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. | ||||||||||||||||||||
|
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| - 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. | |||||||||||||||||||||
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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 | |||||||||||||||||||||
| (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. | |||||||||||||||||||||
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| - 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
| Year 1 | Year 2 | Year 3 | |
| Assets: | |||
| Residence | 50,000 | 50,000 | 200,000 |
| Stocks and bonds | 10,000 | 10,000 | 10,000 |
| Automobiles | 15,000 | 15,000 | 40,000 |
| Cash | 5,000 | 8,000 | 20,000 |
| Liabilities: | |||
| Mortgage balance | 40,000 | 30,000 | 0 |
| Auto loan | 8,000 | 5,000 | 0 |
| Student loans | 10,000 | 8,000 | 0 |
| Income: | |||
| Salary | 30,000 | 35,000 | 40,000 |
| Other | 0 | 1,000 | 1,000 |
| Expenses: | |||
| Mortgage payments | 5,000 | 5,000 | 0 |
| Car payments | 1,000 | 5,000 | 2,500 |
| Student loan payments | 1,000 | 1,000 | 500 |
| Other living expenses | 15,000 | 15,000 | 20,000 |
| Total living expenses | 22,000 | 26,000 | 23,000 |
Calculate the amount of income from unknown sources
In: Accounting
Consider the following time series data.
| Quarter | Year 1 | Year 2 | Year 3 |
| 1 | 4 | 6 | 7 |
| 2 | 2 | 3 | 6 |
| 3 | 3 | 5 | 6 |
| 4 | 5 | 7 | 8 |
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 | (___) |
Consider the following time series data.
| Quarter | Year 1 | Year 2 | Year 3 |
| 1 | 5 | 5 | 6 |
| 2 | 2 | 4 | 5 |
| 3 | 4 | 6 | 6 |
| 4 | 7 | 5 | 8 |
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 | 5 | ||
| 2 | 2 | |||
| (___) | ||||
| 3 | 4 | (___) | ||
| (___) | ||||
| 4 | 7 | (___) | ||
| (___) | ||||
| 2 | 1 | 5 | (___) | |
| (___) | ||||
| 2 | 4 | (___) | ||
| (___) | ||||
| 3 | 6 | (___) | ||
| (___) | ||||
| 4 | 5 | (___) | ||
| (___) | ||||
| 3 | 1 | 6 | (___) | |
| (___) | ||||
| 2 | 5 | (___) | ||
| (___) | ||||
| 3 | 6 | |||
| 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
Consider the following two projects:
|
Project |
Year 0 Cash Flow |
Year 1 Cash Flow |
Year 2 Cash Flow |
Year 3 Cash Flow |
Year 4 Cash Flow |
Discount Rate |
|
A |
-100 |
40 |
50 |
60 |
N/A |
.15 |
|
B |
-73 |
30 |
30 |
30 |
30 |
.15 |
Assume that projects A and B are mutually exclusive. The correct
investment decision and the best rational for that decision is
to:
Group of answer choices
a.invest in project A since NPVB < NPVA.
b.invest in project B since IRRB > IRRA.
c.invest in project B since NPVB > NPVA.
d. invest in project A since NPVA > 0
In: Finance
Jr
| Company | ||||
| Income Statement (in millions) | ||||
| Year 12 | Year 11 | Year 10 | ||
| Sales | 9,431 | 8,821 | 8,939 | |
| Gain on sale of branded product line | 465 | |||
| Cost of goods sold | (6,094) | (5,884) | (5,789) | |
| Selling and admin expenses | (1,746) | (1,955) | (1,882) | |
| Loss from expropriation of subsidiary | (27) | |||
| Interest income | 27 | 23 | 25 | |
| Interest expense | (294) | (333) | (270) | |
| Other income (expense) | (45) | 1 | (25) | |
| Income before income taxes | 1,279 | 646 | 1,463 | |
| Income tax expense | (445) | (168) | (573) | |
| Net income | 834 | 478 | 890 | |
| Jr Company is a marketer of branded foods to the retail and foodservice channels. After reading the notes to the financial statements you find the following exciting info: | ||||
| 1. Gain on sale of branded product line: In year 10, the sale of a portion of one of the branded product lines was completed for $735 million. The transaction resulted in a pretax gain of $464.5 million. The sale did not qualify as a discontinued operations. There was no information about the tax effect of the gain shown above. | ||||
| 2. Loss from expropriation of subsidiary: A loss occured in year 11 when a subsidiary was expropriated during a military coup in a previously stable country. The loss was $27 million. | ||||
| 3. Sale and promotion costs: In year 11, Jr changed the classification of certain sale and promotion incentives provided to customers and consumers. In the past Jr classified these incentives and selling and administrative expenses, with the gross amount of the revenue associated with the incentives reported in sales. Beginning in year 11, Jr changed to reporting the incentives as a reduction of revenues. As a result of this change, the company reduced reported revenues by $693 million in year 12, $610 million in year 11, and $469 million in year 10. The company stated that selling and administrative expenses were "correspondingly reduced such that net earnings were not affected." The income statement above already reflects the adjustments to sales revenues and selling and administrative expenses for years 10 through 12. | ||||
| 4. Tax rate: The U.S. federal statutory rate was 35% for each of the years presented. | ||||
| REQUIRED: | ||||
| a. Briefly discuss whether you would adjust the following items when using earnings to forecast future profitability of Jr. | ||||
| i. Gain on sale of portion of branded product line. | ||||
| ii. Loss from expropriation of subsidiary | ||||
| b. Briefly discuss whether you believe the reclassification adjustments made for the sale and promotion incentive costs are appropriate. | ||||
| c. Prepare an adjusted income statement after making the adjustment(s), if any from part b. Round all adjustments to the nearest million. | ||||
| d. Prepare common size income statements using the information as provided above for year 10, 11, and 12. Set sales equal to 100%. | ||||
| e. Prepare common size income statements after making the adjustments from part b. for year 10, 11, and 12. Set sales equal to 100%. | ||||
| f. Assess the changes in the profitability of Jr during the 3 year period. | ||||
In: Accounting
The one-year spot rate is currently 4 percent; the one-year spot rate one year from now will be 3 percent; and the one-year spot rate two years from now will be 6 percent. Under the unbiased expectations theory, what must today's three-year spot rate be?
