Consider the following time series:
| Quarter | Year 1 | Year 2 | Year 3 |
| 1 | 66 | 63 | 57 |
| 2 | 48 | 40 | 50 |
| 3 | 59 | 61 | 54 |
| 4 | 73 | 76 | 67 |
Use a multiple linear regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data: Qtr1 = 1 if quarter 1, 0 otherwise; Qtr2 = 1 if quarter 2, 0 otherwise; Qtr3 = 1 if quarter 3, 0 otherwise. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)
| Compute the quarterly forecasts for next year. | ||||||||||||||||
|
In: Statistics and Probability
Consider the following time series data.
| Quarter | Year 1 | Year 2 | Year 3 |
| 1 | 4 | 6 | 7 |
| 2 | 0 | 1 | 4 |
| 3 | 3 | 5 | 6 |
| 4 | 5 | 7 | 8 |
| (b) | Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data. Qtr1 = 1 if Quarter 1, 0 otherwise; Qtr2 = 1 if Quarter 2, 0 otherwise; Qtr3 = 1 if Quarter 3, 0 otherwise. | |||||||||||||||
| If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) If the constant is "1" it must be entered in the box. Do not round intermediate calculation. | ||||||||||||||||
| ŷ = + Qtr1 + Qtr2 + Qtr3 | ||||||||||||||||
| (c) | Compute the quarterly forecasts for next year based on the model you developed in part (b). | |||||||||||||||
| If required, round your answers to three decimal places. Do not round intermediate calculation. | ||||||||||||||||
|
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| (d) | Use a multiple regression model to develop an equation to account for trend and seasonal effects in the data. Use the dummy variables you developed in part (b) to capture seasonal effects and create a variable t such that t = 1 for Quarter 1 in Year 1, t = 2 for Quarter 2 in Year 1,… t = 12 for Quarter 4 in Year 3. | |||||||||||||||
| If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) | ||||||||||||||||
| ŷ = + Qtr1 + Qtr2 + Qtr3 + t |
In: Statistics and Probability
Trend Analysis
Critelli Company has provided the following comparative information:
| Year 5 | Year 4 | Year 3 | Year 2 | Year 1 | ||||||
| Net income | $1,283,300 | $1,106,300 | $929,700 | $794,600 | $673,400 | |||||
| Interest expense | 436,300 | 398,300 | 344,000 | 262,200 | 208,800 | |||||
| Income tax expense | 410,656 | 309,764 | 260,316 | 206,596 | 161,616 | |||||
| Average total assets | 7,676,786 | 6,777,477 | 5,789,545 | 4,915,349 | 4,181,043 | |||||
| Average stockholders' equity | 2,629,713 | 2,353,830 | 2,056,858 | 1,822,477 | 1,595,735 | |||||
You have been asked to evaluate the historical performance of the company over the last five years.
Selected industry ratios have remained relatively steady at the following levels for the last five years:
| Industry Ratios | ||
| Return on total assets | 22.1 % | |
| Return on stockholders’ equity | 45.6 % | |
| Times interest earned | 4.6 | |
Instructions:
Calculate three ratios for Year 1 through Year 5. Round to one decimal place.
a. Return on total assets:
| Year 5 | % |
| Year 4 | % |
| Year 3 | % |
| Year 2 | % |
| Year 1 | % |
b. Return on stockholders’ equity:
| Year 5 | % |
| Year 4 | % |
| Year 3 | % |
| Year 2 | % |
| Year 1 | % |
c. Times interest earned:
| Year 5 | |
| Year 4 | |
| Year 3 | |
| Year 2 | |
| Year 1 |
In: Accounting
Consider the following time series data.
| Quarter | Year 1 | Year 2 | Year 3 |
| 1 | 3 | 6 | 7 |
| 2 | 4 | 1 | 8 |
| 3 | 1 | 7 | 5 |
| 4 | 5 | 7 | 8 |
a. Which of the following is a time series plot?
- Select your answer -time series plot #1time series plot #2time series plot #3Item 1
What type of pattern exists in the data?
- Select your answer -upward linear trendnonlinear trend and a seasonal patternlinear trend and a seasonal patternslight curvaturedownward linear trendItem 2
b. Show the four-quarter and centered moving average values for this time series (to 3 decimals if necessary).
| Year | Quarter | Time Series Value | Four-Quarter Moving Average | Centered Moving Average |
| 1 | 1 | 3 | ||
| 2 | 4 | |||
| _________ | ||||
| 3 | 1 | _____ | ||
| __________ | ||||
| 4 | 5 | _________ | ||
| __________ | ||||
| 2 | 1 | 6 | ______ | |
| ________ | ||||
| 2 | 1 | _______ | ||
| ______ | ||||
| 3 | 7 | _______ | ||
| ________ | ||||
| 4 | 7 | ________ | ||
| ________ | ||||
| 3 | 1 | 7 | __________ | |
| ________ | ||||
| 2 | 8 | ________ | ||
| ________ | ||||
| 3 | 5 | |||
| 4 | 8 |
c. Compute seasonal indexes and adjusted seasonal indexes for the four quarters (to 3 decimals).
