For the next three years MBA Inc. is expected to pay​ $1.50, $2.00 and​ $2.50 in dividends and after that dividends will grow at the rate of​ 4% in perpetuity. The required rate of return is​ 12%. Assuming the first dividend will be paid in exactly one​ year, the intrinsic value of MBA shares is

A. $28.96

B. $38.50

C. $25.37

D. $27.85

Read and complete the Capstone exercise on page 177 and answer all of the questions associated with the case.

In 1885, Binney & Smith had a product line of ONE—An-DuSeptic dustless chalk. While promoting this product to teachers across the United States, the company founders discovered that teachers were importing expensive wax crayons from Europe. In the early 1900s, nearly 20 years after starting the company, Binney & Smith introduced a new product, eight colored crayons packaged in a green and yellow box. Crayola Crayons remain a staple in American classrooms today. The size of the boxes and the selection of colors have changed over the decades, but the basic product remains essentially the same. (The “Big Box” with a mind-boggling 96 crayons was introduced in 1993.) In 1964, Binney & Smith acquired Permanent Pigments, an acrylic paint manufacturer, and in 1977, it acquired the rights to Silly Putty. In 1984, the Binney & Smith company became a wholly owned subsidiary of Hallmark Cards, Inc. In 2007, the Binney & Smith corporate name was changed to Crayola because of the brand familiarity. The name Crayola has a 99% recognition among U.S. consumers. Eighty percent of all the crayons sold in the United States today have the Crayola brand name. Crayola products are sold in 80 different countries and packaged in 12 languages. The name change also reflected the company’s new direction. For nearly 100 years, Crayola targeted children and their parents with a product line of back-to-school products. The products had expanded from crayons to water paints, markers, chalk, colored pencils, and poster paints. However, in an effort to expand the market and generate revenues throughout the year, Crayola entered the toy industry. Bath tub art, glow stations, Color Explosion products, Mess-Free Art, flavored drinking water, and even a colorful computer keyboard and mouse are just some of the products added to the Crayola line. Today in any big box store, Crayola will have shelf space in both the art and school supply aisle AND the toy section.

1. How would you define the attributes and benefits of Crayola products?

2. Define the core, actual, and augmented product benefits.

3. Where was Crayola in the product life cycle before it entered the toy market? Where do you think they are now? Explain.

4. Do you see the move from school supply products to toys as product development? Explain.

5. Describe the Crayola product portfolio strategy.

The average annual premium for automobile insurance in the United States is $1485. A representative sample of annual premiums for the state of Michigan is contained in the Excel Online file below. Assume the population is approximately normal. Construct a spreadsheet to answer the following questions.

a. Provide a point estimate of the mean annual automobile insurance premium in Michigan.

$  (to the nearest dollar)

b. Develop a 95% confidence interval for the mean annual automobile insurance premium in Michigan.

($ ,  $ ) (to the nearest cent)

c. Does the 95% confidence interval for the annual automobile insurance premium in Michigan include the national average for the United States?

_____Yes or No

What is your interpretation of the relationship between auto insurance premiums in Michigan and the national average?

We would be % confident that auto insurance premiums in Michigan are _______(above or below) the national average.

Video: The Normal Distribution

1.In the United States, the average weight of an adult male is approximately 172 pounds with a standard deviation of about 30 pounds. If a man weighs 145 pounds, how many standard deviations above/below the mean is he?

A man who weighs 145 pounds is____________ standard deviations__________ the mean.

2.For this question, refer to the normal probability distribution table found here

In the United States, the average weight of an adult male is approximately 172 pounds with a standard deviation of about 30 pounds. Assuming a normal distribution, what proportion of men weigh less than 145 pounds? Express your answer as a decimal rounded to four digits after the decimal point.

3. When considering a normal distribution, proportions can be thought of as areas of regions. The areas can be found using a probability distribution table. To find the proportion of data that falls between two values, look up the appropriate two z scores in the table and      Select an answerdividesubtractmultiplyadd the values.

4. For this question, refer to the normal probability distribution table found here
In the United States, the average weight of an adult male is approximately 172 pounds with a standard deviation of about 30 pounds. Assuming a normal distribution, how much would a man weigh at the 80th percentile? Round your answer to the nearest pound.

pounds.

The U.S. census questionnaire defines kitchens with complete facilities as those having a sink with piped water, a range, and a refrigerator. Homes that lack complete kitchen facilities have been rare in the United States for many years. The first census for which data were tabulated on this subject was in 1970. The table shows the percentage of housing units lacking complete kitchen facilities in the western United States.

