Dr. Jones is a general surgeon and the second highest revenue generator for the healthcare facility.  What are the pros and cons of Dr. Jones experience with this technology?  Does Dr. Jone’s revenue generating abilities pose a conflict of interest? Why or why not?  Does the location of the equipment pose a conflict of interest? Why or why not? What specific steps should be taken and by whom to avoid this situation in the future?

The Internal Revenue Service audits a random sample of 60% of tax returns where the gross income exceeds $100,000. If a tax lawyer assists in the completion of 5 such returns, what is the probability that between 2 and 4 will be audited.

Tillie’sTrilbies estimates that revenues and expenditures for the next fiscal year are:

Total Revenue $6,800,000

Cost of Materials 5,000,000

Cost of Labor 1,000,000

Advertising 100,000

Insurance 50,000

Rent 350,000

Miscellaneous Expenses 100,000

a. Calculate Tilly’s accounting profit.

b. Suppose that in order to open her trilby business Tilly gave up a $250,000 per year job as a buyer at a high-end department store. Calculate Tilly’s economic profit.

c. Tilly is considering purchasing a building across the street and moving her company into that new location. The cost of the building is $5,000,000, which will be fully financed at a simple interest rate of 5 percent per year. Interest payments are paid annually on the last day of Tilly’s fiscal year. The first interest payment will be due next year. Principal will be repaid in 10 equal installments beginning at the end of the fifth year. Calculate Tilly’s accounting profit and economic profit for the next fiscal year.

d. Based upon your answer to part c, should Tilly buy the new building? Explain.

"A company's marketing strategy will last two years and produce revenue in years 1 and 2 only. The strategy can result in a success, a moderate success, or a failure.
The marketing strategy will cost $50,000 immediately (year 0), $44,000 in year 1, and $15,000 in year 2. There is uncertainty with projected revenues, but the forecasted revenues and probabilities for the marketing strategy are as follows:
- Success: Year 1: $109,000; Year 2: $126,000; Probability: 0.35
- Moderate success: Year 1: $95,000; Year 2: $75,000; Probability: 0.52
- Failure: Year 1: $55,000; Year 2: $57,000; Probability: 0.13
The company's MARR is 25%. You can ignore any other costs except for the marketing costs.
Calculate the standard deviation of the net present worth for the strategy.
HINT: it is easier to calculate the net present worth of each separate result first (success, moderate success, failure) before dealing with the probabilities."

Upon adoption of the new revenue standard, a company wrestled with a growth versus net accounting policy judgement and ultimately rationalized that it should likely continue its current position unless there was a compelling reason in the guidance to change.

Identify one or more biases that could be at play, then explain.

1. In 2019, a year in which the firm’s revenue increased, the firm’s gross margin (gross profits/revenue) also increased but the firm’s operating margin (operating profit/revenue) decreased. What does this imply regarding the performance of the firm in 2019?

2. Your friend Bob won the lottery. Four months from today he will start receiving his first annual payments and these payments will continue forever. His first payment will be $100,000 and these annual payments will grow at 2%/year. If we assume the appropriate risk adjusted discount rate is 7%/year, what is the current value of your friend’s lottery winnings? Providing an accurate equation with all of the appropriate inputs will get full credit.

3. If a bond’s market rate increases after the bond is issued then the value of the bond would increase. Agree or disagree? Explain!

4. The firm’s forecasted future dividends per share (DPS) over the next five years are:

    DPS                DPS                 DPS                 DPS                 DPS

   Year 1             Year 2             Year 3             Year 4             Year 5

               $2.00                $2.60               $3.40               $4.00               $4.20

If you believe the growth rate in dividends after year 5 is 3%/year in perpetuity and the firm’s beta is 0.8, then provide and equation to value the stock (include the value of all inputs in your equation).

5. Describe in words what the CAPM (Capital Asset Pricing Model) measures? Define the inputs used in the model.

6. Why is the firm’s cost of raising debt capital (k_d) always less than the firm’s cost of raising equity capital (k_e)? Explain fully!

7. When estimating a firm’s WACC, the weight of equity is a necessary input. Provide a detailed specific description of how you would estimate the weight of equity used to estimate the firm’s WACC.

