Do Violent Video Games Have An Impact On A Person s...

Introduction People play video games mainly for entertainment. It’s just like a hobby such as bike riding, fishing, and swimming or playing sports. Video games are also a form of art through which you can experience a story interactively and can also challenge you mentally through using problem solving skills to work through difficult scenarios. Some video games are even designed to be a fictional representation of life, allowing the player to experience or do things they would never be able to do in real life. In a society where we are responsible for our own actions, individuals may wonder whether these video games can have an influence on our actions. One of the main reasons that attract people to certain games is the inclusion of violence. People become immersed in a world where they are able to take risks and be able to break laws without suffering and harmful consequences that reality or real life would serve. This report is about ‘Do violent video games have an impact on a person’s behaviour?’, Based on the information I collected, the following guiding questions will help in concluding an answer to my research topic. The questions that mostly relate to my topic are the age of people who play games, what do violent video games contain, gaming addiction and effects on behaviour. Methodology I started off investigating my research by using the Internet and used my mind map. My mind map help me developed my research questions that I used on to Google to search andShow MoreRelatedHow Are Violent Video Games Affecting Young People? Essay911 Words   |  4 Pagesplaying violent video games. These video games might seem like harmless fun, but what if the violence in these games is affecting the behavior of young players interacting with others? In a society driven by technology, video games are becoming more popular each and everyday. People of all ages enjoy video games in their free time; these games allow the player to become an athlete, a soldier, or a professional fighter at the tip of their fingers. The hugest problem with these video games is theyRead MoreVideo Games Vs. Wii1344 Words   |  6 PagesVideo Games have been around since the 1950’s meant to entertain people, and to bring them into a fantasy world they have never been to before. However, they haven’t become popular until around the 1970’s and 1980’s introducing arcade games in corner stores, console games like Nintendo, and computer games. The very first console introduced was the ATARI in 1977 which was about every child’s first console they ever played, and was around until the 1990’s. Due to the popularity over video games beingRead MoreVideo Games : Video Game Violence Essay1693 Words   |  7 PagesVideo Ga me Violence Blood and gore, intense violence, strong sexual content, use of drugs. These are just a few of the phrases that the Entertainment Software Rating Board (ESRB) uses to describe the content of several games. The future of entertainment revolves around technology. Along with the evolvement of technology, video games are also changing. More ways of playing violent video games are created each year, but most of us have this question in mind; do violent video games influence peopleRead MoreNegative Impact Of Video Games On Children1278 Words   |  6 PagesNegative Impact Of Video Games When you look around these days, kids as young as five years old are holding their portable devices as their eyes are glued to their screens and their minds clueless about their surroundings. Increasing violence and contents of the video games have a huge impact on our generation of young children mentally and physically. When I was growing up, video games used to be a source connecting people around the world with their mutual love of fun filled games. However, overRead MoreNegative Effects Of Violent Video Games1045 Words   |  5 PagesIntroduction Violent video games in particular are extremely popular in the United States. Many of these games are designed for adults but wind up in the hands of children. We have to ask ourselves what impact violent video games have on the adolescent brain. Two lawyers debate in the Case of Brown vs. Entertainment Merchants Association, US Supreme Court (2010). Prosecutor Steven F. Gruel argues that there is a substantial amount of evidence to make the conclusion that violent video games cause adolescentsRead MoreDo You Think Violent Video Game Exposure Effect The Behavior Of Children?1244 Words   |  5 PagesDo you think violent video game exposure effect the behavior of children? Introduction Studies show that exposure to violent video games affects the behavior of children.Some have vandalized, beat someone up, took part in bullying someone.As many as 97% of US kids age 12-17 play video games, contributing to the $21.53 billion domestic video game industry. More than half of the 50 top-selling video games contain violence. Violent video games have been blamed for school shootings, increases in bullyingRead MoreVideo Games Are More Than Half Of The 50 Top Selling Games1666 Words   |  7 Pages Daniel Molina Kathryn Harrington ENG. 122 December Research paper As many as 97% of US kids age 12-17 play video games, more than half of the 50 top-selling video games contain violence. On April 20, 1999 at Columbine High School in jefferson county colorado, two students and video game fanatics, Eric David Harris, age 18, and Dylan Bennet Klebold, age 17, executed a planned shooting rampage killing 12 other students and a teacher. Researcher and psychiatrist Jerald Block has concludedRead More The Debate Over Video Game Violence Essay1734 Words   |  7 Pagesdifferent types of people that have two opposite points of view about a certain topic or idea. The widespread expansion of technology has allowed people all over the world to debate certain topics that they deem to have a correct understanding of. Unsurprisingly, the effect of video games on the human brain has been a controversy since video games were first released decades ago. Video games involve the use of body and mind, which causes the player to be inside of the game, and they can see the worldRead MoreAdolescent Aggression Based on Violent Videogames1645 Words   |  7 PagesAggression Based on Violent Videogames Violent video games played by millions of people every day results in animated characters having hearts ripped out, heads decapitated, and blood squirting across the screen as their mutilated bodies are erased from the screen. Most players play these games to pass the time, increase hand eye coordination, and create harmless competitions amongst those playing. However, some who play these games are entranced by the violent aggressive behaviors demonstratedRead MoreViolent Video Games Are Violent1677 Words   |  7 Pages2016 Violent Video Games Effect The future of entertainment revolves around technology which perhaps has caused video games to become more and more realistic over time. Although they often are entertaining, the contents have become more violent and disturbing as computing technology has become much more advanced. These days, the popularity of violent video games has caused an increase in controversy. Many parents and researchers say the video games are now becoming too violent. The violent video

Beachy Head Essay - 1484 Words

Beachy Head When it comes to many of the essential ideas explored during the Romantic Movement, are women poets ever accredited in their influence over such themes? This is a question that arises when reading Charlotte Smith’s â€Å"Beachy Head.† The poem is so monumental, so breathtaking in its innovation, that one cannot help but to wonder why it is not more renowned in English Literature. Considering that the poem was composed around 1806 just before her death, â€Å"Beachy Head† truly strikes modern chords in its themes: From a modern experience of Romanticism, nurtured by the sometimes oblique narrative strategies of its major poets, a work that begins atop a massive feature of the landscape and ends immured within it bears a†¦show more content†¦Ã¢â‚¬Å"Beachy Head† is a true example of a poem that embraces many of the great themes of Romanticism and proves that Charlotte Smith should indeed be considered one of the movement’s greatest poets. Here is an excerpt of some of the poem’s most interesting and beautiful stanzas and some of the major themes they express: The poem starts out in a very elevated tone with the speaker atop the overwhelming cliff on the south coast known as â€Å"Beachy Head.† Interestingly, the spirit that inspires Smith’s imagination is not a Muse, but the natural beauty and presence of the amazing natural promontory: On thy stupendous summit, rock sublime! That o’er the channel rear’d, half way at sea The mariner at early morning hails, I would recline; while Fancy should go forth . . .(1-4) From this amazing vantage point, Smith makes a very grand hypothesis that the British Isles were once joined with the rest of Europe and split at some point very long ago. Such a monumental idea about the formation of Britain is extremely daring, and Smith conveys her personal knowledge of the area with great confidence: . And represent the strange and awful hour Of vast concussion; when the Omnipotent Stretch’d forth his arm, and rent the solid hills,Show MoreRelatedThe West s Desire For The East1542 Words   |  7 PagesThe West uses Orientalism to justify its blatant exploitation of the East. Both Charlotte Smith’s â€Å"Beachy Head† and Samuel Coleridge’s â€Å"Kubla Khan† unveils the West’s desire to exploit the East and define the exploitation by highlighting different dimensions to the desire. â€Å"Beachy Head† places economic exploitation at the forefront of the poem while also arguing that an underlying layer of sexual exploitation exists in the West’s desire for the East. The trade rhetoric reveals the West’s view ofRead MoreAnalysis Of The Poem Lines 1246 Words   |  5 PagesImmortal in Lines The poem Beachy Head begins with a narrator who reclines â€Å"on thy [Beachy Head’s] stupendous summit† (1). After the narrator leads readers through the idyllic scene at Beachy Head and introduces a character the shepherd, curiously, this first person narrator â€Å"I† silently vanishes in the middle of the poem. The third person narrative henceforward dominates the rest of the poem. Instead of the narrator, a stranger, later in the poem referred to as the hermit, comes under the spotlightRead MoreEngland Throughout History1724 Words   |  7 Pagescreated Baths here. It was an early popular spa place. In 1988 Bath was designated as a Unesco World Heritage Site. Brighton was a highway for early settlers. It is a very suburban area. Brighton also has good farmland and home of the Beachy Head Cliffs. On the Beachy Head Cliffs there are parallel chalk ranges. Cambridge was settled by a group of scholars. Cambridge is also home of Englands second university. Feud s between students and townspeople took place for six centuries. There are thirty oneRead MoreAmish Culture - Essay 21549 Words   |  7 Pagesare also known for the not using current technology and sticking to old, conservative ways. There are four distinct types of Amish communities: Beachy Amish, Amish Mennonites, New Order Amish, and Old Order Amish. The Older Order and New Order Amish groups do not use public utility electricity and use horse-and-buggy transportation. However, â€Å"the Beachy Amish and Amish Mennonites own automobiles and use public utility electricity† (Kraybill, Nolt, and Johnson-Weiner, 2012). Most Amish groups asRead MoreEssay on Infants with Respiratory Distress Syndrome1306 Words   |  6 Pagesinfant’s body through the isolate portholes. Then She gently stroked with her hands for five minutes, one-minute periods (12 strokes at approximately 5 seconds per stroking motion) over each region in the following sequence: (1) from the top of the head to the neck, (2) from the neck across the shoulders, (3) from the upper back to the waist, (4) from the thigh to the foot to thigh on both legs, and (5) from the shoulder to the hand to the shoulder on both arms. The baby was then placed in a supineRead MoreAnalysis Of The Poem David Sedaris 1733 Words   |  7 Pagestapping shoes on his head, kissing newspapers, and more. Each of these acts are carefully calculated and must be carried out properly, or else he must start from the beginning. â€Å"It was a short distance from school to our rented house, no more than 637 steps, and on a good day I could make that trip in an hour, pausing every few feet to tongue a mailbox or touch whichever single leaf or blade of grass demanded my attention† (360). Since these tics happen inside of Sedaris’s head, it is difficult forRead More Local Culture and College Culture Essay example1490 Words   |  6 PagesCulture and College Culture As the door swings open, five young males stroll into the restaurant displaying earrings, dreadlocks, and counterculture clothing, which causes several dozen flannel-clad, middle-aged men to turn their heads. The young men, all Goshen College students, sit down at a table in the corner and smile to themselves while the other customers continue to stare and chuckle at them for a few minutes. After the smirking waitress comes and kindly takes their ordersRead MoreScottish Patient Safety Programme and the Early Detection of the Deteriorating Patient1929 Words   |  8 Pagessupervise care within an acute adult setting (NHS Scotland, 2010a). During my practice learning experience a male patient was brought into the accident and emergency department following a serious assault, he had suffered severe lacerations to his head, face and hands. Prior to arriving, ambulance staff did not call to warn nursing and medical staff. As a result, the team were unprepared and the pat ient was brought into the wrong area within the department. The patient should have gone straightRead MoreDescriptive Essay About The Galapagos1646 Words   |  7 Pagesto take us to Isla Puna. The island is also known as Isla de los Pajaros, because of the huge population of the Magnificent Frigatebird that settled there. After arriving to the island we had to walk through a muddy swamp like area, then through a beachy shore line and hike a little to be at eye level with the tree tops. The island was full of trees and vegetation and on top of every tree was a male Magnificent Frigatebird with an inflated gular sac. The trees and birds seemed endless as if it wereRead MoreChristmas Playlist Suggestions For Holiday Parties Essay1705 Words   |  7 Pagesit. It’s a unique holiday song that makes you want to grab a partner and have your own personal duet! The lyrics are adorable, the back and forth banter between the two artists is charming, and Ray Charles and Betty Carter r eally hit the nail on the head with this version. Wonderful Christmastime-Paul McCartney Just thinking of this song makes me want to start singing. Talk about a jolly ol’ holiday tune! And sung by one of our favorite Beatles, at that! You want your playlist to be eclectic and not

Rhetorical Appeals- I Have a Dream Speech free essay sample

King made his speech at the Lincoln Memorial and referenced Lincoln’s famous speech given during the American Civil War. He also referenced the Emancipation Proclamation. King’s Lincoln reference is an ethos appeal because it shows he took the time to not only research but also give credit to trailblazers who came before him in the fight for equality. He made this reference to demonstrate that he put a great amount of thought in preparing his speech as well as to boost his credibility as a well-educated man. This appeal also helped him earn the audience’s respect by paying his respects to the individuals who had previously fought for equal rights in America. When King mentioned Lincoln’s advancement, he was able to reach individuals that may not have respected or agree with his views but did respect and agree with President Lincoln. Acknowledging Lincoln and Lincoln’s efforts in righting a previous wrong demonstrates MLK Jr. We will write a custom essay sample on Rhetorical Appeals- I Have a Dream Speech or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page s upstanding, trustworthy reputation. Pathos: â€Å"But one hundred years later, the Negro still is not free. One hundred years later, the life of the Negro is still sadly crippled by the manacles of segregation and the chains of discrimination. One hundred years later, the Negro lives on a lonely island of poverty in the midst of a vast ocean of material prosperity. One hundred years later, the Negro is still languished in the corners of American society and finds himself an exile in his own land.And so weve come here today to dramatize a shameful condition† (King, 1963, p. 1). King follows his ethos appeal with a pathos appeal. He used this passage to give his audience an emotional â€Å"picture† to help them better understand what little progress had been made in the 100 hundred years that followed Lincoln and the Emancipation Proclamation. The similes he used in this passage helped his audience to attach memorable feelings to the lack of progress made. This allowed his audience to not only identify the set back but also experience it through emotion.He created this pathos appeal to help his audience identify with the painstaking inequalities many African Americans had suffered. Logos: â€Å"But there is something that I must say to my people, who stand on the warm threshold which leads into the palace of justice: In the process of gaining our rightful place, we must not be guilty of wrongful deeds. Let us not seek to satisfy our thirst for freedom by drinking from the cup of bitterness and hatred† (King, 1963, p. 1). This is a logos appeal because it exemplifies the illogical thought process of trying to achieve peace among all people through violence and hatred.By definition, the two are apposing states of being, and indulging in one will not achieve the other. King strategically used this logical plea to encourage his audience to behave by the universal Golden Rule. He wanted his audience to treat other individuals as they themselves would want to be treated. He knew if they were to misconstrue his message and behave in a hatful, violent manner, peace and equality would never be achieved. References King, ML. (1963). I have a dream. Proceedings of the March on washington for jobs and freedom Washington D. C. : CBS, Inc.

