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  #1  
Old 05-13-2008, 03:03 PM
ActuaryGuy23 ActuaryGuy23 is offline
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Default Questions on EOM1 Exercise

I know I'm way behind, so hopefully others can lend me a hand here. I am looking over the budget detail and trying to determine which costst the mining company might be able to avoid in this purchase. The severance is obvious from the memorandum, but there are about 6 other lines that I see in here which could be argued as not pertinent to the purchasing company. They are as follows:

1) Annual Silver Dam inspections by Geotech Engineers and report at $12500/yr
2)Post closure Federal MMER final environmental effects study and report

Both of these seem to fall under the portion of the memo which mentioned the possibility of having staff already on payroll do inspections and/or studies.

3) One manager and one accountant for 4 yr at total of $250,000 /yr
4) Tech Contract $55k/yr for 20 yr
5) One environmental person at 95,000/yr for 5 years

These seem to fall under either a severance issue or an already-staffed argument. Why would we hire an environmental person for an adjacent, closed mine if Can-Do already has one? Same for a technician? And the manager/accountant expense is certainly already filled in the company or a severance issue for the old mining company that Can-Do wouldn't pay.

6) Employee Housing Buy-back

If Can-Do isn't paying severance, why would they participate in a housing buy-back program for the other company's employees?

Do all of these seem reasonable to exclude?
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  #2  
Old 05-14-2008, 03:54 PM
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DAG FIN DAG FIN is offline
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Default My un-official opinion...

Long Answer: I recently finished this exercise and can offer the following advice (that I believe pertains to the spirit of all the exercises). There is not only one particular "right" answer regarding which expenses to include and which not to. Many of us are used to the multiple choice exams where there is most certainly a black and white "correct" answer. Some flexibility exists within the modules that takes some getting used to. My understanding is that you should make recommendations and have valid logic to support your recommendations. You shouldn't just assert something without backing it up. That being said, so long as you have successfully made an argument to support your assumptions, you should be ok. You may come up with a different walk-away point than the model solution, but as long as it's justified and your analysis took all relevant factors into account, you should be ok. One of the main goals of the modules is being able to craft a well-constructed memo that will be understood by the target audience, and provides sufficient support for all major assumptions, methodologies, calculations and conclusions.

Short answer: Based on the limited guidance given in the memo, I believe one could make an argument that all of those expenses you listed should not be included. In fact, I think you've already done that...
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  #3  
Old 07-29-2009, 06:44 PM
NYC Actuary NYC Actuary is offline
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ActuaryGuy's list looks decent. However, what about removing the Facilities Demolition expenses and equipment disposition and such (items 11 & 12)? I dont think those expenses would go to Can-Do since no demolition would be necessary.
And what is "Post closure Federal MMER final environmental effects study and report"? so freakin vague. I'm guessing since it says FINAL REPORT, we can toss it as well.

The Tech contract i think should stay though. If it was there, who said we can remove it? As for the manager, accountant, and the environmental employees, just because Can-Do has these ppl, doesnt mean they can run both mines. That's doable the work load. Only thing we know for sure is severance and inspection.

Ideas on this???
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Old 10-17-2011, 10:14 PM
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Quote:
Originally Posted by NYC Actuary View Post
ActuaryGuy's list looks decent. However, what about removing the Facilities Demolition expenses and equipment disposition and such (items 11 & 12)? I dont think those expenses would go to Can-Do since no demolition would be necessary.
And what is "Post closure Federal MMER final environmental effects study and report"? so freakin vague. I'm guessing since it says FINAL REPORT, we can toss it as well.

The Tech contract i think should stay though. If it was there, who said we can remove it? As for the manager, accountant, and the environmental employees, just because Can-Do has these ppl, doesnt mean they can run both mines. That's doable the work load. Only thing we know for sure is severance and inspection.

Ideas on this???
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  #5  
Old 10-18-2011, 09:54 AM
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Anitha Desai Anitha Desai is offline
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Originally Posted by its_me View Post
I don't think it matter much what you eliminate, as long as you justify it in your word doc. I eliminated other stuff too, and reduced some expenses by 50%, and I wasn't sure if I was doing the right thing... but I met minimum requirements.
Don't get too hung up on it!
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  #6  
Old 10-19-2011, 07:23 PM
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The sooner you realize these EOM exercises are completely worthless BS the sooner you can get on with your life.
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  #7  
Old 10-21-2011, 09:15 PM
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Do you do anything at all with additional long years /short years, to calculate the inflation rate? I guess not, but I wanted to be sure.
Thanks in advance
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  #8  
Old 01-08-2019, 06:58 AM
Ang88 Ang88 is offline
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Hi everyone!

I have a question. Since English is not my native language and I've never heard about the term "Employee Housing Buy-back". What exactly is that? I search it on the internet but I can't understand.

Plz can somebody explain me? What is the cost for the Company?

Thank you in advance for your kind help.

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  #9  
Old 01-12-2019, 03:32 PM
shixuzheng shixuzheng is offline
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Do you guys remove the expense item(the entire row) or simply zero out the value? Wasn't sure which way is safer.
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  #10  
Old 01-13-2019, 02:26 PM
Ang88 Ang88 is offline
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Quote:
Originally Posted by shixuzheng View Post
Do you guys remove the expense item(the entire row) or simply zero out the value? Wasn't sure which way is safer.
Initially I deleted the rows. However, the same costs reappear in "Modified Budget Valuation Detail" sheet. Since I had to use NA values (ok...I could delete these rows too), I went back to the Modified Budget sheet, re-entered the deleted lines and zero out the values. I think it's better.
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