Since 1990, Raise the Roof has provided elevator maintenance servicing. On January 1, 2018, Raise the Roof obtains a contract to maintain an elevator in a 90-story building in San Francisco for 10 months and receives a fixed payment of $80,000 on January 1. The contract specifies that Raise the Roof will receive an additional $41,000 at the end of the 10 months if there are no elevator stoppages or accidents during the year. Raise the Roof estimates variable consideration to be the most likely amount it will receive.
R 1: Assume that Raise the Roof will be given unlimited access to the elevators for repairs and maintenance. With these conditions, Raise the Roof believes its chances of earning the bonus is 90%. Prepare the journal entry Raise the Roof would record on January 1 to record the receipt of cash and January 31 to record one month of revenue.
R 2: Assume instead that Raise the Roof will have access to the elevators only from 2:00 AM to 4:00 AM each day which is insufficient for more time consuming repairs and maintenance. As a result, Raise the Roof believes its chances of earning the bonus is only 20%. Prepare the journal entry Raise the Roof will record on January 31 to record one month of revenue.
R 3: Continuing with the same facts from Requirement 2, assume that on May 31, Raise the Roof determines that it does not need to spend more than 2 hours daily on maintenance and repairs. Therefore, Raise the Roof changes its estimate of the likelihood to receive the bonus to 85%. Prepare the journal entry Raise the Roof would record on May 31 to recognize May revenue and any necessary revision in its estimate bonus receivable.
In: Accounting
John Wilson is a conservative investor who has asked your advice about two bonds he is considering. One is a seasoned issue of the Capri Fashion Company that was first sold 22 years ago at a face value of $900, with a 25-year term, paying 8%. The other is a new 30-year issue of the Gantry Elevator Company that is coming out now at a face value of $900. Interest rates are now 8%, so both bonds will pay the same coupon rate. Assume bond coupons are paid semiannually.
What is each bond worth today? Round the answers to the nearest cent.
Capri Fashion Company bond: $
Gantry Elevator Company bond: $
If interest rates were to rise to 16% today, estimate without making any calculations what each bond would be worth. The input in the box below will not be graded, but may be reviewed and considered by your instructor.
If interest rates were to rise to 16% today, find what each bond would be worth to decide which bond is the better investment in this case. Do not round intermediate calculations. Round PVFA and PVF values in intermediate calculations to four decimal places. Round the answers to the nearest cent.
Capri Fashion Company bond: $
Gantry Elevator Company bond: $
If interest rates are expected to fall, which bond is the better investment?
Are long-term rates likely to fall much lower than 6%? Why or why not? (Hint: Think about the interest rate model and its components.) The input in the box below will not be graded, but may be reviewed and considered by your instructor.
In: Finance
You may need to use the appropriate appendix table to answer this question.
According to Money magazine, Maryland had the highest median annual household income of any state in 2018 at $75,847. Assume that annual household income in Maryland follows a normal distribution with a median of $75,847 and standard deviation of $33,800.
(a)
What is the probability that a household in Maryland has an annual income of $90,000 or more? (Round your answer to four decimal places.)
(b)
What is the probability that a household in Maryland has an annual income of $50,000 or less? (Round your answer to four decimal places.)
(c)
What is the probability that a household in Maryland has an annual income between $40,000 and $70,000? (Round your answer to four decimal places.)
(d)
What is the annual income (in $) of a household in the ninety-first percentile of annual household income in Maryland? (Round your answer to the nearest cent.)
In: Statistics and Probability
suppose we are interested in bidding on a piece of land and we know one other bidder is interested. The seller announced that the highest bid in excess of $10,000 will be accepted. Assume that the competitors bid x is a random variable that is uniformly distributed between $10,000 and $15,400.
A) suppose you bid $12,000. What is the probability
that your bid will be accepted (to 2 decimals)?
B) suppose you bid $14,000. What is the probability that your bid
will be accepted (to 2 decimals)?
C) what amount should you bid to maximize the probability that you
get the property (in dollars)?
D) suppose that you know someone is willing to pay $16,000 for the
property. you are considering bidding the amount shown in part (c)
but a friend suggests you bid $13,000. If your objective is to
maximize the expected profit, what is your bid?
What is the expected profit for this bid (in dollars)?
In: Statistics and Probability
Suppose we are interested in bidding on a piece of land and we know one other bidder is interested. The seller announced that the highest bid in excess of $9,700 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $9,700 and $14,700.
a. Suppose you bid $12,000. What is the probability that your bid will be accepted (to 2 decimals)?
b. Suppose you bid $14,000. What is the probability that your bid will be accepted (to 2 decimals)?
c. What amount should you bid to maximize the probability that you get the property (in dollars)?
d. Suppose that you know someone is willing to pay you $16,000 for the property. You are considering bidding the amount shown in part (c) but a friend suggests you bid $12,850. If your objective is to maximize the expected profit, what is your bid?