The Transportation Revolution in the United States free essay sample

This paper argues that, even prior to the advent of the railroads, a transportation revolution had taken place in the United States in the early nineteenth century. The following paper argues that there were two developments that were most important in constituting a transportation revolution: Steamboat navigation and the construction of the great canals. This paper focuses on the building of the Erie Canal which constituted a revolution in its own right. The writer asserts that it was on account of the transportation revolution of the 1815-30 period that the American economy was decisively transformed into a capitalistic one. In 1800, the United States did not lack a transport infrastructure, but it was a very poor one. With the exception of cities and towns located on the Atlantic coastline or along navigable waterways, there was literally no means of transporting agricultural produce and manufactured items to or from market centers other than country roads. We will write a custom essay sample on The Transportation Revolution in the United States or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page These roads were unpaved, infrequently maintained and often impassable in wet weather (Taylor 15-16). A diary passage from 1817 gives some sense of their condition: I returned from Baltimore a few days earlier. Had wet weather muddy Roads and my flour condemned (qted. in Majewski 46). By 1860, however, Americas infrastructure had so greatly improved that the country was in the throes of a major economic transformation. On the eve of the Civil War, writes Peter Way, the United States, although still largely an agricultural nation, was competitive, market-driven and increasingly dominated by relatively large business organizations fueled by multitudes of unattached workers

Nora Should Stay essays

Nora Should Stay essays Ibsen made a very controversial act, by having Nora leave her husband and her family. After first reading the play I thought that what Nora did was the right thing to do. But after thinking about I now realize that wasn't the right thing to do. Yes, Torvald was not the best husband in the world, but Nora should have considered that before she married him. To turn your back on your spouse is one thing, but to turn your back on your children is another. Nora was around in an era were women were looked down upon, not considered equal to men, so it would be hard for her to find a job. If Nora were to leave her Torvald she would have no were to go. Nora was a doll all of her life, first to her father then to Torvald, if she were to leave more then likely she would just become someone else's doll. Torvald was not the best husband in the world, but Nora chose to marry him. Nora never really got a chance to know Torvald. Torvald had his eye on Nora from the beginning. So he help her father and for that Nora was grateful, and thus became Mr. & Mrs. Helmer. It sounds like a very romantic story, but little did Nora know what would be in store for her. Torvald treated Nora like she was his child, I guess that is because he took no part in raising his children the he and Nora had together. If Nora would have taken the time to find out if Torvald was the one for her, then maybe it wouldn't have taken her eight years to realize that she never really loved him. If you are unhappy in your home then you leave your spouse, but you are never to leave your children. Even though Nora never really spent much time with her children she loved them to death. When Nora finally decided to turn her back on Torvald she decided to turn her back on her children as well. It might not have affected the children right away, but eventually it would have. Girls need a women figure to talk to about female things. Not only that but if Nora left and then later on down the ...

Gladiators essays

Gladiators essays Throughout history the gladiatorial games found great distinction and prestige from any other type of entertainment of its time. The first games were held in Rome in 264 BC by the two sons of Junius Brutus Pera, as a type of commemorative service in their fathers honour. After these first games word spread and interest rose exponentially. At the first games there was a total of three matches, by the time Julius Caesar was in power he had promised 320 matches for his daughter. At this point it was no longer a religious ceremony but rather had become a political event to show the elites power. These commemorative games were only to be held twice a year during the winter and summer equinox. In general, gladiators were condemned criminals, prisoners of war or slaves that were purchased for the purpose of combat. There were also professional gladiators who were men which participated of their own free will in the games. Due to the enthusiasm and skill that they possessed history shows that the spectators much preferred to witness the free men battling then the enslaved ones. Men became gladiators because they gained immediate status in society even though the gladiatorial oath forced them to act as slaves to their master and "to endure branding, chains, flogging, or death by the sword" (Petronius Satyricon, 117.5), therefore the professional gladiators were known for their loyalty, courage and discipline. The men were willing to face this, not only for their status but also to gain popularity and wealth. Young Roman boys would always associate hang around with them and try and learn the tricks of the trade. These men easily attracted many matrons, for the women enjoyed having affairs with such prestigious men. These professionals were trained in private or imperial schools known as ludi. Men became specialists in combat techniques that could capture their opponents rather then kill them quickly, because after all they were t...

Patient Safety - QSEN Initiative Term Paper Example | Topics and Well Written Essays - 1250 words

Patient Safety - QSEN Initiative - Term Paper Example To enrich the quality of treatment given to patients, it was realized that nursing standards need to be raised and standardised. ‘Innovation in nursing education is the key to improving quality and safety.’(Enhancing Quality and Education in Nursing Education, 2012) Hence, the basic need was to provide nurses with the Knowledge, skills and Attitude (KSAs) by training the nursing faculties through the help of medical institutes.The nursing faculties then formally train the nurses, thus, improving nursing performance and quality. To resolve this issue, The Robert Wood Johnson Foundation (RWJF) laid foundations for a project, Quality and Safety Education for Nurses (QSEN) via phase-wise funding.Through RWJF, strategies and policies were developed and implemented to ensure that‘future nursing graduates develop competencies in patient-centered care, teamwork and collaboration, evidence-based practice, quality improvement, safety, and informatics’.(Enhancing Quali ty and Education in Nursing Education, 2012).According to ‘Integrating QSEN Competencies’, The QSEN project is categorized into three phases of action. 2005-2007 Phase I Pre-licensure Education 2007-2009 Phase II Graduate Education and Pilot School Collaborative 2009-2011 Phase III Faculty Development to Achieve Curriculum Integration The concern today is that there is stilllack of qualified, good-quality nursing staff in general (Hinshaw 2001). That can be roughly depicted as the growth in number of patients is much higher than the growth in patient-centered nursing staff. This lack extra burden on the existing system of nursing staff and institutions. Thus, during this shortage, it becomes a bigger challenge to conduct QSEN processes and ensure quality maintenance. The issue of shortage not only concerns the nursing staff, but it also exists in the number of nursing faculty that trains the nursing staff while utilizing QSEN standards. A future issue which can cause in efficiencies and counter-productivity is keeping in-check the size and number of trained nurses. When an institute produces its products in terms of trained individuals, credibility is often judged by quality of performance by the alumni. Hence, if there ever exists a period of low performances by nurses, the whole process will become counter-productive and might cease to be perceived as viable any more. The nursing leaders aim to take this initiative forward by stressing the importance of role-models in the nursing staff. During practical duty hours, role models are the figureheads who channel the treatment objectives and quality standards in the right way. They should be able to correct inappropriate processes while bringing the whole environment a positive air. It also serves to instigate a feeling of self-fulfilment in the nurses. Another step taken to enhance nursing environment is to allow nurses to take ownership of their specific wards. That means nurses can be allowed more control of their own wards and the nursing operations in the dedicated premises (Ford 2009). The very idea to develop and introduce the QSEN program to the nursing schools and healthcare system is a very commendable step. The three-phased project encircles the needs of the patients, the nurses and the faculty as well. For the betterment of patients in hospitals and hospital care, in general, it is of great significance Feedback and opinion-taking surveys area good inclusions to the QSEN project. This

Supplied case study examining understanding of key positive Essay

Supplied case study examining understanding of key positive psychological concepts in a service organisation - Essay Example the patients, especially in the field of mental health wherein â€Å"mental health services rely on human resources (staff) to a much greater degree than other medical and health disciplines (Thornicroft & Tansella, 1999 cited in World Health Organization (WHO), 2003). Since the mental health services are primarily delivered by the direct care providers (physicians, psychiatrists, nurses, aides, and alike), it is essential for them to not only have the competence but also be in their optimum health and well being to be efficient in providing positive services for better patient care and thus, greater productivity outcomes.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   In connection, this paper will emphasize the practices and services that will offer the organizational staff of Ontario Shores Centre for Mental Health Services ways to reach optimal health and well being that will show their improved competency needed in the delivery of better mental health services. Specifically, it is deemed significant to examine the benefits of positive psychological approaches in comparison to the current service-delivery trends of the hospital, as well as to identify the activities required to acquire these approaches, and to recognize the three key positive psychological concepts (among others) which must be utilized by the staff to reach the goals set by the organization of Ontario Shores.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Ontario Shores Centre for Mental Health Science or simply known as Ontario Shores is a public mental health institution formerly called as Whitby Mental Health Centre. Located at 700 Gordon Street, Whitby, Ontario, Canada, the hospital functions under the Public Hospital Act, the Mental Health Act, and other provincial and federal legislative enactments and offers a 329-bed capacity for its inpatient program along with its out-patient care services. The organization staff of the Ontario Shores is made up of 1, 100 employees oriented and mobilized at providing â€Å"leadership and exemplary mental health care

Birch Paper Case Essay Example for Free

Birch Paper Case Essay The division cant very well show a profit by putting in bids that dont even cover a fair share of overheadcosts,let alone give us a profit. Birch Paper Company was a medium-sized,partly integrated paper company, producing white and kraft papers and paperboard. A portion of its paperboard output was converted into corrugated boxes by the Thompson Division, which also printed and colored the outside surface of the boxes. Including Thompson,the companyhad four producingdivisions and a timberland division, which supplied part of the companyspulp requirements. For severalyears, eachdivision had beenjudged independently on the basis of its profit and return on investment. Top managementhad been working to gain effectiveresults from a policy of decentralizing responsibility and authority for all decisionsexcept those relating to overall companypolicy. The companys top officials believed that in the past few years the concept of decentralization had been applied successfullyand that the companysprofits and competitive position definitely had improved. The Northern Division had designeda special display box for one of its papers in conjunction with the ThompsonDivision, which was equippedto make the box. Thompsonsstaff for packagedesign and developmentspent several months perfecting the design, production methods,and materials to be used. Becauseof the unusual color and shape, these were far from standard. According to an agreement between the two divisions, the Thompson Division was reimbursed by the Northern Division for the cost of its design and developmentwork. When all the specificationswere prepared,the Northern Division askedfor bids on the box from the ThompsonDivision and from two outside companies. Each division manager was normally free to buy from whatever supplier he wished, and evenon saleswithin the company, divisions were expectedto meet the going market price if they wanted the business. During this period, the profit margins of such converters as the Thompson Division were being squeezed. Thompson,as did many other similar converters,bought its paperboard,and its function was to print, cut, and shapeit into boxes. Though it bought most of its materials from other Birch divisions, most of Thompsonssaleswere made to outside customers. If Thompsongot the order from Northern, it probably would buy its linerboard and corrugating medium from the Southern Division of Birch. The walls of a corrugated box This case was prepared by William Rotch under the supervision of Neil Harlan, Harvard Business School. Copyright 158-001. by the President and Fellows of Harvard College. Harvard Business School case i Case6-2 Birch PaperCompany 2 consist of outside and inside sheets of linerboard sandwiching the fluted corrugating medium. About 70 percent of Thompsons out-of-pocketcostof$400 for the order representedthe cost of linerboard and corrugating medium. Though Southern had beenrunning below capacity and had excess inventory, it quoted the market price, which had not noticeably weakenedas a result of the oversupply. Its out-of-pocket costs on both liner and corrugating medium were about 60 percent of the selling price. The Northern Division receivedbids on the boxesof $480 a thousand from the ThompsonDivision, $430 a thousand from West Paper Company,and $432 a thousand from Eire Papers,Ltd. Eire Papers offered to buy from Birch the outside linerboard with the specialprinting already on it, but would supply its own inside liner and corrugating medium. The outside liner would be supplied by the Southern Division at a price equivalent of $90 a thousand boxes,and it would be printed for $30 a thousand by the Thompson Division. Of the $30, about $25 would be out-of-pocketcosts. Since this situation appearedto be a little unusual, William Kenton, manager of the Northern Division, discussedthe wide discrepancy of bids with Birchs commercialvice president. He told the vice president:We sell in a very competitivemarket, where higher costscannot be passedon. How canwe be expectedto show a decent profit and return on investment if we have to buy our supplies at more than 10 percent over the going market? Knowing that Mr. Brunner on occasionin the past few months had beenunable to operate the Thompson Division at capacity,it seemedodd to the vice president that Mr. Brunner would add the full 20 percent overheadand profit chargeto his out-of-pocketcosts. When he was asked about this, Mr. Brunners answer was the statement that appears at the beginning of the case. He went on to say that having donethe developmentalwork on the box, and having receivedno profit on that, he felt entitled to a goodmarkup on the production of the box itself. The vice president explored further the cost structures of the various divisions. He remembereda comment that the controller had made at a meeting the week before to the effect that costs which were variable for one division could be largely fIXedfor the companyas a whole. He knew that in the absence of specific orders from top management Mr. Kenton would acceptthe lowest bid, which was that of the West Paper Companyfor $430. However,it would be possiblefor top managementto order the acceptance another bid if the situof ation warranted such action. And though the volume representedby the transactionsin questionwas less than 5 percent of the volume of any of the divisions involved, other transactions would conceivablyraise similar problemslater. Questions 1. Which bid should Northern Division acceptthat is in the best interests of Birch Paper Company? 2. Should Mr. Kenton acceptthis bid? Why or why not? 3. Should the vice president of Birch Paper Companytake any action? 4. In the controversydescribed,how,if at all, is the transfer price system dysfunctional? Doesthis problem call for somechange,or changes, the transin fer pricing policy of the overall firm? If so, what specific changesdo you suggest?