Percent of Western U.S. Homes with Incomplete
Kitchens

(a) Use the method of least squares to find the multivariable function f with inputs a and b for the best-fitting line

y = ax + b,

where x is years since 1970.
f(a, b) =

(b) Calculate the minimum value of

f(a, b).

Explain what this minimum value indicates about the relationship between and the best-fitting line.The minimum value of

f(a, b)

is  , which indicates that the line with parameters a =  and b =  passes through each data point.
(c) Write function of the linear model that best fits the data to give the percentage of homes with incomplete kitchens in the Western United States, where x is years since 1970, with data from

0 ≤ x ≤ 20.

h(x) =

(d) In what year does the best-fitting line predict that no housing units will lack complete kitchen facilities?

Fullerton Company (a U.S. taxpayer) has wholly-owned subsidiaries located in Hungary and Hong Kong. The Hungarian operation purchases electric generators manufactured by Fullerton and sells them throughout Eastern Europe; 90 percent of sales are made outside of Hungary. The Hungarian subsidiary generated pretax income of $ 200,000 in the current year. The Hong Kong subsidiary is an investment company that makes investments in world financial markets; 100 percent of its income is generated from passive investments. The Hong Kong subsidiary generated pretax income of $ 100,000 in the current year. Both subsidiaries distribute 100 percent of income to Fullerton Company as a dividend each year. Corporate income tax rates and withholding rates are provided in Exhibits 8.1 and 8.3.

Required: a. Explain why the income earned by the subsidiaries in Hungary and Hong Kong should be included in Fullerton’s U.S. taxable income.

b. Determine the amount of foreign tax credit allowed by the United States in the current year and the amount of excess foreign tax credit, if any.

Exhibit 8.1 International Corporate Tax rates, 2017

Country Effective Tax Rate (%)

Hong Kong   16.5
Hungary 9

United States 40

Exhibit 8.3

Nontreaty Withholding Rates in Selected Countries, 2017

Country Dividend Interest Royalties

Hong Kong     0 0 4.95
Hungary 0 0 0

US 30 30 30

United States 40

22.A gene will increase in a population, even if it causes an individual's fitness to be immediately decreased, if:

23.Under what circumstances does reciprocal altruism appear in unrelated individuals?

24.

Why do babies in the United States easily develop a fear of snakes but not a fear of guns?

In order to provide relief from the surge in imports of hangers into the United​ States, a tafiff was recently imposed on wire hangers that increased the price from​ $20 to​ $40 per box of 500 hangers. ​ Initially, there were three​ (3) million boxes of hangers produced domestically and 12.5 million boxed consumed​ (primarily by the nearly​ 30,000 dry cleaning establishments located around the United​ States). After the implementation of the tariff the domestix quantity produced increase from to four​ (4) million boxes of hangers and domestic consumption fell to 10 million boxes of hangers. Before the​ tariffs, how many millions boxes of hangers were imported   nothing After the​ tariffs, how many millions of boxes of hangers were imported nothing After the​ tariff, ​$ nothing millions is raised in tariff revenue. The gain in producer surplus after the tariff is ​$ nothing million. The loss to consumer surplus as a result of the tariff is ​$ nothing. The deadweight loss of the tariff is ​$ nothing million. There are 600 workers employed in the United States producing wire hanger. The average pay for a worker in the industry is ​ $30,000. If we compare the cost of saving all 600 jobs to the loss of consumer​ surplus, the cost of the tariff per job is ​$ nothing ​(Round your answer to the second decimal ​place.). If we compare the cost of saving all 600 jobs to the deadweight​ loss, the cost of the tariff per job is ​$ nothing ​(Round your answer to the second decimal ​place.).

2.) You believe that a stock currently selling for$50 a share should sell for $60.00 a share. An at-the-money call option (the exercise price equals the market price) sells for $3 per share and an at the money Put option sells for $2.50 per share. In which option should you invest. Now say that he actual price ended up being $54.00. Was there a better choice? Did you make the right choice?

3.) What is the money market all about? You purchased a 91 day United States T-bill on February 1st for $99,000 and sold it on April 1st for $99,500. What was your annualized return?

4.) A 20 year United States Treasury bond has a market rate of interest of 4 percent and a coupon rate of 4 percent. What is its price? A 20 year AAA corporate bond has a market rate of interest of 6 percent and coupon rate of 6 percent. What is its price? Which bond is more risky? Now say that both the market rate of the Treasury security and the corporate bond rise by 1 percent, what is the new price of each bond. Comment.

5.) The United States economy grew by 2.3 percent in 2019 and the European economy grew by 1.0 percent. Based on this data, what happened to the value of the dollar compared to the Euro. Explain