple = Market Value / EBIT (1-tax) Therefore, Market value = Multiple x EBIT (1-tax) Market value = 30 (1-0.34) x 12 = $237.6 million Market value = D + E D = 40% x $140 million = $ 56 million. E = Market value D = $237.6 million $ 56 million = $181.6 million. With calculation above, the minimum price the owner of the division should consider for its sale is the value of its equity (E). The minimum price is $181.6 million. b. What is the maximum price the acquirer should be willing to pay? The maximum price the acquirer should be willing to pay is the market value. In this case, it is $237.6 million c. Does it appear that that an acquisition is feasible? Why or why not? Because the companies have debt-to-asst ratios averaging 40 percent with an average interest rate of 10 percent, the price will be: $237.6 million + ($237.6 million x 40%) x 10% = $247.104 million The price above is less than $275 million. If the managements build and staff a facility, they have to pay $275 million. Thus, this acquisition is feasible. Otherwise, the company can utilize staff and facility. d. Would a 25 percent increase in stock prices to an industry average price-to-earnings ratio of 15 change your answer to (C)? Why or why not? In this situation, Market Value = $237.6 million x 1.25 = $297 million. The price in this situation is more than $275 million. If the managements build and staff a facility, they have to pay $275 million. Thus, with 25% increase in stock prices to an industry average price-to-earnings ratio of 15%, my answer to (c) will be changed. e. Referring to the $275 million price tag on the replacement value of the division, what would you predict would happen to acquisition activity when market values of companies and divisions rise above their replacement values? When market values of companies and divisions rise above their replacement value and related to the $275 million price tag on the replacement value of the division, I predict that the company will acquire existing firm or division with the desired capacity instead of building and staffing new facility. Question VI: What does it mean when a companys free cash flow is negative in one or more years? Free cash flow always measures how much money a company generates after deducting maintenance capital expenditure, but before capital expenditure on expansion. Free cash flow is important for any company because it a company can pursue opportunities that increase shareholder value with free cash flow. It is difficult for a company to launch new products, make any acquisition, pay dividends and reduce debt without enough cash. In theory, Free Cash Flow = Net Income + Amortization/Depreciation- Changes in Working Capital Capital Expenditures. Thus, if the free cash flow is negative in one or more years, company may have large investments. If these investments get a high return, profits that a company attains are more than costs to be paid. Otherwise, a profitable business or in some particular industries may have negative cash flow especially in the beginning of investments. In these cases, negative free cash flow of a company can be accepted in a short time but not in a long time. b. Do negative values of free cash flow in way alter or invalidate the notion that a companys fair market value equals the present value of its free cash flows discounted at the companys weighted average cost of capital? Free cash flow is the amount of cash a company has after expenses, debt service, capital expenditures, and dividends. The higher the free cash flow of a company, the stronger the companys Balance Sheet. Free cash flow can affect the value of a firm. Negative free cash flow can not define the value and it has no sense. However, negative values of free cash flow invalidate the notion that a companys fair market value equals the present value of its free cash flows discounted at the companys weighted average cost of capital. Some divisions of a company may accept loss in order to increase free cash flow of a company in the future. c. Suppose a companys free cash flows were expected to be negative in all future periods. Can you conceive of any reasons for buying the companys stock? Free cash flow is the most important number to be needed to know about a company before buying its stock. Big companies usually throw off large sums of free cash flow whereas young or growing companies may have a negative free cash flow. We can buy the companys stock if the companys free cash flow in the short time. However, if a companys cash flow were expected to be negative in all future periods, we should not buy their stock because the companys finance situation is not good. The company may get troubles in sales, heavy debt, ineffective investments or other causes in operation that result to a cash flow with higher expenditures than income. With negative cash flow in all periods, the company may have to bankruptcy. Therefore, there is no reason for buying its stock. However, if we know that the company has some big projects and will get high return in the long time, we can consider buying the companys stock because large investments can make the company having negative cash.