BonJours Basic Antifoundationalist Argument :: Philosophy Philosophical Papers

BonJour's 'Basic Antifoundationalist Argument' ABSTRACT: BonJour argues that there can be no basic empirical beliefs. But premises three and four jointly entail ‘BonJour’s Rule’ — one’s belief that p is justified only if one justifiably believes the premises of an argument that makes p highly likely — which, given human psychology, entails global skepticism. His responses to the charge of skepticism, restricting premise three to basic beliefs and noting that the Rule does not require ‘explicit’ belief, fail. Moreover, the Rule does not express an epistemic duty. Finally, his argument against this fails since it is false that if an experiential state has representational content, then it is in need of justification. I venture the diagnosis that BonJour mistook the representational content of a cognitive state for the assertive functional role of a belief. Foundationalism may well be false, but not for BonJour’s reasons. Laurence BonJour observes that critics of foundationalism tend to argue against it by objecting to "relatively idiosyncratic" versions of it, a strategy which has "proven in the main to be superficial and ultimately ineffective" since answers immune to the objections emerge quickly. (1) BonJour aims to rectify this deficiency. Specifically, he argues that the very soul of foundationalism, "the concept of a basic empirical belief," is incoherent. (2) This is a bold strategy from which we can learn even if, in the end, as I shall argue, it fails. But, first, what is foundationalism? A person's belief is ‘nonbasic’ just in case it is justified in virtue of its relation to other justified beliefs; it is ‘basic’ just in case it is justified but not in virtue of its relation to other justified beliefs. Foundationalism is the view that if one has a nonbasic belief, then — in the final analysis — it is justified in virtue of its relation to a basic belief. Basic beliefs comprise the foundation of a person's network of justified beliefs. Now to BonJour's argument. 1. The Argument Stated BonJour summarizes it like this: 1. Suppose, for reductio, that there are basic empirical beliefs. 2. A belief is justified only if there is a reason why it is likely to be true. 3. A belief is justified for a person only if he is in cognitive possession of such a reason. 4. A person is in cognitive possession of such a reason only if he believes with justification the premises from which it follows that the belief is likely to be true.

Gravity Assignment

You will be helping Galileo perform the experiment to determine if objects with different mass fall at the same, or different, rates in the air and in a vacuum. Before you conduct your experiment, you need to form a hypothesis. A hypothesis is a prediction of what you think will happen in the experiment. The hypothesis is a statement that describes â€Å"if† a certain set of circumstances are present â€Å"then† there will be a specific result that will occur.Record your hypothesis here: My hypothesis is that i think that the heavier ball will always drop first in the vacuumRecord the results from step one of the experiment (dropping the objects in the air):First trial: The big ball fell faster than the small ballSecond trial: The small ball fell faster than the featherThird trial: The big ball fell faster than the featherRecord the results from step two of the experiment (dropping the objects in a vacuum):First trial: The feather and the small ball hit the ground at th e same timeSecond trial:The big ball and the small ball hit the ground at the same timeThird trial: The bigger ball and the feather hit the ground at the exact same timeDid the experiment support your hypothesis? Using the data from your experiment, describe why you believe your hypothesis was either proven or disproven. My hypothesis wasnt proven because all the objects regarless of weight and acceleration all hit the ground at the exact same rate and time.What forces were acting on the objects dropped in the air? What force was acting on the objects dropped in the vacuum? The force acting upon the objects dropped in the air was air resistance and gravity. The force acting upon the objects dropped in the vacuum was gravity only.Part two: Comparing ForcesChoose two forces and compare and contrast these forces. You must provide two ways that they are alike and two ways that they are different. You may make a list, write in paragraph form, or make a chart. The strong nuclear is differ ent from the weak nuclear because the strong nuclear holds an atoms nucleus together and a weak nuclear governs nuclear decay and radioactivity.Strong nuclear is the strongest of the four forces where as the weak nuclear is the second weakest of all four forces. There alike because they both have a short range of force and there particles and subatomic particles experience the same forceChoose two forces and compare and contrast these forces. These must be different forces than used in the prior question. Provide two ways that they are similar and two ways that they are different. You may make a list, write it out, or make a chart.Gravity is different from electro-magnetism because gravity is the attraction between objects with mass and electro-magnetismis the attraction or repulsion between electrically charged particles. Gravity is the weakest of the four forces and electro-magnetism is the second strongest of the four forces. there alike because they both have infinity range of f orce and they both attract forces