What is the expected profit for this bid (in dollars)?
In: Statistics and Probability
Suppose we are interested in bidding on a piece of land and we know one other bidder is interested. The seller announced that the highest bid in excess of $9,800 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $9,800 and $14,900.
a. Suppose you bid $12,000. What is the probability that your bid will be accepted (to 2 decimals)?
b. Suppose you bid $14,000. What is the probability that your bid will be accepted (to 2 decimals)?
c. What amount should you bid to maximize the probability that you get the property (in dollars)?
d. Suppose that you know someone is willing to pay you $16,000 for the property. You are considering bidding the amount shown in part (c) but a friend suggests you bid $12,900. If your objective is to maximize the expected profit, what is your bid? What is the expected profit for this bid (in dollars)?
In: Statistics and Probability
Suppose we are interested in bidding on a piece of land and we
know one other bidder is interested. The seller announced that the
highest bid in excess of $10,500 will be accepted. Assume that the
competitor's bid x is a random variable that is uniformly
distributed between $10,500 and $14,800.
Suppose you bid $12,000. What is the probability that your bid will be accepted (to 2 decimals)?
Suppose you bid $14,000. What is the probability that your bid will be accepted (to 2 decimals)?
What amount should you bid to maximize the probability that you get the property (in dollars)?
Suppose that you know someone is willing to pay you $16,000 for the property. You are considering bidding the amount shown in part (c) but a friend suggests you bid $13,250. If your objective is to maximize the expected profit, what is your bid?
What is the expected profit for this bid (in dollars)?
In: Statistics and Probability
Suppose we are interested in bidding on a piece of land and we
know one other bidder is interested. The seller announced that the
highest bid in excess of $9,900 will be accepted. Assume that the
competitor's bid x is a random variable that is uniformly
distributed between $9,900 and $15,500.
In: Statistics and Probability
You may need to use the appropriate appendix table to answer this question.
According to Money magazine, Maryland had the highest median annual household income of any state in 2018 at $75,847.† Assume that annual household income in Maryland follows a normal distribution with a median of $75,847 and standard deviation of $33,800.
(a)
What is the probability that a household in Maryland has an annual income of $110,000 or more? (Round your answer to four decimal places.)
(b)
What is the probability that a household in Maryland has an annual income of $50,000 or less? (Round your answer to four decimal places.)
(c)
What is the probability that a household in Maryland has an annual income between $60,000 and $70,000? (Round your answer to four decimal places.)
(d)
What is the annual income (in $) of a household in the eighty-sixth percentile of annual household income in Maryland? (Round your answer to the nearest cent.)
$
In: Statistics and Probability
According to an airline, flights on a certain route are on time 8080% of the time. Suppose 1515 flights are randomly selected and the number of on-time flights is recorded. (a) Explain why this is a binomial experiment. (b) Find and interpret the probability that exactly 99 flights are on time. (c) Find and interpret the probability that fewer than 99 flights are on time. (d) Find and interpret the probability that at least 99 flights are on time. (e) Find and interpret the probability that between 77 and 99 flights, inclusive, are on time. (a) Identify the statements that explain why this is a binomial experiment. Select all that apply. A. The experiment is performed until a desired number of successes is reached. B. The trials are independent. C. The probability of success is the same for each trial of the experiment. D. The experiment is performed a fixed number of times. E. Each trial depends on the previous trial. F. There are two mutually exclusive outcomes, success or failure. G. There are three mutually exclusive possibly outcomes, arriving on-time, arriving early, and arriving late. (b) The probability that exactly 99 flights are on time is nothing. (Round to four decimal places as needed.) Interpret the probability. In 100 trials of this experiment, it is expected about nothing to result in exactly 99 flights being on time. (Round to the nearest whole number as needed.) (c) The probability that fewer than 99 flights are on time is nothing. (Round to four decimal places as needed.) Interpret the probability. In 100 trials of this experiment, it is expected about nothing to result in fewer than 99 flights being on time. (Round to the nearest whole number as needed.) (d) The probability that at least 99 flights are on time is nothing. (Round to four decimal places as needed.) Interpret the probability. In 100 trials of this experiment, it is expected about nothing to result in at least 99 flights being on time. (Round to the nearest whole number as needed.) (e) The probability that between 77 and 99 flights, inclusive, are on time is nothing. (Round to four decimal places as needed.) Interpret the probability. In 100 trials of this experiment, it is expected about nothing to result in between 77 and 99 flights, inclusive, being on time. (Round to the nearest whole number as needed.)
In: Statistics and Probability