please show in excel
In: Finance
a.
|
Merck |
|||
|
INCOME STATEMENT |
Year 3 Estimate |
Year 2 |
Year 1 |
|
Net sales |
47,716 |
40,343 |
|
|
Cost of goods |
28,977 |
22,444 |
|
|
Gross profit |
18,739 |
17,900 |
|
|
Selling general & administrative expense |
6,531 |
6,469 |
|
|
Depreciation & amortization expense |
1,464 |
1,277 |
|
|
Interest expense |
342 |
329 |
|
|
Income before tax |
10,403 |
9,824 |
|
|
Income tax expense |
3,121 |
3,002 |
|
|
Net income |
7,282 |
6,822 |
|
|
Outstanding shares |
2,976 |
2,976 |
2,968 |
|
RATIOS |
|||
|
Sales growth |
18.27% |
18.27% |
|
|
Gross Profit Margin |
39.27% |
39.27% |
|
|
Selling General & Administrative Exp / Sales |
13.69% |
13.69% |
|
|
DEPRECIATION (depn exp / pr yr PPE gross) |
8.76% |
8.76% |
|
|
INT (int / pr yr LTD) |
4.94% |
4.94% |
|
|
Tax (Inc Tax / Pre-tax inc) |
30.00% |
30.00% |
|
|
BALANCE SHEET |
Year 3 Estimate |
Year 2 |
Year 1 |
|
Cash |
3,287 |
4,255 |
|
|
Receivables |
5,215 |
5,262 |
|
|
Inventories |
3,579 |
3,022 |
|
|
Other |
880 |
1,059 |
|
|
Total current assets |
12,961 |
13,598 |
|
|
Property, plant & equipment |
18,956 |
16,707 |
|
|
Accumulated depreciation |
5,853 |
5,225 |
|
|
Net property & equipment |
13,103 |
11,482 |
|
|
Other assets |
17,942 |
15,075 |
|
|
Total assets |
44,007 |
40,155 |
|
|
Accounts payable & accrued liabilities |
5,904 |
5,391 |
|
|
Short-term debt & cmltd |
4,067 |
3,319 |
|
|
Income taxes |
1,573 |
1,244 |
|
|
Total current liab |
11,544 |
9,954 |
|
|
Deferred income, taxes and other |
11,614 |
11,768 |
|
|
Long term debt |
4,799 |
3,601 |
|
|
Total liabilities |
27,957 |
25,323 |
|
|
Common stock |
30 |
30 |
|
|
Capital surplus |
6,907 |
6,266 |
|
|
Retained earnings |
31,500 |
27,395 |
|
|
OTHER EQUITIES |
0 |
0 |
|
|
Treasury stock |
22,387 |
18,858 |
|
|
Shareholder equity |
16,050 |
14,832 |
|
|
Total liabilities & net worth |
44,007 |
40,155 |
|
|
RATIOS |
|||
|
AR turn |
9.15 |
9.15 |
7.67 |
|
INV turn |
8.10 |
8.10 |
7.43 |
|
AP turn |
4.91 |
4.91 |
4.16 |
|
Tax Pay (Tax pay / tax exp) |
50.41% |
50.41% |
41.45% |
|
FLEV (Assets/Equity) |
2.35 |
2.74 |
2.71 |
|
Div/sh |
$1.06 |
$1.06 |
$0.98 |
|
CAPEX |
5,100 |
4312 |
3641 |
|
CAPEX/Sales |
9.04% |
9.04% |
9.03% |
Additional Balance Sheet Assumptions:
Other Current Assets- Unchanged
Other Assets- Unchanged
Deferred Income Taxes & Other- Unchanged
Short Term Debt & CMLTD- Unchanged
Long Term Debt- Unchanged
Required:
1)Prepare the estimated Year 3 projected income statement using the ratios provided.
2)Prepare the estimated Year 3 projected balance sheet using the ratios and assumptions provided. Remember that cash is your residual account to make the balance sheet, balance.
3)Assuming that Merck requires an ending 6.5% cash balance for sales projected in Year 3, does it have a ‘surplus’ or a ‘deficit’ of cash relative to the requirement. By how much? If a deficit, suggest how the deficit might be financed. If a surplus, suggest how it might be used.
In: Accounting