Managing Financial Resources and Decisions

Executive summary This report is to propose an appropriate capital structure for Xpresso Delight Limted’s business expansion with the minimum amount of capital as US$ 30 million. In order to achieve that goal, firstly, it is going to identify the sources of finance available for the business as debt financing which include loans, debentures and bonds; and equity financing, which includes common shares, preference shares and retained profit.It is also to discuss advantages & disadvantages of each source, as well as to assess the implications of these different sources related to risk, legal, financial and dilution of control and bankruptcy. Based on those analyses, it is to select the appropriate sources of finance for the project including retained profit, common and preference shares and loans. What’s more, the costs involved with each source will be assessed and compared in order to form the best alternative of capital structure.There are three options of capital stru cture proposed: †¢ 50% debt financing; and 50% equity including 80% common share and 20% preference shares †¢ 25% debt financing; and 75% equity financing including 80% common shares and 20% preference shares †¢ 10% debt financing; and 90% equity financing including 80% common shares and 20% preference shares Besides, this report is also to mention and explain the importance of financial planning for Xpresso Limited. CONTENTS Page 1.Cover Sheet †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦ 1 2. Executive Summary †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦4 3. Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ â⠂¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦.. 7 4. Main Body†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦ 8 4. 1 Available various sources of finance†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 8 4. 1. 1. Debt financing†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 8 4. 1. 1. 1. Loans†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦8 4. 1. 1. 2. Debentures†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â ‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦8 4. 1. 1. 3. Bonds†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 9 4. 1. 2. Equity financing†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. 9 4. 1. 2. 1. Issued share capital†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦9 4. 1. 2. 2.Retained profit & other reserves†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 10 4. 2. Assessment of the implications of sources†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦10 4. 2. 1. Debt financing†¦Ã¢â‚¬ ¦Ã¢â ‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦. 10 4. 2. 1. 1. Debentures†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 11 4. 2. 1. 2. Bonds†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 12 4. 2. 2. Equity financing†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦.. 12 4. 2. 2. 1. Issued shares†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦12 4. 2. 2. 1. 1. Common shares†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã ¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 12 4. 2. 2. 1. 2. Preference shares†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 13 4. 2. 2. 2. Retained profit†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦13 4. 3. Selection of appropriate sources & The assessment and comparison for costs†¦. 4 4. 3. 1. Appropriate sources of finance†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦14 4. 3. 2. Costs of sources†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦14 4. 3. 2. 1. Retained profit†¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚ ¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 14 4. 3. 2. 2. Issued shares†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦14 4. 3. 2. 3. Loans†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 15 4. 3. 3. Options of capital structure†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 15 4. 3. 3. 1. First structure†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 15 4. 3. 3. 2. Second structure†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦. †¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 16 4. 3. 3. 3. Third structure†¦Ã¢â‚¬ ¦Ã¢ € ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦16 4. 4. The financial planning †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦17 4. 4. 1. Definition†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦17 4. 4. 2. Importance for Xpresso Limited†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 17 4. 4. 3. Shortage & surplus of capital: †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 17 5. Conclusion . †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 19 6. Appendix †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 20 7. References†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦21 3. INTRODUCTION: Xpresso Delight Limited is a publicly listed company in Australia Stock Exchange with the headquarter is based in Hanoi, Vietnam. Xpresso Delight Limited is majority owned (51% stake) by Chief Executive Officer (CEO), Mr.Nguyen Dong Khoa. The company has 30 cafes concentrated mainly in big cities in Vietnam like Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, Can Tho and so on. With many advantages such as the growing affluence of coffee culture, the incre asing expatriates population in Vietnam, and even the government’s pro-business policies; Xpresso limited believes that there is an immense market potential in the emerging Vietnam, which encourages it to embark on an ambitious plan of expanding, opening at least 20 cafes each year for the next five years in the various parts of the country.The company issues two kinds of share including ordinary shares (par value US$ 1 per share), which are currently traded at US$ 2. 50 per share; and preference shares, which are currently traded at US$ 52 per share in Australia Stock Exchange. Its corporate tax rate is 25% at present but is expected to go down. With strong earnings growth projected at a constant 15% per annum in the future, Xpresso Delight Limited is expected to pay out US$ 0. 30 per share as ordinary dividend in the next financial year while a constant preference dividend is US$ 5 per share per year.The average flotation cost for the new issue of ordinary shares and prefer ence shares are 17% and 10% of the gross proceeds respectively. For new issue of ordinary shares and preference shares, Xpresso Delight Limited’s issue price will be set at their respective current market price as traded in the Australia Stock Exchange. Xpresso Delight Limited’s before-tax cost of debt is 15%. 4. MAIN BODY: 1. Available various sources of finance: In the case of Xpresso Limited, as a large company with stable profit growth looking for capital to expand, it is only necessary for long-term financing to be taken into account.Therefore, there are two principal sources of finance available to Xpresso Limited including debt and equity financing. 4. 1. 1. Debt financing: In regards to debt financing, the simplest meaning is borrowing money on credit with a promise to repay the amount borrowed, plus interest18. There are many types of debt financing, including borrowing from banks in terms of loans; or borrowing from investors in terms of debentures, bonds 4. 4. 1. 1. 1. Loans: A loan is a financial transaction in which one party – the lender – agrees to give another party – the borrower an amount of money which must be paid back in full16.With a good finance profile and the support of Vietnam government pro-business policies, it is easier for Xpresso Limited to borrow from commercial banks such as Vietcombank, VietinBank and so on. For example, the supportive interest rate of loans in Vietnam at present is fluctuating between 5 and 6 percent per year14, therefore if Xpresso Limited. borrows US$ 10,000, the interest it has to pay back will be between US$ 500 and US$ 600. 4. 1. 1. 2. Debentures: It is a channel for Xpresso to mobilize capital from investors setting out the terms of loans, backed by its reputation but not collateral12.Investors can be individuals, Vietnam and foreign financial institutions such as VinaCapital, BankInvest and so on; and even Vietnam commercial banks are the main investors in organizatio nal debentures. Because of its high standing in the market, investors and other creditors are willing to purchase once Xpresso Limited issues debentures. As in the Vietnam present market , the common interest rate of debentures issued by enterprises is 12. 5 percent per year11, if Xpresso issues debentures of US$ 10 million for 5 years, it has to pay investors the total interest of US$ 6. 5 million. 4. 1. 1. 3. Bonds: Bonds are large debts which are usually paid off over a period of 10 to 35 years1. Simply explaining, in bond financing, Xpresso mobilizes capital from investors instead of banks by selling bonds to them with a promise to pay back with interest, according to specified schedules8. As an example, if Xpresso issues bonds at an interest rate of 6%, the interest over 20 years would be about US$ 0. 73 for each dollar borrowed. 4. 1. 2. Equity financing:In terms of equity financing, equity capital generally is composed of funds that are raised by Xpresso in exchange for an ow nership interest in the company17. Since it is owner’s equity, the company does not have to worry about any liability to repay interest or loans for other parties. There are two major sources of equity financing including issued share capital and retained profit & other reserves12. 4. 1. 2. 1. Issued share capital: Issued share capital is capital that is subscribed by shareholders when they purchase shares Xpresso Limited issues, including common and preference shares4.Common shares are shares issued to the general public in the stock market, while preference shares are shares issued to some special people (for example, banks or specific institutions)2. 4. 1. 2. 2. Retained profit & other reserves: Retained profit is simply profit that has been kept within Xpresso Limited rather than paid out to shareholders as dividends 2. 2. Assessment of the implications of sources of finance to Xpresso Delight Limited related to risk, legal, financial and dilution of control and bankruptc y: 4. 2. 1. Debt financing:As being categorized in debt financing, those various types including loans, debentures and bonds have some implications to Xpresso in similarity, which are going to be discussed below. There are many advantages of Xpresso Limited for using debt financing. There is no dilution of control since the creditors have no authority in running the company but just involve in the money they invest; and they usually do not participate in the superior earnings of the company either as the cost of debts is limited 13. The most important advantage is tax relief on interest as it is considered one kind of expenses3.For example, if Xpresso Limited borrows US$ 10,000 at the interest rate of 5%, it will have to pay the interest of US$ 500 but will be reduced US$ 500 in the tax-incurred income. What’s more, in time of inflation, debts may be paid back with â€Å"cheaper pesos†13 since the money becomes worth less. To the existing shareholders, one advantage is when Xpresso Limited unfortunately goes broke, they may lose their investment but other personal possessions are safe 2. However, using debt financing also has disadvantages. Obviously, debts add risk to the company12.There is a risk of not having enough money to pay by the maturity date or if the earnings of Xpresso Limited fluctuate 12; either of which easily makes the company become bankruptcy. To add more, the legal of debt financing in Vietnam is relatively complicated 2, and certain managerial prerogatives are usually given up in the bond’s indenture contract (for example, specific ratios must be kept above a certain level during the term of the loan)13. Besides, debentures and bonds also have their own characteristics. 4. 2. 1. 1. Debentures:One advantage of using debenture financing is that Xpresso Limited does not have to give collateral9. However, it also has disadvantages as it must compete with government loan stocks (gilts), what are the dominant type of debentu res in Vietnam market, so the company must generally offer a higher rate of interest than the one on gilts to attract investors4. The legal issue of debentures that Xpresso Limited has to concern is that if a bond defaults, investors are entitled to the liquidation proceeds of property bought with the money they invest (by purchasing debentures)5. . 2. 1. 2. Bonds: Bonds have fixed interest and are issued for long-term1. One advantage of using bond is that substantial flexibility in the financial structure is enhanced by debt through the inclusion of call provisions in the bond indenture13. In case of financial distress, bondholders have greater claims of the issuer’s income than shareholders6. 4. 2. 2. Equity financing: 4. 2. 2. 1. Issued shares: The legal aspect involved is that shareholders are also owners of the company4.Therefore, the business ownership is diluted and it is possible to lose the control of the business for investors. However, there is also an advantage th at there is large potential membership to provide capital and to share risks of loss, bankruptcy and so on. There is a part of profit of the company distributed to shareholders as dividends. One significant advantage of using issued share capital is that Xpresso may withhold the dividend if profits are insufficient. One disadvantage is that cash dividends are not tax deductible. 13) Besides, each type of shares also has its own characteristics. 4. 2. 2. 1. 1. Common shares: The advantages of using common shares are that common dividend is based on profits when so that Xpresso Limited is free from worrying about not having enough money to pay; there is no fixed maturity date for repayment of the capital; and the sale of common shares is frequently more attractive to investors than debts as its value grows with the success of the firm11. However, there are disadvantages as well. Shareholders ave right to vote, therefore the shareholders’ control and share in earnings are usuall y diluted13. If Xpresso decides to issue common shares, the stake of CEO (51% at present) will be reduced as the number of shares increases. In terms of finance, issuance of common shares requires higher underwriting costs; and the average cost of capital may increase above the optimal level when too much equity is issued13. 4. 2. 2. 1. 2. Preference shares: Legally, like common share, preference shares represent a part of ownership or equity of Xpresso Limited4.What’s more, in case of financial distress, claims of preference shareholders must be satisfied before common shareholders receive anything13. There is no default risk since non-payment of dividends does not necessarily mean bankruptcy. Preference dividend is fixed so that the company can plan to pay. Preference shareholders have no voting rights except in case of financial distress, which means there is no dilution of control. Call features and provision of sinking may be included so Xpresso may replace the issue if interest rates decline.There is one disadvantage that preference shares involve cumulative feature, which means in case Xpresso Limited does not have money to pay dividends in a particular year, the dividend keeps getting added to the next years’ dividend until the it is able to pay. (13) 4. 2. 2. 2. Retained profit: There are advantages to using retained profit as a form of finance due to the absence of brokerage costs (for example, merchant banks’ fees), its simplicity and flexibility, and all gains from investment will still ultimately belong to existing shareholders13.Besides, there are disadvantages as shareholders’ expectation of dividends may present a problem or insufficient earnings may be available4. 4. 3. Selection of appropriate sources of finance for a business project & assessment and comparison for various cost involved for each sources: 4. 3. 1. Appropriate sources of finance: As discussed above, it is proposed that Xpresso Delight Limited should use equity financing in forms of retained profit, issued share capital and debt financing in forms of loans in the capital structure.The main source that should be included is retained earning since it is the solidest source and has the least risk to the firm3. Issued shares and loans are the next choices as they bring many opportunities and a relatively reasonable number of risks as well as liabilities. 4. 3. 2. Costs of sources: 4. 3. 2. 1. Retained profit: Costs of retained earnings include fixed expenses such as wages, rent, materials, electricity and so on; tax cost; dividends (dividends are a cost of retained earnings as well as a cost of share capital); certain costs if invested in the short term as not needed immediately; and also opportunity costs4. . 3. 2. 2. Issued shares: Costs of the issued share capital include flotation costs, dividends (cash dividend and scrip dividends- dividends in the form of new shares); cost of providing shareholders or owners with information about the performance of the business such as the cost of glossy financial reports, Annual General Meetings, audit fees and the administrative costs of company with legal and Stock Exchange requirements for disclosure of information to shareholders; and also certain costs associated with investing them if not needed immediately4. 4. 3. 2. 3. Loans:Loans have interest as the main cost. The rate of interest may either be fixed or variable but in the case of Xpresso Limited it is fixed. There are also other costs including an initial arrangement fee to cover lender’s administrative costs on setting up the loan (checking references, setting up data on a computer system and so on); factors charge commission for advancing funds; non-financial costs involved in the relationship between the company and creditors (for example, Xpresso will be required to provide the creditor with regular information about the performance of the business)4.That kind of non-financial cost may create the uncomfortable feeling of being watched for the owner. Opportunity cost is also included in this case as well. For instance, instead of paying interest of US$ 10,000 a year the business could do something else with that US$ 10,000 that might help generate income. 4. 3. 3. Options of capital structure: There are three alternative capital structures that could be taken into account. Based on the comparison between their advantages and disadvantages, the most appropriate structure would be chosen. . 3. 3. 1. First structure: For the first structure, it is to use 50% debt financing; and 50% equity including 80% common share and 20% preference shares. That means US$ 15 million of debts, and US$ 15 million of equity including US$ 12 million of common shares and US$ 3 million of preference shares. The costs of sources are: Rf = US$ 0. 167 million Rc = US$ 1. 84 million Rd = US$ 1. 69 million The total cost is: 0. 167 + 1. 84 + 1. 69 = 3. 697 (US$ million) 4. 3. 3. 2. Second structure:The s econd structure is to use 25% debt financing; and 75% equity financing including 80% common shares and 20% preference shares. That means US$ 7. 5 million of debts, US$ 22. 5 million of equity including US$ 18 million of common shares and US$ 4. 5 million of preference shares. The costs of sources are: Rf = US$ 0. 25 million Rc = US$ 2. 81 million Rd = US$ 0. 84 million The total cost is: 0. 25 + 2. 81 + 0. 84 = 3. 9 (US$ million) 4. 3. 3. 3. Third structure: The third structure includes 10% debt financing; and 90% equity financing including 80% common shares and 20% preference shares.That means US$ 3 million of debts, and US$ 27 million of equity including US$ 21. 6 million of common shares and US$ 5. 4 million of preference shares. The costs of sources are: Rf = US$ 0. 3 million Rc= US$ 3. 32 million Rd = US$ 0. 34 million The total cost is: 0. 3 + 3. 32 + 0. 34 = 3. 96 (US$ million) As comparing the costs and the advantages & disadvantages of the three structures, it is to be said that the second structure is the best capital structure to apply for Xpresso Limited.Because although it does not has the lowest cost, the proportions of sources of finance included are the most appropriate option as the percentage of debts used (25%) is not too high for adding risks to the company but also ensures for the financial leverage (the tax relief) to be used. In addition, the cost of finance in this structure is still relatively low. 4. 4. The financial planning: 4. 4. 1. Definition: In general, financial planning is the process of developing strategies to help you manage your financial affairs so you can build wealth, enjoy life and achieve financial security5. . 4. 2. Importance for Xpresso Limited: Financial planning involves achieving a balance between the requirements to minimize the risk of not having cash to pay creditors and the requirements to maximize the earnings made by using assets4. It plays a very important role in helping Xpresso co-ordinate and organize the internal system, set up detailed plans for using resources, as well as for paying debts and liabilities, develop strategies, and finally prepare for any potential incidents in the future7. For Xpresso, every transaction has to be well-planned to run the business efficiently. . 4. 3. Shortage & surplus of capital: Capital surplus- the amounts of directly contributed equity capital in excess of the par value13 – has a large impact on Xpresso Limited as it can be used to distribute as bonus dividends to shareholders, to reinvest as owner’s equity and it also helps to reduce the cost of capital mobilizing9. It helps gain more prestige for Xpresso but also gives more pressure on the management as they have a duty to use it effectively. Capital is one factor of production, therefore its shortage makes difficulties for Xpresso to operate and develop efficiently4.Even it can lead to bankruptcy if capital shortage is too large. 5. CONCLUSION: It can be said that each and ev ery source of finance has both advantages and disadvantages. The aim is to make use of the advantages and also to avoid the disadvantages of all sources. The best capital structure is to combine the appropriate sources to make the best use for the company. To conclude, the capital structure proposed is to use 25% debt financing and 75% equity financing including 80% common shares and 20% preference shares in estimated US$ 30 million of capital.The cost of finance is US$ 3. 9 million. The structure has a relatively cost of finance and also ensures to make use of all advantages as well as minimizes all disadvantages of sources of finance used for expansion. As preparing a detailed and well-organized financial planning, there is a high rate of success for the expansion and other further developments of Xpresso Delight Limited Company. Appendix 1. Formula of cost debts: + Before-tax cost: Rdt = debts x 15% + After-tax cost: Rd = Rdt x (1 – t) Rd : After-tax cost Rdt : Before-tax cost t : Corporate tax rate (t = 25%) . Formula of cost of issuing shares: 1. Cost of issuing common shares: Rc = Dc / Pc (1 – ec) + g Dc : dividend per share (Dc= US$ 0. 