| Quarter | Seasonal Index |
Adjusted Seasonal Index |
| 1 | ||
| 2 | ||
| 3 | ||
| 4 | ||
| Total |
In: Statistics and Probability
Trend Analysis
Critelli Company has provided the following comparative information:
| Year 5 | Year 4 | Year 3 | Year 2 | Year 1 | ||||||
| Net income | $1,052,000 | $906,900 | $762,100 | $651,400 | $552,000 | |||||
| Interest expense | 357,700 | 326,500 | 282,000 | 215,000 | 171,100 | |||||
| Income tax expense | 336,640 | 253,932 | 213,388 | 169,364 | 132,480 | |||||
| Average total assets | 6,350,000 | 5,606,364 | 4,789,450 | 4,067,606 | 3,459,809 | |||||
| Average stockholders' equity | 2,169,072 | 1,941,970 | 1,697,327 | 1,504,388 | 1,317,422 | |||||
You have been asked to evaluate the historical performance of the company over the last five years.
Selected industry ratios have remained relatively steady at the following levels for the last five years:
| Industry Ratios | ||
| Return on total assets | 21.9 % | |
| Return on stockholders’ equity | 45.3 % | |
| Times interest earned | 4.6 | |
Instructions:
Calculate three ratios for Year 1 through Year 5. Round to one decimal place.
a. Return on total assets:
| Year 5 | % |
| Year 4 | % |
| Year 3 | % |
| Year 2 | % |
| Year 1 | % |
b. Return on stockholders’ equity:
| Year 5 | % |
| Year 4 | % |
| Year 3 | % |
| Year 2 | % |
| Year 1 | % |
c. Times interest earned:
| Year 5 | |
| Year 4 | |
| Year 3 | |
| Year 2 | |
| Year 1 |
In: Accounting
Consider the following international investment opportunity:
year 0 -50000 euro Year 1 15000 euro year 2 15000 year 3 15000
The current exchange rate is $1.60 = €1.00. The inflation rate in the U.S. is 3 percent and in the euro-zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent.
Find the dollar cash flows to compute the dollar-denominated NPV of this project.
In: Finance
Consider the following time series data.
| Quarter | Year 1 | Year 2 | Year 3 |
| 1 | 5 | 8 | 10 |
| 2 | 1 | 3 | 7 |
| 3 | 3 | 6 | 8 |
| 4 | 7 | 10 | 12 |
| (a) | Choose the correct time series plot. | ||||||||||||||||||||
|
|||||||||||||||||||||
| - Select your answer -Plot (i)Plot (ii)Plot (iii)Plot (iv)Item 1 | |||||||||||||||||||||
| What type of pattern exists in the data? | |||||||||||||||||||||
| - Select your answer -Positive trend pattern, no seasonalityHorizontal pattern, no seasonalityNegative trend pattern, no seasonalityPositive trend pattern, with seasonalityHorizontal pattern, with seasonalityItem 2 | |||||||||||||||||||||
| (b) | Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data. Qtr1 = 1 if Quarter 1, 0 otherwise; Qtr2 = 1 if Quarter 2, 0 otherwise; Qtr3 = 1 if Quarter 3, 0 otherwise. | ||||||||||||||||||||
| If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) If the constant is "1" it must be entered in the box. Do not round intermediate calculation. | |||||||||||||||||||||
| ŷ = + Qtr1 + Qtr2 + Qtr3 | |||||||||||||||||||||
| (c) | Compute the quarterly forecasts for next year based on the model you developed in part (b). | ||||||||||||||||||||
| If required, round your answers to three decimal places. Do not round intermediate calculation. | |||||||||||||||||||||
|
|||||||||||||||||||||
| (d) | Use a multiple regression model to develop an equation to account for trend and seasonal effects in the data. Use the dummy variables you developed in part (b) to capture seasonal effects and create a variable t such that t = 1 for Quarter 1 in Year 1, t = 2 for Quarter 2 in Year 1,… t = 12 for Quarter 4 in Year 3. | ||||||||||||||||||||
| If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) | |||||||||||||||||||||
| ŷ = + Qtr1 + Qtr2 + Qtr3 + t | |||||||||||||||||||||
| (e) | Compute the quarterly forecasts for next year based on the model you developed in part (d). | ||||||||||||||||||||
| Do not round your interim computations and round your final answer to three decimal places. | |||||||||||||||||||||
|
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| (f) | Is the model you developed in part (b) or the model you developed in part (d) more effective? | ||||||||||||||||||||
| If required, round your intermediate calculations and final answer to three decimal places. | |||||||||||||||||||||
|
