A race car company  developed a new car battery that has a longer life span than that of a traditional battery. From the date of purchase of a race car, the distribution of the life span of the new battery is approximately normal with mean 30 months and standard deviation 8 months. For the price of $50, the company offers a two-year warranty on the new battery for customers who purchase a race car. The warranty guarantees that the car will be replaced at no cost to the customer if the battery no longer works within 24 months from the date of purchase.

(a) In how many months from the date of purchase is it expected that 25 percent of the batteries will no longer work? Show work.

(b) Suppose one customer who purchases the warranty is selected at random. What is the probability that the customer selected will require a replacement within 24 months from the date of purchase because the battery no longer works? Show your work and label your answer with appropriate probability notation.

(C). The company has a gain of $50 for each customer who purchases a warranty but does not require a replacement. The company has a loss (negative gain) of $150 for each customer who purchases a warranty and does require a replacement. What is the expected value of the gain for the company for each warranty purchased? Show work

The director of admissions at the University at the University of Maryland, University College is concerned about the high cost of textbooks for the students each semester. A sample of 25 students enrolled in the university indicates that x(bar) = $315.40 and s = $43.20.

A mean that is not in a confidence interval is rejected by the confidence interval, and we say the evidence against the mean is significant. At the 0.10 level of significance, is there evidence against mean $300?

1. No, because 300 is below the lower limit of the confidence interval
2. Yes, because 300 is below the lower limit of the confidence interval
3. No because 300 is in the confidence interval
4. Yes, because 300 is in the confidence interval

You have recently been hired by Bio Lux Company, in its relatively new treasury management department. Bio Lux was founded five years ago by Jessica Parker. Jessica found a method to produce high quality shampoo using natural ingredients. The shampoo produced by Bio Lux is in a good position to compete with other more established shampoo producers. The company is privately owned by Jessica Parker and her family, and it had sales of $12 million last year.

Bio Lux primarily sells its products through a wholesaler who distributes the products through its network of retailers throughout the country. Bio Lux’s growth to date has come from its innovation, quality, and low costs. When the company had sufficient capital, it would expand production. Relatively little formal analysis has been used in its capital budgeting process. Jessica has just read about capital budgeting techniques and has come to you for help. For starters, the company has never attempted to determine its cost of capital, and Jessica would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company. Jessica wants you to use a similar company to estimate the cost of capital (WACC) for Bio Lux, and she has chosen Procter & Gamble as a representative company. The following questions will lead you through the steps to calculate this estimate.

1. To estimate the cost of equity for Procter & Gamble, go to finance.yahoo.com and enter the ticker symbol “PG.” Follow the various links at this website to find answers to the following questions:

a) What is the most recent stock price (and provide the associated date) listed for Procter & Gamble?

b) What is the market value of equity, or market capitalization?

c) How many shares of stock does Procter & Gamble have outstanding?

d) What is the beta for Procter & Gamble?

e) Now go back to finance.yahoo.com and follow the “Bonds” link. What is the yield on three-month Treasury bills? Using a 6 percent market risk premium, what is the cost of equity for Procter & Gamble using the CAPM?

Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $51,000; Johnson conveys title to the following properties to the partnership:

Book Value Fair Value

Land $ 15,500 $ 29,000

Building and equipment 35,500 37,000

The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized.

According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula:

Boswell receives a compensation allowance of $1,200 per month.

All remaining profits and losses are split 70:30 to Johnson and Boswell, respectively.

Each partner can make annual cash drawings of $4,000 beginning in 2017.

Net income of $11,500 is earned by the business during 2016.

Walpole is invited to join the partnership on January 1, 2017. Because of her business reputation and financial expertise, she is given a 40 percent interest for $55,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Walpole a $2,000 compensation allowance per month and an annual cash drawing of $8,000. Remaining profits are now allocated:

Johnson 50 %

Boswell 10

Walpole 40

All drawings are taken by the partners during 2017. At year-end, the partnership reports an earned net income of $29,000.

On January 1, 2018, Pope (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Pope, who makes the following payments directly to the partners:

Johnson $ 6,413

Boswell 7,650

Walpole 9,012

Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Pope to a compensation allowance of $1,000 per month and an annual drawing of $3,000. Profits and losses are now assigned as follows:

Johnson 40.0 %

Boswell 12.0

Walpole 38.0

Pope 10.0

For the year of 2018, the partnership earned a profit of $51,000, and each partner withdrew the allowed amount of cash.

Determine the capital balances for the individual partners as of the end of each year: 2016 through 2018.

ENDING BALANCES

Boswell Johnson Walpole Pope

2016 68,670 59,830 0 0 *These Are Correct*

2017

2018

Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $53,000; Johnson conveys title to the following properties to the partnership:

The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized.