3) Pc : value per share (Pc= US$ 1) ec : flotation cost for ordinary share (ec= 17%) g: rate of earnings growth (g= 15%) 2. Cost of issuing preference shares: Rf = Df / Pf (1 – ef) Df : dividend per share (Df = US$ 5) Pf : value per share (Pf = US$ 1) ef : flotation cost for preference (ef= 10%) Reference: 1. City & County of San Francisco (2002) Bond Financing Basics. San Francisco: Controller’s office 2.Communist party of Vietnam (2005) Procedure of borrowing from Vietnam bank for agriculture and rural development [online]. Updated 20 June 2005 [accessed 29 November 2009]. Available from: http://www. cpv. org. vn/cpv/Modules/News/NewsDetail. aspx? co_id=30592&cn_id=223635 3. Edexcel HNC&HND business (2004) Business environment, London: BPP professional Education 4. Edexcel HNC&HND business (2 004) Managing financial resources and decisions, London: BPP professional Education 5. Financial News (1996) [online]. eFinancialNews Ltd [cited 26 October 2009] .Available from Internet: http://www. efinancialnews. com/&sc=TWTAM000GS 6. Financial planning defined (2005) [online] Financial Planning Association [cited 25 October 2009]. Available from Internet: http://www. fpa. asn. au/FPA_Content. aspx? Doc_id=1056 7. Hong, P. (2007) Capital surplus- to distribute or not?. Saga [online]. Accession No. 362/GP-BC, 10 October, [cited 1 December 2009]. Available from: http://www. saga. vn/Luatkinhdoanh/Luattrongnuoc/6794. saga 8. Hong, S. (2009) Organizational debentures attractive to foreign Managing Financial Resources and Decisions Executive summary This report is to propose an appropriate capital structure for Xpresso Delight Limted’s business expansion with the minimum amount of capital as US$ 30 million. In order to achieve that goal, firstly, it is going to identify the sources of finance available for the business as debt financing which include loans, debentures and bonds; and equity financing, which includes common shares, preference shares and retained profit.It is also to discuss advantages & disadvantages of each source, as well as to assess the implications of these different sources related to risk, legal, financial and dilution of control and bankruptcy. Based on those analyses, it is to select the appropriate sources of finance for the project including retained profit, common and preference shares and loans. What’s more, the costs involved with each source will be assessed and compared in order to form the best alternative of capital structure.There are three options of capital stru cture proposed: †¢ 50% debt financing; and 50% equity including 80% common share and 20% preference shares †¢ 25% debt financing; and 75% equity financing including 80% common shares and 20% preference shares †¢ 10% debt financing; and 90% equity financing including 80% common shares and 20% preference shares Besides, this report is also to mention and explain the importance of financial planning for Xpresso Limited. CONTENTS Page 1.Cover Sheet †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦ 1 2. Executive Summary †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦4 3. Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ â⠂¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦.. 7 4. Main Body†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦ 8 4. 1 Available various sources of finance†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 8 4. 1. 1. Debt financing†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 8 4. 1. 1. 1. Loans†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦8 4. 1. 1. 2. Debentures†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â ‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦8 4. 1. 1. 3. Bonds†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 9 4. 1. 2. Equity financing†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. 9 4. 1. 2. 1. Issued share capital†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦9 4. 1. 2. 2.Retained profit & other reserves†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 10 4. 2. Assessment of the implications of sources†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦10 4. 2. 1. Debt financing†¦Ã¢â‚¬ ¦Ã¢â ‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦. 10 4. 2. 1. 1. Debentures†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 11 4. 2. 1. 2. Bonds†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 12 4. 2. 2. Equity financing†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦.. 12 4. 2. 2. 1. Issued shares†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦12 4. 2. 2. 1. 1. Common shares†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã ¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 12 4. 2. 2. 1. 2. Preference shares†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 13 4. 2. 2. 2. Retained profit†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦13 4. 3. Selection of appropriate sources & The assessment and comparison for costs†¦. 4 4. 3. 1. Appropriate sources of finance†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦14 4. 3. 2. Costs of sources†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦14 4. 3. 2. 1. Retained profit†¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚ ¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 14 4. 3. 2. 2. Issued shares†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦14 4. 3. 2. 3. Loans†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 15 4. 3. 3. Options of capital structure†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 15 4. 3. 3. 1. First structure†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 15 4. 3. 3. 2. Second structure†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦. †¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 16 4. 3. 3. 3. Third structure†¦Ã¢â‚¬ ¦Ã¢ € ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦16 4. 4. The financial planning †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦17 4. 4. 1. Definition†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦17 4. 4. 2. Importance for Xpresso Limited†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 17 4. 4. 3. Shortage & surplus of capital: †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 17 5. Conclusion . †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 19 6. Appendix †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 20 7. References†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦21 3. INTRODUCTION: Xpresso Delight Limited is a publicly listed company in Australia Stock Exchange with the headquarter is based in Hanoi, Vietnam. Xpresso Delight Limited is majority owned (51% stake) by Chief Executive Officer (CEO), Mr.Nguyen Dong Khoa. The company has 30 cafes concentrated mainly in big cities in Vietnam like Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, Can Tho and so on. With many advantages such as the growing affluence of coffee culture, the incre asing expatriates population in Vietnam, and even the government’s pro-business policies; Xpresso limited believes that there is an immense market potential in the emerging Vietnam, which encourages it to embark on an ambitious plan of expanding, opening at least 20 cafes each year for the next five years in the various parts of the country.The company issues two kinds of share including ordinary shares (par value US$ 1 per share), which are currently traded at US$ 2. 50 per share; and preference shares, which are currently traded at US$ 52 per share in Australia Stock Exchange. Its corporate tax rate is 25% at present but is expected to go down. With strong earnings growth projected at a constant 15% per annum in the future, Xpresso Delight Limited is expected to pay out US$ 0. 30 per share as ordinary dividend in the next financial year while a constant preference dividend is US$ 5 per share per year.The average flotation cost for the new issue of ordinary shares and prefer ence shares are 17% and 10% of the gross proceeds respectively. For new issue of ordinary shares and preference shares, Xpresso Delight Limited’s issue price will be set at their respective current market price as traded in the Australia Stock Exchange. Xpresso Delight Limited’s before-tax cost of debt is 15%. 4. MAIN BODY: 1. Available various sources of finance: In the case of Xpresso Limited, as a large company with stable profit growth looking for capital to expand, it is only necessary for long-term financing to be taken into account.Therefore, there are two principal sources of finance available to Xpresso Limited including debt and equity financing. 4. 1. 1. Debt financing: In regards to debt financing, the simplest meaning is borrowing money on credit with a promise to repay the amount borrowed, plus interest18. There are many types of debt financing, including borrowing from banks in terms of loans; or borrowing from investors in terms of debentures, bonds 4. 4. 1. 1. 1. Loans: A loan is a financial transaction in which one party – the lender – agrees to give another party – the borrower an amount of money which must be paid back in full16.With a good finance profile and the support of Vietnam government pro-business policies, it is easier for Xpresso Limited to borrow from commercial banks such as Vietcombank, VietinBank and so on. For example, the supportive interest rate of loans in Vietnam at present is fluctuating between 5 and 6 percent per year14, therefore if Xpresso Limited. borrows US$ 10,000, the interest it has to pay back will be between US$ 500 and US$ 600. 4. 1. 1. 2. Debentures: It is a channel for Xpresso to mobilize capital from investors setting out the terms of loans, backed by its reputation but not collateral12.Investors can be individuals, Vietnam and foreign financial institutions such as VinaCapital, BankInvest and so on; and even Vietnam commercial banks are the main investors in organizatio nal debentures. Because of its high standing in the market, investors and other creditors are willing to purchase once Xpresso Limited issues debentures. As in the Vietnam present market , the common interest rate of debentures issued by enterprises is 12. 5 percent per year11, if Xpresso issues debentures of US$ 10 million for 5 years, it has to pay investors the total interest of US$ 6. 5 million. 4. 1. 1. 3. Bonds: Bonds are large debts which are usually paid off over a period of 10 to 35 years1. Simply explaining, in bond financing, Xpresso mobilizes capital from investors instead of banks by selling bonds to them with a promise to pay back with interest, according to specified schedules8. As an example, if Xpresso issues bonds at an interest rate of 6%, the interest over 20 years would be about US$ 0. 73 for each dollar borrowed. 4. 1. 2. Equity financing:In terms of equity financing, equity capital generally is composed of funds that are raised by Xpresso in exchange for an ow nership interest in the company17. Since it is owner’s equity, the company does not have to worry about any liability to repay interest or loans for other parties. There are two major sources of equity financing including issued share capital and retained profit & other reserves12. 4. 1. 2. 1. Issued share capital: Issued share capital is capital that is subscribed by shareholders when they purchase shares Xpresso Limited issues, including common and preference shares4.Common shares are shares issued to the general public in the stock market, while preference shares are shares issued to some special people (for example, banks or specific institutions)2. 4. 1. 2. 2. Retained profit & other reserves: Retained profit is simply profit that has been kept within Xpresso Limited rather than paid out to shareholders as dividends 2. 2. Assessment of the implications of sources of finance to Xpresso Delight Limited related to risk, legal, financial and dilution of control and bankruptc y: 4. 2. 1. Debt financing:As being categorized in debt financing, those various types including loans, debentures and bonds have some implications to Xpresso in similarity, which are going to be discussed below. There are many advantages of Xpresso Limited for using debt financing. There is no dilution of control since the creditors have no authority in running the company but just involve in the money they invest; and they usually do not participate in the superior earnings of the company either as the cost of debts is limited 13. The most important advantage is tax relief on interest as it is considered one kind of expenses3.For example, if Xpresso Limited borrows US$ 10,000 at the interest rate of 5%, it will have to pay the interest of US$ 500 but will be reduced US$ 500 in the tax-incurred income. What’s more, in time of inflation, debts may be paid back with â€Å"cheaper pesos†13 since the money becomes worth less. To the existing shareholders, one advantage is when Xpresso Limited unfortunately goes broke, they may lose their investment but other personal possessions are safe 2. However, using debt financing also has disadvantages. Obviously, debts add risk to the company12.There is a risk of not having enough money to pay by the maturity date or if the earnings of Xpresso Limited fluctuate 12; either of which easily makes the company become bankruptcy. To add more, the legal of debt financing in Vietnam is relatively complicated 2, and certain managerial prerogatives are usually given up in the bond’s indenture contract (for example, specific ratios must be kept above a certain level during the term of the loan)13. Besides, debentures and bonds also have their own characteristics. 4. 2. 1. 1. Debentures:One advantage of using debenture financing is that Xpresso Limited does not have to give collateral9. However, it also has disadvantages as it must compete with government loan stocks (gilts), what are the dominant type of debentu res in Vietnam market, so the company must generally offer a higher rate of interest than the one on gilts to attract investors4. The legal issue of debentures that Xpresso Limited has to concern is that if a bond defaults, investors are entitled to the liquidation proceeds of property bought with the money they invest (by purchasing debentures)5. . 2. 1. 2. Bonds: Bonds have fixed interest and are issued for long-term1. One advantage of using bond is that substantial flexibility in the financial structure is enhanced by debt through the inclusion of call provisions in the bond indenture13. In case of financial distress, bondholders have greater claims of the issuer’s income than shareholders6. 4. 2. 2. Equity financing: 4. 2. 2. 1. Issued shares: The legal aspect involved is that shareholders are also owners of the company4.Therefore, the business ownership is diluted and it is possible to lose the control of the business for investors. However, there is also an advantage th at there is large potential membership to provide capital and to share risks of loss, bankruptcy and so on. There is a part of profit of the company distributed to shareholders as dividends. One significant advantage of using issued share capital is that Xpresso may withhold the dividend if profits are insufficient. One disadvantage is that cash dividends are not tax deductible. 13) Besides, each type of shares also has its own characteristics. 4. 2. 2. 1. 1. Common shares: The advantages of using common shares are that common dividend is based on profits when so that Xpresso Limited is free from worrying about not having enough money to pay; there is no fixed maturity date for repayment of the capital; and the sale of common shares is frequently more attractive to investors than debts as its value grows with the success of the firm11. However, there are disadvantages as well. Shareholders ave right to vote, therefore the shareholders’ control and share in earnings are usuall y diluted13. If Xpresso decides to issue common shares, the stake of CEO (51% at present) will be reduced as the number of shares increases. In terms of finance, issuance of common shares requires higher underwriting costs; and the average cost of capital may increase above the optimal level when too much equity is issued13. 4. 2. 2. 1. 2. Preference shares: Legally, like common share, preference shares represent a part of ownership or equity of Xpresso Limited4.What’s more, in case of financial distress, claims of preference shareholders must be satisfied before common shareholders receive anything13. There is no default risk since non-payment of dividends does not necessarily mean bankruptcy. Preference dividend is fixed so that the company can plan to pay. Preference shareholders have no voting rights except in case of financial distress, which means there is no dilution of control. Call features and provision of sinking may be included so Xpresso may replace the issue if interest rates decline.There is one disadvantage that preference shares involve cumulative feature, which means in case Xpresso Limited does not have money to pay dividends in a particular year, the dividend keeps getting added to the next years’ dividend until the it is able to pay. (13) 4. 2. 2. 2. Retained profit: There are advantages to using retained profit as a form of finance due to the absence of brokerage costs (for example, merchant banks’ fees), its simplicity and flexibility, and all gains from investment will still ultimately belong to existing shareholders13.Besides, there are disadvantages as shareholders’ expectation of dividends may present a problem or insufficient earnings may be available4. 4. 3. Selection of appropriate sources of finance for a business project & assessment and comparison for various cost involved for each sources: 4. 3. 1. Appropriate sources of finance: As discussed above, it is proposed that Xpresso Delight Limited should use equity financing in forms of retained profit, issued share capital and debt financing in forms of loans in the capital structure.The main source that should be included is retained earning since it is the solidest source and has the least risk to the firm3. Issued shares and loans are the next choices as they bring many opportunities and a relatively reasonable number of risks as well as liabilities. 4. 3. 2. Costs of sources: 4. 3. 2. 1. Retained profit: Costs of retained earnings include fixed expenses such as wages, rent, materials, electricity and so on; tax cost; dividends (dividends are a cost of retained earnings as well as a cost of share capital); certain costs if invested in the short term as not needed immediately; and also opportunity costs4. . 3. 2. 2. Issued shares: Costs of the issued share capital include flotation costs, dividends (cash dividend and scrip dividends- dividends in the form of new shares); cost of providing shareholders or owners with information about the performance of the business such as the cost of glossy financial reports, Annual General Meetings, audit fees and the administrative costs of company with legal and Stock Exchange requirements for disclosure of information to shareholders; and also certain costs associated with investing them if not needed immediately4. 4. 3. 2. 3. Loans:Loans have interest as the main cost. The rate of interest may either be fixed or variable but in the case of Xpresso Limited it is fixed. There are also other costs including an initial arrangement fee to cover lender’s administrative costs on setting up the loan (checking references, setting up data on a computer system and so on); factors charge commission for advancing funds; non-financial costs involved in the relationship between the company and creditors (for example, Xpresso will be required to provide the creditor with regular information about the performance of the business)4.That kind of non-financial cost may create the uncomfortable feeling of being watched for the owner. Opportunity cost is also included in this case as well. For instance, instead of paying interest of US$ 10,000 a year the business could do something else with that US$ 10,000 that might help generate income. 4. 3. 3. Options of capital structure: There are three alternative capital structures that could be taken into account. Based on the comparison between their advantages and disadvantages, the most appropriate structure would be chosen. . 3. 3. 1. First structure: For the first structure, it is to use 50% debt financing; and 50% equity including 80% common share and 20% preference shares. That means US$ 15 million of debts, and US$ 15 million of equity including US$ 12 million of common shares and US$ 3 million of preference shares. The costs of sources are: Rf = US$ 0. 167 million Rc = US$ 1. 84 million Rd = US$ 1. 69 million The total cost is: 0. 167 + 1. 84 + 1. 69 = 3. 697 (US$ million) 4. 3. 3. 2. Second structure:The s econd structure is to use 25% debt financing; and 75% equity financing including 80% common shares and 20% preference shares. That means US$ 7. 5 million of debts, US$ 22. 5 million of equity including US$ 18 million of common shares and US$ 4. 5 million of preference shares. The costs of sources are: Rf = US$ 0. 25 million Rc = US$ 2. 81 million Rd = US$ 0. 84 million The total cost is: 0. 25 + 2. 81 + 0. 84 = 3. 9 (US$ million) 4. 3. 3. 3. Third structure: The third structure includes 10% debt financing; and 90% equity financing including 80% common shares and 20% preference shares.That means US$ 3 million of debts, and US$ 27 million of equity including US$ 21. 6 million of common shares and US$ 5. 4 million of preference shares. The costs of sources are: Rf = US$ 0. 3 million Rc= US$ 3. 32 million Rd = US$ 0. 34 million The total cost is: 0. 3 + 3. 32 + 0. 34 = 3. 96 (US$ million) As comparing the costs and the advantages & disadvantages of the three structures, it is to be said that the second structure is the best capital structure to apply for Xpresso Limited.Because although it does not has the lowest cost, the proportions of sources of finance included are the most appropriate option as the percentage of debts used (25%) is not too high for adding risks to the company but also ensures for the financial leverage (the tax relief) to be used. In addition, the cost of finance in this structure is still relatively low. 4. 4. The financial planning: 4. 4. 1. Definition: In general, financial planning is the process of developing strategies to help you manage your financial affairs so you can build wealth, enjoy life and achieve financial security5. . 4. 2. Importance for Xpresso Limited: Financial planning involves achieving a balance between the requirements to minimize the risk of not having cash to pay creditors and the requirements to maximize the earnings made by using assets4. It plays a very important role in helping Xpresso co-ordinate and organize the internal system, set up detailed plans for using resources, as well as for paying debts and liabilities, develop strategies, and finally prepare for any potential incidents in the future7. For Xpresso, every transaction has to be well-planned to run the business efficiently. . 4. 3. Shortage & surplus of capital: Capital surplus- the amounts of directly contributed equity capital in excess of the par value13 – has a large impact on Xpresso Limited as it can be used to distribute as bonus dividends to shareholders, to reinvest as owner’s equity and it also helps to reduce the cost of capital mobilizing9. It helps gain more prestige for Xpresso but also gives more pressure on the management as they have a duty to use it effectively. Capital is one factor of production, therefore its shortage makes difficulties for Xpresso to operate and develop efficiently4.Even it can lead to bankruptcy if capital shortage is too large. 5. CONCLUSION: It can be said that each and ev ery source of finance has both advantages and disadvantages. The aim is to make use of the advantages and also to avoid the disadvantages of all sources. The best capital structure is to combine the appropriate sources to make the best use for the company. To conclude, the capital structure proposed is to use 25% debt financing and 75% equity financing including 80% common shares and 20% preference shares in estimated US$ 30 million of capital.The cost of finance is US$ 3. 9 million. The structure has a relatively cost of finance and also ensures to make use of all advantages as well as minimizes all disadvantages of sources of finance used for expansion. As preparing a detailed and well-organized financial planning, there is a high rate of success for the expansion and other further developments of Xpresso Delight Limited Company. Appendix 1. Formula of cost debts: + Before-tax cost: Rdt = debts x 15% + After-tax cost: Rd = Rdt x (1 – t) Rd : After-tax cost Rdt : Before-tax cost t : Corporate tax rate (t = 25%) . Formula of cost of issuing shares: 1. Cost of issuing common shares: Rc = Dc / Pc (1 – ec) + g Dc : dividend per share (Dc= US$ 0. 3) Pc : value per share (Pc= US$ 1) ec : flotation cost for ordinary share (ec= 17%) g: rate of earnings growth (g= 15%) 2. Cost of issuing preference shares: Rf = Df / Pf (1 – ef) Df : dividend per share (Df = US$ 5) Pf : value per share (Pf = US$ 1) ef : flotation cost for preference (ef= 10%) Reference: 1. City & County of San Francisco (2002) Bond Financing Basics. San Francisco: Controller’s office 2.Communist party of Vietnam (2005) Procedure of borrowing from Vietnam bank for agriculture and rural development [online]. Updated 20 June 2005 [accessed 29 November 2009]. Available from: http://www. cpv. org. vn/cpv/Modules/News/NewsDetail. aspx? co_id=30592&cn_id=223635 3. Edexcel HNC&HND business (2004) Business environment, London: BPP professional Education 4. Edexcel HNC&HND business (2 004) Managing financial resources and decisions, London: BPP professional Education 5. Financial News (1996) [online]. eFinancialNews Ltd [cited 26 October 2009] .Available from Internet: http://www. efinancialnews. com/&sc=TWTAM000GS 6. Financial planning defined (2005) [online] Financial Planning Association [cited 25 October 2009]. Available from Internet: http://www. fpa. asn. au/FPA_Content. aspx? Doc_id=1056 7. Hong, P. (2007) Capital surplus- to distribute or not?. Saga [online]. Accession No. 362/GP-BC, 10 October, [cited 1 December 2009]. Available from: http://www. saga. vn/Luatkinhdoanh/Luattrongnuoc/6794. saga 8. Hong, S. (2009) Organizational debentures attractive to foreign