1.For a linear demand curve that is downward sloping, the marginal revenue curve

Select one:

a. will be to the left of the demand curve and twice as steep.

b. will be to the right of the demand curve and twice as steep.

c. will be to the left of the demand curve and half as steep.

d. will be the same as the demand curve.

2.The demand curve that a monopolist faces is:

Select one:

a. not affected by changes in the prices of other goods.

b. the market demand curve.

c. the same as the demand curve that faces a perfectly competitive firm.

d. generally flatter than the demand curve that faces a perfectly competitive firm.

3.

The Herfindahl-Hirschman (HH) Index is used to

Select one:

a. measure the degree of market concentration in an industry.

b. None of the above

c. measure the degree of nonprice competition.

d. measure the extent of price leadership.

4.

The kinked demand curve model best reflects

Select one:

a. mutual interdependence among sellers.

b. price rigidities in oligopolistic markets.

c. a game theory approach to price-output decisions.

d. All of the above

5.

When a monopolist sells two units of output its total revenues are $100. When the monopolist sells three units of output its total revenues are $120. When the monopolist sells three units of output, the price per unit is:

Select one:

a. $33.33.

b. $6.67.

c. $40.

d. $20.

6.

When a monopolist sells two units of output its total revenues are $100. When the monopolist sells three units of output, its price per unit is $35. The monopolist's marginal revenue from selling the third unit of output is:

Select one:

a. $105.

b. $35.

c. $5.

d. $33.33.

1. Assume that a demand equation is given by

q=5000−100p

1. Find the marginal revenue for the production level (value of q) 1000 units

b. The cost of producing q units is given by

C(q)=3000−20q+0.03q2

Find the marginal profit for production level 500 units

A new historic revenue recognition procedure is about to go into affect. 1) Discuss the convergence leading up this event and the nature of accrual basis accounting. 2) Discuss under what conditions revenue recognition occurs, to include a compare/contrast of point of sale versus percentage of completion.

Sue’s Flowers Revenue Business Process Project Sue Hernandez is the owner and operator of a small flower shop, Sue’s Flowers. She has decided to develop a database system to track her sales, inventory, accounts receivable and cash receipts. This system is used for large orders that are arranged in advance. However, she does not have time to do the development herself. Therefore, she has hired you to design and implement the system for her. She describes the requirements of her revenue system for processing wedding orders as follows: Whenever a customer comes in to place an order, a sales clerk enters a Sales Order directly into the computer system. The sales order lists all of the floral inventory items the customer wishes to purchase. The clerk then prints the sales order and gives a copy to the customer. If this is a new customer, before entering the sales document, the clerk must enter the customer's basic information such as name, address, etc. Additionally, credit for new customers must be approved by Sue.In addition to transaction information, Sue tracks history information for each customer, showing all of the flowers purchased by each customer, and quantities of each type. This allows her to target market specials to each customer, and more quickly assess each customer’s needs when they come into the shop.This information is updated automatically by the computer system when the goods are delivered to the customer.When Sue completes delivery of the sales order, an accounts receivable clerk records the delivery on a special screen. When delivery entry is completed, Sue prints the invoices and sends them to customers. When customers send in their payments, a sales clerk records the cash receipts on a special input screen. Sue takes the all of the cash receipts for a day and prepares a single deposit slip form and makes the deposit. Sue later enters the deposit information from the paper form into the computer.

Prepare an ER diagram describing Sue's database. (State any assumptions you believe you have to make in order to develop a complete diagram). Sue would like for you to consider that, eventually, as new stores are opened, she will have store managers in each store that will perform the tasks she now performs. As a result, the system should be planned to always store information about the employee associated with transactions, whether that employee enters information, performs a task (such as delivery) or formally authorizes the transaction.

Hints:

1. A particular sales order is always delivered and invoiced all at the same time. Deliveries include information for only one Sales Order.

2. A single cash receipt may pay for several deliveries. A single delivery may be paid for with several different cash receipts. List and describe all of the recording, maintenance and reporting information processes that are described in the narrative.