|||||||||||||||||||||
| - Select your answer -Model developed in part (b)Model developed in part (d)Item 22 | |||||||||||||||||||||
| Justify your answer. | |||||||||||||||||||||
| The input in the box below will not be graded, but may be reviewed and considered by your instructor. | |||||||||||||||||||||
In: Statistics and Probability
Consider the following time series:
| Quarter | Year 1 | Year 2 | Year 3 |
| 1 | 69 | 66 | 60 |
| 2 | 45 | 37 | 47 |
| 3 | 55 | 57 | 50 |
| 4 | 83 | 86 | 77 |
| (a) | Choose a time series plot. | |||||||||||||||
|
||||||||||||||||
| - Select your answer -Graph (i)Graph (ii)Graph (iii)Graph (iv)Item 1 | ||||||||||||||||
| What type of pattern exists in the data? Is there an indication of a seasonal pattern? | ||||||||||||||||
| - Select your answer -Positive trend pattern, no seasonalityHorizontal pattern, no seasonalityNegative trend pattern, no seasonalityPositive trend pattern, with seasonalityHorizontal pattern, with seasonalityItem 2 | ||||||||||||||||
| (b) | Use a multiple linear regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data: Qtr1 = 1 if quarter 1, 0 otherwise; Qtr2 = 1 if quarter 2, 0 otherwise; Qtr3 = 1 if quarter 3, 0 otherwise. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) | |||||||||||||||
| ŷ = + Qtr1 + Qtr2 + Qtr3 | ||||||||||||||||
| (c) | Compute the quarterly forecasts for next year. | |||||||||||||||
|
In: Statistics and Probability
Consider the following quarterly time series.
|
Quarter |
Year 1 |
Year 2 |
Year 3 |
|
1 |
923 |
1,112 |
1,243 |
|
2 |
1,056 |
1,156 |
1,301 |
|
3 |
1,124 |
1,124 |
1,254 |
|
4 |
992 |
1,078 |
1,198 |
a. Construct a time series plot. What type of pattern exists in the data?
b. Use a multiple regression model with dummy variables as follows
to develop an equation to account for seasonal effects in the
data.
Qtr1 = 1 if quarter 1, 0 otherwise; Qtr2 = 1 if quarter 2, 0 otherwise; Qtr3 = 1 if quarter 3, 0 otherwise.
c. Compute the quarterly forecasts for next year based on the model developed in part (b).
(that is for all the four quarters next year)
In: Statistics and Probability
Glasgow company has the following financial data for project X (3-year project): Year 0 Year 1 Year 2 Year 3 CF -10,000 5,000 4,000 4,000 The company’s capital structure is distributed equally between debt, preferred stock and common stock. It has also the following information: 1- After tax cost of debt: 5.8%. Tax rate: 40%
2- Preferred stocks are selling at $65 per share and pay a dividend of $8 per share
3- Common stocks are selling at $40 per share, pay a year-end dividend of $2 per share and grow at a constant rate of 13%.
The company is also considering another two projects “Y” & “Z” with the following information: Criterion Project Y Project Z Payback Period 2.56 years 3 years NPV $678.98 $282.24 IRR 15.19% 16% MIRR 14.48% 15%
5. Assuming that the three projects X, Y & Z are independent, which project (s) should the company choose? *
A. X, Y & Z
B. X & Z
C. Only X
D. Only Y
E. Reject all projects
6. Assuming that the three projects X, Y & Z are Mutual Exclusive, which project (s) should the company choose? *
A. X, Y & Z
B. X & Z
C. Only X
D. Only Y
E. Reject all projects
7. Assuming that the three projects X, Y & Z are independent, then based on MIRR criteria which project (s) should the company choose? *
A. X, Y & Z
B. X & Y
C. Only X
D. Only Z
E. Reject all projects
8. Assuming that the three projects X, Y & Z are Mutual Exclusive, then based on MIRR criteria which project (s) should the company choose? *
A. X, Y & Z
B. X & Y
C. Only X
D. Only Z
E. Reject all projects
9. If IRR for “X” is 15.02%, and the three projects X, Y & Z are Independent, based on IRR criteria which project (s) should the company choose? *
A. X, Y & Z
B. X & Y
C. Only X
D. Only Y
E. Reject all projects
10. Belanger Construction is considering the following project. The project has an up-front cost and will also generate the following subsequent cash flows. The project’s payback is 1.5 years, and it has a weighted average cost of capital of 10 percent. What is the project’s modified internal rate of return (MIRR)? *
A. 10.00%
B. 19.65%
C. 21.54%
D. 23.82%
E. 14.75%
In: Finance