Government Regulatory and Legislative Organs The WritePass Journal

Government Regulatory and Legislative Organs Introduction Government Regulatory and Legislative Organs IntroductionNational Oil Spill Detection and Response Agency (NOSDRA)National Environmental Standard Regulatory Agency (NESREA)  Department of Petroleum Resources (DPR)Senate Committee on Environment and Ecology Rivers State Ministry of EnvironmentConclusionRelated Introduction In the previous chapter, the researcher’s interview with Shell’s regional manager for environmental affairs was presented. In this chapter I will firstly present my interviews with representatives of the three regulatory agencies in the Nigerian oil industry, namely; the Department of Petroleum Studies, the National Oil Spill Detection and Response Agency and the National Environmental Standards and Regulations Enforcement Agency. Secondly, interviews with agencies that collaborate with the three regulatory bodies or conduct oversight functions in the oil industry are presented. The organizations are the Nigerian Senate Committee on Environment and ecology and the Rivers State Ministry of Environment. National Oil Spill Detection and Response Agency (NOSDRA) The researcher was able to gain access to the an official representative of NOSDRA with the help of an introductory letter from the University of Leicester and acting Director General arranged for the researcher to interview a key department head for the purpose of this research.   Ã‚  Ã‚   NOSDRA is the sole agency with federal responsibility for regulating oil related environmental matters and is unique in not having responsibility for   non-oil industry related environmental matters as is the case for other environmental agencies in Nigeria. The roles of the organization were presented in Chapter two, so the.     Ã‚  Ã‚   The respondent was first asked to explain the statutory functions of NOSDRA. The official explained that the functions are regulated by the federal Ministry of Environment which has the overall mandate to protect and conserve the Nigerian environment while NOSDRA has responsibility for implementing various aspects of the national environmental policy, specifically     within the petroleum sector.   Ã‚   The respondent was asked how NOSDRA carried out its responsibilities of regulating the oil industry exactly. He noted that the basic responsibility of NOSDRA is to respond to any oil spill through reporting procedures. He explained further â€Å"By law, all oil spills irrespective of the quantity must be reported, and the oil companies usually abide by this requirement. However there are cases where oil companies may not know that they have a spill, and, where such spills occur, they are often reported by the community and then we   immediately inform the oil companies concerned who have first responsibility to organize remedial measures † (t13). The regulator also explained that his agency works in collaboration with others as part of a Joint Investigation Team (JIT). The team is comprised of the oil companies, the regulatory body and the state counterpart, the State Ministry of Environment and the host communities. The JIT jointly determine the cause of the spill. If the spill is the result of sabotage or third party interference, no compensation will be paid but the oil company concerned must make all reasonable efforts to take remedial action.   In cases where there is no third party interference, remedial action must be taken and the JIT will carry out a damage assessment and compensation must be paid accordingly.† (t13). The respondent also argued that the Joint Investigation Visit is necessary because â€Å"we have a peculiar situation in Nigeria.   In other parts   of the world oil spills would be almost certainly accidental   but here we have third party interference, that is oil bunkering, oil theft, sabotage and so on, so a joint investigation visit is necessary to ascertain the cause of the spill and the extent of the spread of the spill because, according section 11(c) of the Oil Pipeline Act of 1969, when a spill is caused by third party interference through vandalism or sabotage, the oil company that is operating in that area does not have to pay compensation but still has to take remedial action †(t13). A JIV approach is also necessary because of the poor levels of trust between the oil companies and the community. The community where the spill occurs may sometimes argue that the spill has been caused by equipment failure or human errors in maintenance while the oil company may also argue that it is sabotage or third party interference.   The senior official explained that according to the law â€Å"there are three ways of reporting oil spills, first by telephone so that we can immediately deploy our staff. Secondly, when it happens the community filled a form called from A when we get there we establish the cause and the extent of the spill and the facility owners are required to put remedial measures in place within the first 14 days, depending on the nature and extent we do remediation especially when the screening shows that it could have negative impact on human health and the environment† (t13). However, the official explained that in some cases it has not been possible to comply with the legal requirement to respond to a report of a spill within 24 hours and to put in place remedial measures within two weeks because of hostility from the community who sometimes delayed the response because of the belief that a delay would lead to a greater spill and the opportunity to claim more  Ã‚   compensation.   Ã¢â‚¬Å"In one instance, where the spill was caused by third party interference, the community took the company to the court to get an injunction restraining the facility owner from gaining access.   It took about four meetings before we could persuade the host community to remove the junction in the court before we could gain access to stop the spill. This process took about a month and half, imagine a breach leaking for that period, so those are some of the problems we face in   responding to oil spills in Nigeria† (t13). The local communities the respondent agued consider any oil spill on the environment as something of a bonanza, so they try to delay the response, and, in some cases, the Joint Investigation Team has to pay for ‘permits’ to enter the affected area, to access the facility to stop the source of the spill, resulting in increased environmental damage.   He pointed out that Joint investigation visits were therefore very difficult and complicated. The senior NOSDRA official noted that the claim by the community that JIV reports are sometimes ignored or altered under Oil Company’s pressure may not be â€Å"entirely correct, the reason being this is if we are part of the joint investigation team that carry out the joint investigation visit, if the diver goes down there and comes up with a report that it is equipment failure, obviously it is of upheld. It is not possible for a manager who sat in the office to say what is there, for instance I am there, am relying more o n the report submitted by my officer,   I may have the mental impression of what happen could be for instance pipeline licking or manifold under water, two reasons could be, It could be vandals who could divedown to alter   the pipelines but it is more probable that it is corrosion   because, the pipelines are   within an area that is perpetually   wet,   wet terrain were the rate of erosion will be very high† (t13). The senior regulator is also of the opinion that it is possible the water which is essentially salty may hasten the level of corrosion couple with the pressure inside and outside the pipelines there could be a pipeline enrapture. According to him this is more of equipment failure than third party interference. However, in some cases NOSDRA experience a situation where during the crisis time some people want to destroy pipeline and detonate dynamite by blowing them up and in such cases large spills are recorded and nobody knows it is sabotage or third party interference. Another angle according to the NOSDRA representative is that â€Å"in many cases where JIV’s are carried out host communities are very hostile and aggressive even when they know the cause is third party interference and may attempt to get the regulators to report that it is equipment failure because that is the only way compensation can be guaranteed. If you refuse, you may be attacked. Our approach in these situations is to remain calm and not release our findings until later from a less intimidating environment† (t13). I ask the NOSDRA official what are the main cause of oil spills in Nigeria. He cited statistics released by individual oil companies and the official statistics kept by NOSDRA since the inception of the agency in 2006 he claimed that third party interference has been the main cause of oil spills rather than equipment failure. â€Å"This was proved by individual companies and by aggregate of all, and of cause when people tell you they are going to blew up your pipelines and indeed they carry out the threat, so all of this is responsible for the high rate of oil spill which in our opinion degraded the environment†(t13). However, the regulator noted that equipment failure was a cause of some spills; he cited the case of Exxon-Mobil, which operates mainly offshore, and noted the problems they had had with salt water corrosion of pipelines. The regulator also explained that as well as its major role of responding to oil spills, NOSDRA was also mandated to sanction violations of environmental laws.   He said after every JIV a scope is set and his agency follow up to ensure compliance.   However, in some cases, he noted that some oil companies do not comply in a timely manner. â€Å"Shell was guilty of that and we imposed a fine of one million naira (about $6,600) on it† (t13). The regulator conceded that the amount was relatively small but noted that â€Å"NOSDRA cannot raise the amount without amending the law itself† (t13). The Manager also explained that NOSDRA had also previously sanctioned The Pipeline and Production Marketing Company (PPMC), a subsidiary of the government-owned Nigerian National Petroleum Corporation (NNPC). The NOSDRA regulator noted that the financial penalties imposed on oil companies (see above) had helped to change the attitude of the oil companies towards environmental issues, because of the global attention on good environmental practices. The official suggested that the penalties imposed on Shell had led to significant changes in their environmental policies and procedures.   Before the fine was imposed, Shell had only had a Health, Safety and Environment manager who had to deal with a wide range of issues whereas now they had developed a much more comprehensive structure with a manager for oil response, a Manager for remediation, a manager for compensation issues communications manager who had the task of ‘interfacing’ with government regulatory agencies.   The regulator explained that â€Å"at least know they have seen that there is need to comply because as an international oil company if anything happens to it, it will affect its shares in the New York stock exchange, just like BP. And when investors noticed you are causing environmental pollution, they will either refuse to invest in your company or de-invest their existing share and the company know what can come out of it, that is why they quickly adjusted†(t13). The manager admitted that enforcing environmental regulations in the petroleum industry has been a major challenge for NOSDRA. He explained that lack of funding from the government was becoming a major problem for his organization. â€Å"Our   immediate challenge is lack of funding, we need adequate funding to enable us to purchase technical equipment and to provide effective logistical support, which would mean we could respond more rapidly, because speed is the key to effective oil spill response†(t13). The researcher asked the respondent whether or not NOSDRA received any other funding besides the government statutory allocation, he replied that â€Å"The funding of this agency comes mainly from statutory allocations. At the beginning of each fiscal year the budget is set and we have to work within this budget but we have been exploring other possibilities such as getting some form of assistance from international donors† (t13). On collaboration between NOSDRA and other regulators, the Manger explained that his agency maintained a good relationship with other stakeholders particularly these in the Joint Investigation Team. However, he observed that there was a problem of overlapping functions among the regulators; some of these problems he argued are created by the human factors. â€Å"There are overlapping responsibilities between the Ministry of Environment and NOSDRA, although the government has tried to reconcile these, there has been an element of territoriality involved a reluctance to give up areas of influence so there is still some overlap in functions with respect to regulating the petroleum sector.   But in the last 3 to 4 years the attrition was high but know it is weathering down they are beginning to concede day by day to the fact that environmental issues should aptly be in the environment ministries and its agencies like NOSDRA† (t13). The next section will present my interview with the second regulatory agency also under the Federal ministry of Environment. National Environmental Standard Regulatory Agency (NESREA) This government agency has its head office in the centre of the Federal capital territory. Gaining access to this agency was problematic and the researcher had to apply through the Ministry of Environment. The agency’s Director General arranged for the researcher to interview one of her principal officers a US trained environmentalist. The senior official made it clear that the interview would only last for only thirty minutes because of prior commitments.   He informed the researcher that the primary mandate of his agency is to protect the Nigerian environment and to thus ensure that human health is also protected.   He also noted that the agency ensures that all regulations and standards are properly implemented at a national level. While carrying out this function, the agency collaborates with other stake holders. â€Å"We sign a memorandum of understanding with various agencies, organizations, state governments and the private sector.   In fact, any agency that has related responsibilities to those of NESREA. We also work closely with state government that’s why we have about 16 state offices across the country in addition to the six zonal Headquarters, which have responsibility for the states within the zone just like the same six geo political structures in the country. The   reason is that we work closely with the state and part of that is that interrelationship and cooperation is to let the states have some level of ownership, were ever we go the state government provided us with an office so that they will have some   sense of ownership†Ã‚   (t14). The NESREA official also noted that his agency also collaborates with individuals, civil society, academia and international organizations. He pointed out that one of the major achievements of NESREA has been to develop eleven new regulations already documented and thirteen more are undergoing expert review.   According to him â€Å"the laws are meant to balance our environmental consideration in every aspect of our development effort† (t14). The researcher asked the respondent to outline what his agency considered to be source of environmental degradation and the role of his agency in oil related environmental degradation in the Niger Delta. He argued that in Nigeria environmental degradation is not limited to oil related degradation He explained â€Å"There are lots of forms of environmental degradation, of course, and particularly land degradation in the North and problems with desertification and in the South with erosion† (t14). However, he noted that oil pollution in the Niger Delta is a major problem for his agency. In relation to this, he noted the agency was also concerned with the level of poverty in Nigeria, the official said â€Å"poverty is a problem because it causes indoors pollution the local communities use large quantities of firewood by for cooking   and unfortunately   even those who do a lot of smoking are creating problem† (t14). The respondent further explained that another major threat to the environment is the problem of disposal of old electrical goods. According to the senior official Nigeria is becoming a global dumping ground for unserviceable, end of life electronic products.   As a government regulatory agency, he explained â€Å"we check the influx of e-waste to Nigeria, we have to also deal with those who are bringing them in, and we have to work closely with the Alaba (Lagos) International Electronics Market, because a lot of guys are bringing shipment from there. We also have to work closely with the consumer protection council and standards organizations of Nigeria because part of the problem relates to the standards of equipment coming into Nigeria.   There’s no point importing equipment that is waste even before arrival† (t13). In order to track   address the problem of electronic dumping and other related abuses NESREA is also involved in environmental education awareness campaign involving security agencies like Nigeria Police, the immigration and customs services and the road safety commission. The purpose of the education programmes is to give officials of these agencies the tools to identify environmental violations, understand the legal implications of these and the role of these agencies in enforcing environmental legislation. He cited the example of NESREA’s collaboration with the Federal Road Safety Commission to reduce vehicular emissions, with the Nigerian police to report and respond to noise or air pollution. NESREA also work with the immigration authorities to prevent the illegal smuggling of flora and fauna across the Nigerian borders, which in the opinion of the official, is also another source of environmental degradation. There is also close cooperation with the Nigerian customs s ervice to stop the importation of e-waste. The researcher asked the senior official what specific role his agency is playing in regulating the Nigerian oil industry.   