Consider the following three projects:

The cost of capital of the firm is 10%.

Based on the IRR decision rule:

1. Should you invest in Project A?

Below are multiple choice for the IRR calculation

i) 16.55%

ii) 17.61%

iii) 18.31%

iv) 20.22%

v) Cannot calculate

Answer: I should/should not (choose one) invest in Project A.

2. Should you invest in Project B?

Below are multiple choice for the IRR calculation

i) 16.55%

ii) 17.61%

iii) 18.31%

iv) 20.22%

v) Cannot calculate

Answer: I should/should not (choose one) invest in Project B.

3. Should you invest in Project C?

Below are multiple choice for the IRR calculation

i) 16.55%

ii) 17.61%

iii) 18.31%

iv) 20.22%

v) Cannot calculate

Answer: I should/should not (circle one) invest in Project C.

4. Assume that we can only take one of the projects. Which one would we choose?

Answer: You would choose project ____________

EXERCISE 4‐1

Parent Company Entries, Liquidating Dividend LO 2

Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2019 for $387,000. At the time of purchase, Song Company's total stockholders' equity amounted to $475,000. Income and dividend distributions for Song Company from 2019 through 2021 are as follows:

Required:

Prepare journal entries on the books of Percy Company from the date of purchase through 2021 to account for its investment in Song Company under each of the following assumptions:

1. Percy Company uses the cost method to record its investment.
2. Percy Company uses the partial equity method to record its investment.
3. Percy Company uses the complete equity method to record its investment. The difference between book value of equity acquired and the value implied by the purchase price was attributed solely to an excess of market over book values of depreciable assets, with a remaining life of 10 years.

There are four theories of motivation:
1. hierarchy-of-needs theory
2. two-factor theory
3. expectancy theory
4. equity theory
Which one makes the most intuitive sense to you? Give an example of this theory in your life.   
Why do you find this motivation theory appealing?

Consider the following time series data.

(a) Construct a time series plot.

What type of pattern exists in the data? The data appear to follow a horizontal pattern.

(b) Develop the three-week moving average forecasts for this time series. (Round your answers to two decimal places.)

Compute MSE. (Round your answer to two decimal places.)

MSE = 15.89

What is the forecast for week 7? 14.00

(c) Use α = 0.2 to compute the exponential smoothing forecasts for the time series.

Compute MSE. (Round your answer to two decimal places.)

MSE = 16.80

What is the forecast for week 7? (Round your answer to two decimal places.) 15.52

(d) Compare the three-week moving average approach with the exponential smoothing approach using  α = 0.2.  Which appears to provide more accurate forecasts based on MSE? Explain.

The three-week moving average provides a better forecast since it has a smaller MSE than the smoothing approach.

(e) Use a smoothing constant of α = 0.4 to compute the exponential smoothing forecasts.

Does a smoothing constant of 0.2 or 0.4 appear to provide more accurate forecasts based on MSE? Explain. .The exponential smoothing using α = 0.4 provides a better forecast since it has a smaller MSE than the exponential smoothing using α = 0.2.

Missing 5 and 6 from both charts

onsider the following time series data. Week 1 2 3 4 5 6 Value 20 12 15 10 18 15 Using the naïve method (most recent value) as the forecast for the next week, compute the following measures of forecast accuracy. (a) Mean absolute error If required, round your answer to one decimal place. (b) Mean squared error If required, round your answer to one decimal place. (c) Mean absolute percentage error If required, round your intermediate calculations and final answer to two decimal places. (d) What is the forecast for week 7?

Consider the following time series data:

Month 1 2 3 4 5 6 7

Value 23 14 19 13 19 24 14

(a) Compute MSE using the most recent value as the forecast for the next period. If required, round your answer to one decimal place.

What is the forecast for month 8? If required, round your answer to one decimal place. Do not round intermediate calculation.

(b) Compute MSE using the average of all the data available as the forecast for the next period. If required, round your answer to one decimal place. Do not round intermediate calculation.

What is the forecast for month 8? If required, round your answer to one decimal place.

(c) Which method appears to provide the better forecast? - Select your answer -

1. Consider the following data table:

1. (15 points) Create a scatterplot of the data either by hand or with a computer.  Does there appear to be a linear relationship between x and y?  If so, what is the strength and direction of the relationship?

2. (20 points) Give the Simple Linear Regression Model, using x as the predictor variable and y as the response variable.  What is the meaning of β₁ in this model?

3. (25 points) Give the least squares line and correlation coefficient.  Round everything to three decimal places.  What is the meaning of the slope estimate?

4. (25 points) Obtain the predicted values and residuals.  Round all values to three decimal places.