Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows:

a. Find the expected value of the cash flow for each apartment complex. (Enter the answers in thousands.)

b. What is the coefficient of variation for each apartment complex? (Do not round intermediate calculations. Round the final answers to 4 decimal places.)

c. Which apartment complex has more risk?

• Windy Acres

• Hillcrest Apartments

Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows:

a. Find the expected value of the cash flow for each apartment complex. (Enter the answers in thousands.)

b. What is the coefficient of variation for each apartment complex? (Do not round intermediate calculations. Round the final answers to 4 decimal places.)

c. Which apartment complex has more risk?

• Windy Acres

• Hillcrest Apartments

(a) Suppose a dealer draws one card from a standard, properly shuffled, 52-card deck of cards (that is, all Jokers have been removed). (i) Describe the sample space - i.e. all of the possible outcomes (no need to write them all out, just describe them in words). (1 point) (ii) What is the probability that the card is a Heart? (1 point) (iii) What is the probability that the card is a 6? (1 point) (iv) What is the probability that the card has a number on the face (i.e. not Jack, Queen, King, or Ace)? (1 point)

(b) Suppose I flip a fair coin twice in a row. (i) Write out the set of possible outcomes (the sample space). (1 point) (ii) What is the probability that at least one flip lands with Heads facing up? (1 point) (iii) What is the probability that both flips land with Heads facing up? (1 point)

(c) Consider a business owner who can make one of three decisions about a new product. Each decision generates a lottery over different possible revenue outcomes. If he makes Decision A, then the resulting lottery, p A, generates $20, 000 in revenue with probability 0.3, $12, 000 in revenue with probability 0.15, $5, 000 in revenue with probability 0.35, and $2, 000 with probability 0.2. If he makes Decision B, then the resulting lottery, p B, generates $30, 000 in revenue with probability 0.1, $10, 000 in revenue with probability 0.6, and $1, 000 with probability 0.3. If he makes Decision C, then the resulting lottery, p C , generates $20, 000 in revenue with probability 0.2, and $8, 000 with probability 0.8. (i) Write each lottery in the form (p1, x1; p2, x2; ...; pn, xn). (2 points) (ii) Calculate the expected value (of revenue) from each decision. (3 points)

The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $11 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $5.1 million with a 0.2 probability, $2.1 million with a 0.5 probability, and $0.7 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.

1. Debt/Capital ratio is 0.

2. Debt/Capital ratio is 10%, interest rate is 9%.

3. Debt/Capital ratio is 50%, interest rate is 11%.

4. Debt/Capital ratio is 60%, interest rate is 14%.

Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $5.4 million. The equipment will be depreciated straight line over 6 years to a value of zero, but in fact, it can be sold after 6 years for $682,000. The firm believes that working capital at each date must be maintained at a level of 10% of next year’s forecast sales. The firm estimates production costs equal to $1.30 per trap and believes that the traps can be sold for $5 each. Sales forecasts are given in the following table. The project will come to an end in 6 years. when the trap becomes technologically obsolete. The firm’s tax bracket is 35%, and the required rate of return on the project is 8%. Suppose the firm can cut its requirements for working capital in half by using better inventory control systems.

Sales Units millions of traps

By how much will this increase project NPV? (Enter your answer in millions round to 4 decimal places)

1) A discrete random variable X has the following probability distribution:

Compute each of the following quantities (give the exact numbers):

(a) P(18)=

(b) P(X>18)=

(c) P(X?18)=

(d) The mean ? of X is

(e) The variance ?2 of X is (write all decimal points)

(f) The standard deviation ? of X is (use 4 decimal points)

2) Borachio works in an automotive tire factory. The number X of sound but blemished tires that he produces on a random day has the probability distribution

For the following, don’t round the numbers

(a) Find the probability that Borachio will produce more than three blemished tires tomorrow.

(b) Find the probability that Borachio will produce at most two blemished tires tomorrow.

(c) Compute the mean of X.

3)Find the mean ? and standard deviation ? of a random variable X with the following probability distribution

(a) ?=1.5, ?=0.96

(b) ?=1.2, ?=0.96

(c) ?=1.5, ?=0.98

(d) ?=1.2, ?=0.98

(e) ?=1.5, ?=2.4

4). To set a schedule for a new bus route, the transit authority repeatedly times the trip between two points; the time X in minutes is found to have the following probability distribution function

(a) the probability that a randomly selected trip will take at least 24 minutes is about:

(i) 0.14; (ii) 0.10; (iii) 0.23; (iv) 0.04; (v) 0.86

(b) The probability that a randomly selected trip will take between 21 and 24 minutes (including 21 and 24) is about: (i) 0.19; (ii) 0.79; (iii) 0.89; (iv) 0.29; (v) 0.7

(c) If the trip is made over and over, the average time it takes in minutes is about:

(i) 22.5; (ii) 22.2; (iii) 21.9; (iv) 22.0; (v) 23.0

5) A sociologist surveyed the households in a small town. The random variable X represents the number of dependent children in the households. The missing probability is

(a) 0.02

(b) 0.12

(c) 0.22

(d) 0.32

(e) 0.78

6) The following is a probability distribution function. True or False?

Consider a portfolio with $2,943 invested in Asset A and $3,390 invested in Asset B with the following returns and probabilities. What is the rate of return on the portfolio pay when a TIE occurs? (round the the nearest whole percentage ##%)

1. The following data set is given. Determine whether it is reasonable to treat the following sample as though it comes from an approximately normal population. Include any charts or graphs you make in Excel here and justify your answer.

A car is to be hoisted by elevator to the fourth floor of a parking garage, which is 48 ft above the ground. Part A If the elevator can accelerate at 0.8 ft/s2, decelerate at 0.3 ft/s2, and reach a maximum speed of 8 ft/s, determine the shortest time to make the lift, starting from rest and ending at rest.

1. Variable, Fixed, and Mixed Costs

   Classify the following costs of activity inputs as variable, fixed, or mixed. Identify the activity and the associated activity driver that allow you to define the cost behavior. For example, assume that the resource input is “cloth in a shirt." The activity would be "sewing shirts," the cost behavior "variable," and the activity driver "units produced." Prepare your answers in the following format:

   	Activity	Cost Behavior	Activity Driver
   a. Flu vaccine	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   b. Salaries, equipment, and materials used for moving materials in a factory	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   c. Forms used to file insurance claims	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   d. Salaries, forms, and postage associated with purchasing	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   e. Printing and postage for advertising circulars	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   f. Equipment, labor, and parts used to repair and maintain production equipment	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   g. Power to operate sewing machines in a clothing factory	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   h. Wooden cabinets enclosing audio speakers	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   i. Advertising	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   j. Sales commissions	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   k. Fuel for a delivery van	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Mileage Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Mileage Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   l. Depreciation on a warehouse	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   m. Depreciation on a forklift used to move partially completed goods	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   n. X-ray film used in the radiology department of a hospital	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold
   o. Rental car provided for a client	Assembling Delivering orders Filing claims Maintaining equipment Moving materials Purchasing goods Selling goods Selling products Sewing Storing goods Transporting clients Vaccinating patients X-raying patients	Variable Fixed Mixed	Machine hours Maintenance hours Miles driven Number of circulars Number of claims Number of flu shots Number of moves Number of orders Number of X-rays Square feet Units produced Units sold