According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula:

• Boswell receives a compensation allowance of $900 per month.
• All remaining profits and losses are split 70:30 to Johnson and Boswell, respectively.
• Each partner can make annual cash drawings of $6,000 beginning in 2017.

Net income of $12,500 is earned by the business during 2016.

Walpole is invited to join the partnership on January 1, 2017. Because of her business reputation and financial expertise, she is given a 40 percent interest for $57,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Walpole a $3,000 compensation allowance per month and an annual cash drawing of $12,000. Remaining profits are now allocated:

All drawings are taken by the partners during 2017. At year-end, the partnership reports an earned net income of $35,000.

On January 1, 2018, Pope (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Pope, who makes the following payments directly to the partners:

Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Pope to a compensation allowance of $700 per month and an annual drawing of $5,000. Profits and losses are now assigned as follows:

For the year of 2018, the partnership earned a profit of $56,000, and each partner withdrew the allowed amount of cash.

Determine the capital balances for the individual partners as of the end of each year: 2016 through 2018.

Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $69,000; Johnson conveys title to the following properties to the partnership:

The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized.

According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula:

• Boswell receives a compensation allowance of $900 per month.
• All remaining profits and losses are split 70:30 to Johnson and Boswell, respectively.
• Each partner can make annual cash drawings of $8,000 beginning in 2017.

Net income of $20,500 is earned by the business during 2016.

Walpole is invited to join the partnership on January 1, 2017. Because of her business reputation and financial expertise, she is given a 40 percent interest for $73,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Walpole a $4,000 compensation allowance per month and an annual cash drawing of $16,000. Remaining profits are now allocated:

All drawings are taken by the partners during 2017. At year-end, the partnership reports an earned net income of $47,000.

On January 1, 2018, Pope (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Pope, who makes the following payments directly to the partners:

Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Pope to a compensation allowance of $700 per month and an annual drawing of $7,000. Profits and losses are now assigned as follows:

For the year of 2018, the partnership earned a profit of $69,000, and each partner withdrew the allowed amount of cash.

Determine the capital balances for the individual partners as of the end of each year: 2016 through 2018.

Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $60,000; Johnson conveys title to the following properties to the partnership:

The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized.

According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula:

Boswell receives a compensation allowance of $800 per month.

All remaining profits and losses are split 60:40 to Johnson and Boswell, respectively.

Each partner can make annual cash drawings of $8,000 beginning in 2017.

Net income of $16,000 is earned by the business during 2016.

Walpole is invited to join the partnership on January 1, 2017. Because of her business reputation and financial expertise, she is given a 40 percent interest for $64,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Walpole a $3,000 compensation allowance per month and an annual cash drawing of $16,000. Remaining profits are now allocated:

All drawings are taken by the partners during 2017. At year-end, the partnership reports an earned net income of $38,000.

On January 1, 2018, Pope (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Pope, who makes the following payments directly to the partners:

Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Pope to a compensation allowance of $600 per month and an annual drawing of $7,000. Profits and losses are now assigned as follows:

For the year of 2018, the partnership earned a profit of $53,000, and each partner withdrew the allowed amount of cash.

Determine the capital balances for the individual partners as of the end of each year: 2016 through 2018.

Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $57,000; Johnson conveys title to the following properties to the partnership:

The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized.

According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula:

• Boswell receives a compensation allowance of $1,500 per month.
• All remaining profits and losses are split 70:30 to Johnson and Boswell, respectively.
• Each partner can make annual cash drawings of $5,000 beginning in 2017.

Net income of $14,500 is earned by the business during 2016.

Walpole is invited to join the partnership on January 1, 2017. Because of her business reputation and financial expertise, she is given a 40 percent interest for $61,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Walpole a $2,000 compensation allowance per month and an annual cash drawing of $10,000. Remaining profits are now allocated:

All drawings are taken by the partners during 2017. At year-end, the partnership reports an earned net income of $35,000.

On January 1, 2018, Pope (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Pope, who makes the following payments directly to the partners:

Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Pope to a compensation allowance of $1,300 per month and an annual drawing of $4,000. Profits and losses are now assigned as follows:

For the year of 2018, the partnership earned a profit of $58,000, and each partner withdrew the allowed amount of cash.

Determine the capital balances for the individual partners as of the end of each year: 2016 through 2018.

Many individuals take mineral supplements to enhance body function. What potential health concerns should be considered by an individual who is considering taking mineral supplements? Do you take a supplement with minerals in it? Why or why not? Support your position.

Defend or refute the contention that individuals who persistently hold on to the deceased should enter therapy. Present a personal profile of an individual “holding on to the deceased.” What does that phrase mean? After you have established this understanding and image, address the role of therapy.