He noted that the only function his organization has in regulating the oil sector is in ensuring that whatever terms were reached in public hearings involving oil companies and oil communities are complied with either by the Oil Company or the communities.   He also noted that it was the responsibility of NOSDRA. However, the respondent explained that the regional offices conduct inspections of oil facilities on occasion and any environmental violations are reported to head office, and in some cases the agency also encourages the neighborhood watch to report contraventions on environment. When such reports are received NESREA investigates and can prosecute violators if necessary. NESREA also ensures compliance with any actions imposed by the courts in such cases. Although NESREA has a mandate to protect the environment, the official noted that there was some overlap in responsibility and function with other agencies.   However, he maintained that NESREA is doing everything possible to find common ground to work together with other agencies without losing focus on the primary objective of the agency. Next I will present a similar visit to Department of Petroleum resources, a federal government agency that also played a key role in the petroleum sector.   Department of Petroleum Resources (DPR) The interview with the DPR differed from the other interviews in that the researcher was given access to, four officials to interviews. However, unlike the previous interviews, these officials refused to be identified or to allow the interview to be recorded.   They stated that they belonged to the ethnic groups inhabiting the Niger Delta and did not want to risk being identified through the research as this could jeopardize their personal safety, despite the researcher’s assurance of identity protection.   The interview was therefore carried out in a form of focus group and off tape. The officials discussed the official version of the environmental problem from their organizational perspective and at the same time their personal feelings as Nigerians.   It is worth pointing out that during the discussions, there was wide disagreement between the participants and various contradictions and inconsistencies emerged.   As is discussed further below. The DPR officials agre ed to answer only questions that concerned their operational responsibilities and not issues relating to the politics of the Nigerian oil industry. However, the discussion did include some discussion of this more controversial area. The DPR focus group were asked questions on seven key areas including Environmental Impact Assessment (EIA), environmental laws, collaborating with other agencies to tackle environmental problems in the petroleum industry, the challenges and constrains, on multiple regulations, the vision of the department and the opinion of the   DPR on environmental degradation in the Niger Delta. According to the respondents, the   environmental legislation in place today   are effective, unlike in the early 90’s, when there was no specific law specifying who is responsible for environmental issues in the oil sector. However, they noted that the ‘Nigerian factor’ is always a problem.   The respondents were asked what they meant by the ‘Nigerian factor’, however, they reminded the researcher that, as a Nigerian, he should understand this concept and that as civil servants they would not want to say more than that. The respondents all agreed that implementing environmental legislation in Nigeria is difficult because of the resistance from some oil companies, however, the DPR tries to apply sanctions were necessary.   According to the respondents â€Å"What is also helping us now as a regulatory agency is the general level of environmental awareness, on issues like climate change and global warming. There are now powerful NGO’s raising public awareness of environmental problems and, from our experience, this puts pressure on the oil companies to be environmentally aware.   Another forum Are the social networks like ‘Twitter and ‘Face book’, which also heighten public awareness, no company wants to have a bitter experience of BP in the Gulf of Mexico† (FN18). This reason, according to one of the respondents, is now forcing the parent companies to monitor the activities of their subsidiaries worldwide to ensure compliance with good environmental practices. This is unlike before when the subsidiaries is another countries are treated as entities. I ask my respondents how DPR collaborate with other agencies in the sector.   The argued that regulating the oil industry requires close collaboration among the multiple agencies as provided by relevant laws.   However, the respondents were of the opinion that the collaboration is not working as it should. This, according to one of them is due to the lack of well defined roles and boundaries for each regulatory agency. One of them cited the example of NOSDRA as one of the agencies that abandon   its primary mandate as a third tier regulatory agency to be involved in non-oil spill issues (FN18).   They   argued that â€Å"unless   Nigeria adopted a model similar to that used in the   United States where the   Environmental Protection Agency (USEPA) formulates laws, which are   widely applicable to the agencies both at state and local levels, in Nigeria   the level of ignorance of the laws and greed among the regulators make the problem   more severe† (FN18 ). As well as the problem of collaboration among the regulatory agencies, the Department of Petroleum resources is also facing some challenges and constrains in respect of funding which in some cases have seriously impacted on the DPR’s effectiveness. The respondents all agreed that funding is a major problem, they claim DPR has the technical know-how however, logistics and security has changed all that, â€Å"we can’t get to relevant locations on our own, we don’t have the necessary logistics, the closest we can do on our own is to visit downstream sector, but in upstream sector is impossible we can’t† (FN18). The respondents were asked to explain the logistics problem, and they noted that they were supposed to be provided with helicopters, boats, and operational road vehicles.   At present, they only have operational vehicles, and at times due to the topographical nature of the Niger Delta they had to abandon them and trek for several kilometers be fore reaching sites.   One of the respondents explained that they had to rely on oil companies to provide them with logistical support like helicopters and boats. In relation to this, one of them advised me to read the Irekife Report (1991) which suggested ways the DPR should be funded to be more effective. Another major challenge for the DPR according to the respondents comes from the oil communities themselves â€Å"who at times will not allow access by DPR/Joint Investigation Team due to criminality and greed, there are some cases where one of the parties challenged the findings of the Joint Investigation Team report.   Sometimes they use threats to change the findings of the report and on occasion warn the JIT not to come otherwise they will attack the team† (FN18). The officials also noted that certain communities would justify their criminality using cultural reasons, stating that some areas were sacred, and could not be visited by non-indigenes as this would bring calamity on the community.   On occasions, they also request to perform traditional rituals before access is granted. The official stated that thought these were often deliberate attempts to delay access to the spill in order to increase the amount of environmental damage and the corresponding amount of compensation.   At times we are compelled to do our job by proxy and they believe the more the spill the more the compensation† (FN18). The researcher asked the respondents to explain what exactly he meant ‘by proxy’ but he was prevented by another respondent from providing further explanation, because that will mean compromising their personal safety. Finally, the respondents were asked for their opinion on the causes of environmental degradation in the Niger Delta.   One of the officials explained that â€Å"oil theft account for about 90 percent of the oil spills, which is widespread despite the danger to the population and the environment. The attraction of making ‘quick money’ makes it very difficult for some people to resist the temptation of stealing oil from the oil facilities† (FN18). Other major challenges to both the environment and public health   over the   last ten years, according to the respondents,   include crude oil theft And   illegal refining.   However, the DPR officials also noted that equipment failure, corrosion, operational error (human error) had also led to oil spills and environmental degradation.   On the overall they argued, DPR has zero tolerance approach to oil related environmental degradation, though with the official could not explain if there is any target set to achieve this. The officials also express their own opinion as Nigerians. They argued that if there were more honesty and integrity over the way both environmental and oil sector is managed in Nigeria, then the environmental problems would be minimal if not eradicated completely â€Å"But as long as corruption is widespread, particularly among the government officials and the political class,   then our environment will continue to suffer degradation † (FN18). In the following section, the interviews with the official of the Nigerian Senate Committee on Environment and Ecology and with the representative of the Rivers State Ministry of Environment are presented. Senate Committee on Environment and Ecology The Nigerian senate committee on environment and ecology is one of the standing committees of the Nigerian legislature or the national assembly. The primary responsibility of this committee is to make laws on all issues related to the environment in Nigeria.   The committee oversees environmental matters under the standing rules of the Nigerian senate.   The committee legislates on issues like environmental pollution, air water, land degradation, and matters relating to marine pollution. The committee is also responsible for allocating funds to all agencies under the federal Ministry of Environment.   Another mandate of this committee is to identify key projects within the environmental sector and ensure the government gave them the priority they deserve.   A third main responsibility of this committee is to perform an oversight function for the national environmental sector through monitoring of budgetary allocations and expenditure on the projects that were approved originally in budgets.  Ã‚   Nigerian legislature is a bi-cameral and, therefore, the Senate Committee on Environment and Ecology  Ã‚   performs its legislative duties in tandem with the sister committee in the Federal House of Representative.  Ã‚   Before any bill becomes law or budgetary allocations and projects are approved, the two committees must harmonize any differences in their positions before is forwarded to the two chambers for ratification and assent by the Nigerian President. From the discussion above, it can be seen that the Senate Committee is strategically importance in the environmental sector in Nigeria and, therefore, an essential source of information in the data collection process. Findings from the earlier interviews with agencies regulating the oil sector and from the oil communities suggested that environmental laws in Nigeria are either obsolete or they are not effective enough to enforce any regulation. In addition, it had been suggested that the government was too corrupt to enforce standards or enforce sanctions when the laws were violated. My original plan was to meet with the two chairs of the Committees in the Senate and House of representatives respectively. However the researcher was unable to interview the House Committee chair despite five separate interviews having been arranged.   Therefore, the researcher decided to focus on the senate committee, the superior committee by hierarchy. The interview covered five major issues. First, the perception of the Nigerian Senate on environmental issues in Nigeria, second, the legislative framework of environmental legislation, third, the politics of environmental legislation in Nigeria, fourth,   how the committee regulates the regulators and, finally, the  Ã‚   opinion of the Nigerian Senate on global environmental issues . According to the clerk senate committee the environmental problems in the Niger Delta cannot be treated in isolation because every area in the country is crying for attention â€Å"In the Northern part of the country the desert is encroaching at an alarming rate, claiming about five kilometers per annum, and this makes drought increasingly likely as new diseases are emerging, people and animals are dying and there are more and more conflicts between farmers and herdsman over grazing lands. If you take the Southeastern part of the country the erosion, the land slide clearing villages and taking people along with them recoding lot of death, people will wake up and they are buried under the ground. So the focus is not only on the Niger Delta.   But agreed there are major problems in the Niger Delta like pollution, unprecedented soil degradation, farmlands, water, everything is polluted, gas flare, public health, their houses roof tops etc.   So I would say that no one problem is mo re important than the other but we must use a holistic approach to tackle all the problems simultaneously, rather than focus on one thing and neglect the other problems†(t15). The respondent argued that most of the laws regulating the environment in Nigeria are not in line with contemporary environmental challenges. She stated â€Å"We have a number of laws dating back to the 1950’s, 60’s and most of these laws are not fit for purpose and are no longer relevant to contemporary realities, or address current environmental issues as set out by the United Nations Framework Convention on Climate Change Committee, so a lacuna exists in terms of legislation with respect to the environment sector† (t15). In addition the respondent noted that one of the major problems in developing effective environmental legislation in the past was the relatively unstable democracy in Nigeria where military coups had interrupted the development of an effective legislative framework.   Nevertheless, she was of the opinion that the stable democracy attained since the inception of this political dispensation in 1999 has meant the, legislature had been able develop the legal framework and create, for example, the agencies regulating the environmental sector. She noted that these agencies were already having a positive impact on environmental protection. The Clerk explained that as at now the National assembly had created a number of bills that were presently before the legislature. She noted that these included the Climate Change bill that would lead to the establishment of climate change commission, the Petroleum Industry Bill, the Biodiversity bill, the Bio Safety bill and Gas Flaring bill, which are intended to improve the sector and make operators to comply with acceptable standards. The researcher asked the respondent to what extent the problem of environmental legislation affect the environmental regulations in Nigeria. The respondent explained that most of the problems are economic and political in nature.   She argued that â€Å"There is a school of thought that says we don’t have money to keep setting up agencies, that the financial resources required are huge, and that we should strengthen the existing ones and give them more teeth to function instead of duplicating agencies to create jobs for the boys. If you want to give specific task to specific agency, for the purpose of effectiveness and productivity there will be nothing wrong creating it,   like setting up the Climate Change Commission which is absolutely necessary in the face of the present environmental trends† (t15).   On the other side another group is saying we cannot set it up because we don’t have money instead let us strengthen NESREA or NOSDRA to take care of the d emands by the political class.   Currently, the national assembly is being asked to create a Desertification Commission by some northern Senators and then the Senators from the eastern part of Nigeria also want erosion commission and according to the committee Clerk the committee is of the opinion that one agency can be established to cater for both desertification and erosion. The respondent also acknowledged that the roles of the various regulatory agencies in the environmental sector sometimes overlap and leads to clashes of interest.   She stated â€Å"The Committee has noted that there is some overlap in terms of function and responsibility among the regulating agencies both NOSDRA, NESREA, DPR and parental ministries and some other agencies. The committee is studying the problem   Ã‚  to see how we can reduce the overlap and make them more effective and efficient.   The senate is currently formulating amendments to strengthen them and also remove areas of duplication in the existing legislation so that   they can reflect the provisions of the United Nations Framework Convention on Climate Change† (t15). The Clerk also noted that the Senate Committee has a limited constitutional mandate to drive these changes as the main role of the Committee is purely one of oversight in relation to the regulators. She pointed out that the Ministries of Environment and Petroleum Resources are solely responsible for the activities of these agencies.   She stated â€Å"We are not responsible for their day to day operations but our role is to see the outcome of the field assignment, how they are doing this particular job that has been budgeted for in the budget how effectively they carry out their role is not in our mandate. We are more concerned with the impact they are having on the environment than how they carry out their duties and we don’t interfere in their internal operations† (t15). The researcher asked from the respondent if the existing environmental legislation was effective enough to enforce standards in the oil industry. The respondent had doubts as to whether such legislation is effective enough to regulate the oil industry in Nigeria.   Though the committee receives series of petitions from the affected oil communities which has been there for over years, but the Committee, according to the respondent, has been making serious efforts to tackle the problems, she noted that the problems are multi faceted and that, on the one hand, the oil companies claim it is sabotage, while, on the other hand, the community claim the causes are mainly operational failures. According to the respondent the Committee was committed to ensuring that the operators operate within the standards that are globally acceptable, she argued that â€Å"Nigeria is not the only country where oil exploration and extraction is taking place and this exploration is mostly governed by set standards.   Nigeria should follow the same standards, we know that the we need to strengthen legislation to further enforce compliance in Nigeria, and we are really working hard to achieve this. We are talking with the oil companies and visiting locations to see things for ourselves and, despite the enormity of the problems we are trying to ensure something is done† (t15). Concerning the use of sanctions and compliance, the senate committee acknowledges it doesn’t enforce any sanctions when there are violations. The Committee has no constitutional mandate to do this. The regulatory agencies have the responsibility to impose sanctions such as shutting down the operations of the companies, taking them to court or fining them.   The Senate can only direct the relevant agencies to take action or summon them for investigative purposes or public hearings. The Clerk was also of the opinion that while there was a need for proper enforcement of the law, there was also a need for enlightenment and education. She noted that people and corporations need to understand the dangers of degrading the environment and the future consequences. According to her, Nigeria is now taking the lead in Africa by creating the first national Climate Change Commission to tackle the issues of climate change. This section will be followed up with a visit and interview with a state politician and a senior official in the Rivers State Ministry of Environment, Port Harcourt. Rivers State Ministry of Environment The researcher had initially not been intending to interview key personnel in the Rivers state but it soon became clear that it would be necessary to try and interview representatives of the Rivers State Ministry of the Environment.   This was because the ministry represents the environmental interests of the Rivers State government and at the same time has close connections to the communities and the oil companies in the area. Access to state environmental official who is also a local politician was difficult at the beginning the interview had to be rescheduled more than five times before access was gained to interview the senior government official. The ‘interview’ was unusual in that it took the form of a group  Ã‚   interview with journalists who were doing a personality profile interview with the politician.   Initially, a separate interview had been requested but this was turned down on the grounds of time pressures.   The discussion with the senior official concerned the role of his ministry on matters relating to oil related environmental issues, environmental laws, and relationships with the oil companies, the federal government, and the communities, other regulatory agencies in the sector and the environmental politics in the state. The major function of the ministry is to safeguard the environment of Rivers State. Its primary mandate is to formulate, execute and review policies on environment and ecological matters within the state, monitor and evaluate environmental and ecological programmes and projects in the state and to protect the physical, biological and chemical environment of the state. Its mission statement is to bequeath to the present and future generations of the state a healthy and sustainable environment. The Ministry also liaises with other key stake holders in the environmental sector of Rivers state.   The ministry is one of the regulators in the sector it works with the DPR, NESREA, and NOSDRA in particular. The ministry is also part of Joint Investigation Team that investigates oil damaged sites, the impact of the spill on the environment and possible claims for compensation. By law, spills have to be reported to the Ministry within 24 hours by the oil companies or the impacted community. The Ministry is also involved in the payment of compensation, the cleaning and remediation of the sites.   The Ministry is also responsible for re-inspecting affected sites after they have been cleaned, and remediated.   If the Ministry is satisfied with the remediation efforts, a certificate is issued to that effect, and if it is deemed unsatisfactory, the facility owner is urged to go back to site. As a key stake holder in the regulatory process, the senior government official was asked his opinion on the relationship between his organisation and the oil corporations in the state. In relation to this, he noted â€Å"it has been problematic dealing with them because they do not apply the same standards in Nigeria as they do elsewhere. You will also find out that they also exhibit a high level of ignorance here, because when you have a polluted environment, it also affects you because that is where you work, that is where your family exist so I don’t see any reason why somebody who is very well enlighten and who understands this problems will want to allow a polluted environment to remain for the purposes of making profit.   We have to be alive to enjoy the money we are making† (t21). The respondent was also of the opinion that the responses to the cases of spills by the oil companies were dictated more by the economic value or its importance to them than making good the environment. â€Å"I don’t think they feel sorry that they are polluting the environment, they are more concerned with the cost of the oil spilled.   If it is possible not to lose money and continue polluting the environment; you won’t get any reaction from them† (t.21). The official explained that the Ministry had organized a corporate forum to consider ways to minimize the emission of green gases and to combat climate change, which none of the oil companies had attended.   He further explained that the oil companies had different set of policies of paying compensation to impacted communities. In Nigeria the responsibility of determining compensation rests with the Oil Producers Trade Section (OPTS)   The senior official noted that the OPTS â€Å"is made up of   only the facility owners, how can you be the polluter and at the same time also determine how much you pay for polluting?   The proximate sufferers are not members of the OPTS.   So what it means is that there is a line you cannot exceed in terms of compensation† (t21).   Again on compensation, if it is discovered that the spill was the result of sabotage, you don’t pay compensation, the Ministry of Environment is also of the opinion that this policy is not fair it is completely against the interest of the people who suffer such spills. The respondent sighted example as follows: â€Å"If a spill occurs in community ‘A’ and affects innocent and innocent man in community ‘D’ far away from community ‘A’ got his fishing pond or farm affected by that spill, from community ‘D’ that innocent man in community ‘D’ even though loses his source of livelihood completely and if it is discovered that the spill in community ‘A’ was as a result of sabotage the man impacted in community ‘D’ who was not part of the sabotage who did not contribute in any way is entitled to nothing† (t21). The senior official argued there is this high level of negligence on the part of the facilities owners and the third party is made to suffer.   The innocent person should not have to suffer from the negligence of the people who are supposed to secure the pipes against sabotage. He also claimed that when a spill occurs the oil companies do not make serious efforts to contain or clean the spill as stipulated by law nor in the time period specified. He cited several spills that had not been cleaned for two to three years in which time the spill had spread and affected a much wider area than it should have.   According to him the Rivers state government was introducing new laws as a result to address certain aspects of compensation procedures.   He noted that in the new bill â€Å"If there is a spill there, it must be contained and cleaned up, within a given time. If it is not done within this time, the the facility owner will be fined. If there is an impact on the property of the third party and it is clearly discovered that he was not part of the sabotage he should be entitled to compensation.   Whoever is responsible for safeguarding that facility should pay compensation for being negligent; whether it is the government or the facility owner† (t21). The respondent was asked if the oil companies are above the law based on his earlier claims. He explained that the companies are not really above the law but the Nigerian government has a major snag and that is why it is unable to take proactive step just like the USA did in the case of Gulf of Mexico spill incidence. He noted that â€Å"This is because the relationship that exists between government organisations and the facility owners in Nigeria   is not the same type of relationship that exist between the US government and the oil companies that operates in the USA. It is not that they are above the law but because the contractual basis on which the oil companies operate is that of a joint venture between the oil companies and Nigerian government.   In a joint venture situation if your partner is in default it means you are part of it, too.   We are of the opinion that we don’t need to run a joint venture or review the venture but to cancel the contract.   Let the companies operate pay what they ought to pay to the Nigerian government   and be fully responsible for whatever misconduct that arises from their operations, that way the government will be able to stand up and say we cannot tolerate this in our environment† (t21). Having discussed the nature of relationship between his ministry and the oil companies in Rivers state, my respondent was asked   about the kind of relationship that exist between the Ministry and the oil communities. He stated that â€Å"There is also high level of ignorance on the part of the communities, which is hinged on the literacy level.   Here you find that in a community that is supposed to care about its environment, some elements of the community are actively responsible for pollution of the environment.   Of course, we have very high levels of sabotage in this part of the world, people sabotage oil facilities to make money and it is unfortunate situation.   Aside the issue of sabotage even third party sometimes they try to prevent the containment of the spill because they also want the spill to extend to their own area so they can make compensation claims and there is little concern about the impact of this on the immediate environment†(t21). Though the se nior official blamed the communities for this, he is also of the opinion the system for paying compensation, as explained previously, played a key role in inciting people to sabotage as the people felt exploited by the facility owners. He cited an example of the Gulf of Mexico oil spill, where funds were immediately set aside for compensation, but it never happened here in Nigeria. As a result of this shortcoming, the senior government official said the Rivers state government was implementing new environmental legislation in the state which will guarantee justice to both parties. The newly propose law stipulates that â€Å"Whereas if there is a spill there must be a time line within which facility owner must curve the spill, within which you must contain it, you must clean it, within a particular period which you must carry out remediation, if you don’t do it within this time line, then the facility owner is also committing an offence and will be finalised.   Again if the re is an impact on the property of the third party and it is clearly discovered that he was not part of the sabotage he should be entitled to compensation†(t21). The official also added that â€Å"The state government is also determined to discourage people from sabotaging the facilities, so we have also included in the new bill penalties for sabotage should be long term imprisonment or death sentence† (t21).   Despite the efforts of the state government, the official claimed that people don’t understand the technicalities and so they don’t appreciate what the government is doing, to protect them. The respondent was asked how effective the present environmental laws were. He noted that existing environmental laws are either difficult to enforce or not in line with contemporary realities as some of the laws were made over twenty years ago. He cited the example with one of the environmental laws in Rivers state which is on environmental litter. The law forbids littering and street hawking. It is a criminal offence and the penalty on conviction carries a fine of five hundred naira ( £1.90). This, according to him is not realistic because â€Å"you have to carry out the arrest, have a trial and the outcome of all this is a five hundred naira fine† (t21). According to him in most cases â€Å"people ask us why you wasted your time to go through legal process instead of just asking me to pay five hundred naira ( £1.90) and continue my business† (t21). The respondent said a new compendium of all environmental legislations in Nigeria is planned so that the country wil l have a one stop shop for environmental laws. Another major feature of the proposed environmental laws is that it addresses the issue of multiple regulatory agencies in the petroleum sector. The respondent stated that multiple regulations â€Å"we are not desirable omen because in this sector you need specialisation. The agencies presently carry out virtually the same assignments and it does not make sense.   But it is better if you have specialised agencies carrying out specialised tasks. Presently, because of our level of development, you find out that most of these agencies overlap, most of them virtually do the same thing† (t21). I ask the respondent his opinion about the politics of environment in the Niger Delta.   He noted that environmental problems were not the result of political issues.   But that they had become politicised. According to him â€Å"Today, President Jonathan is from the south-south and he has to be a president, if not there will be no Nigeria, because the oil money comes from this part of the country, because we now agitated that this place has been polluted we must be given opportunity to also hold that office, that is political† (t21). The respondent also claimed that some environmental problems in the Delta were the result of â€Å" past bad administrations in that sector, it started as a result of greed by the operators in that sector, the race for profit has resulted negligence over issues that ordinarily will not have been neglected Some of the pipelines that criss-cross the Niger Delta are over 50 years but they are still being used.   In other places they would have been changed† (t21). The respondent is also of the opinion that the environmental problems are not only hinged on political issues, it is also hinged on problems that has made people over years to see themselves as helpless, being denied of their source of livelihood, being deprived of existence and of course being very hungry, there is an abject poverty in the Niger Delta region. He equates the situation to that of a goose that lay the golden egg but without anything to eat. The respondent also claimed that â€Å"In some places the oil heads are so close to people’s homes that they literally hang their clothes on, yet they don’t have food to eat, there is no portable water, no clinics, and yet every other day wealth is leaving that place. This is taking place while yields on farmlands are going down all the time oil pollution is affecting the livelihoods of fishermen etc† (t21). According to him when people are exposed to such situations, definitely you will expect a reaction because they are rendered jobless â€Å"an idle mind is a devils workshop† (t21). The researcher reminded the respondent that the communities had claimed that politicians at all levels were responsible for their predicament, and they ignored them until election periods As a politician, he agreed to some extent but he also blamed the behaviour of the people during elections â€Å"when they come back to them they demand money before voting and when they give them money what do you expect?† (t21). He also stated that people should not be blamed for demanding money before voting, â€Å"if you want to balance it you will also find out that the people are hungry, and so we come back to them with little food rather than stay back and die they will prefer to chase that little food and allow you take the vote (t21). Finally, the senior official of the Rivers State Ministry of Environment was asked to describe the relationship between his ministry and the federal Ministry of Environment. His explained that, by law, his ministry was supposed to work in conjunction with the federal Ministry of Environment, but it is only recently we started having some positive romance with the federal ministry of environment on two projects the integrated waste management scheme and the proposed plastic recycling plant. Besides these two projects we have not felt the presence of the federal government. Being as it may this projects are yet to pick up† (t21).    Conclusion This chapter presented the researcher’s interviews with the five regulatory agencies in the Nigerian oil industry. The interviews have been presented almost verbatim with little explanatory commentary to better represent the views of the respondents.  Ã‚   In the next chapter, three interviews are presented. The first is with the representative of the United Nations Environmental Programme in Ogoniland and a senior security official in one of the security outfits in the Niger Delta and lastly the ‘founding father’ of the Nigerian oil industry. It is hoped this will provide a rich source of information and opinion to inform the thesis from the perspective of those outside the Nigerian oil industry.