A European put option on the common stock of XYZ Ltd. is currently selling for a price of $2 per share. The expiration date of the put is 3 months from now. The relevant interest rate is 4% per annum. The exercise price of the put $30 per share and the size of one put is 100 shares.

Suppose Ms. Parker sells 20 of these puts now, find her profit (loss), assuming the spot price of the stock on the expiration date to be equal to either (i) $15 or (ii) $40.

Secondly, find the break-even level of the spot price of the stock on the expiration date.

Lewis Company adopted the dollar-value LIFO method of inventory valuation on 12/31/18. Its inventory at that date was $320,000 and the relevant price index was 100.

What will Lewis report as inventory at the end of 2019, 2020, 2021, and 2022 using dollar-value LIFO?

Based on market research, a monopolist obtains the following information about the market demand and production costs:

Demand: ? = 1,000 − 10?

Marginal Revenue: ?? = 1,000 − 20?

Marginal Cost: ?? = 100 + 10?

where ? is the quantity and ? is the price.

a. Draw demand, MR and MC curves. Clearly display the price and quantity the monopolist chooses. Y-axis measures costs ($) and X-axis measures quantity in your graph.

b. Find the price and quantity that maximize the firm’s profit.

c. Calculate the total surplus and deadweight loss from monopoly.

d. Find the price and quantity that maximize social welfare (total surplus).

We are evaluating a project that costs $1,675,000, has a six year life, and has no salvage value. Assume that depreciation is straight line to zero over the life of the project. Sales are projected as 91,000 units per year, price is $35.95 per unit, variable cost is $21.4 per unit, fixed costs are $775,000 per year. Tax rate is 35% and discount rate is 11%.

1) calculate base-case profit, profit with a 100-unit increase or 100-unit decrease, and break-even units

2) how much is base-case NPV? What is changes on NPV with a 100-unit increase in sales?

Assume that you manage a firm that sells calculators. You want to sell calculators to both commercial users and home users, and so you have developed 2 types of calculators - fancy and basic calculators. Each customer type has the following valuations for each type of calculator: Home User Commercial User Fancy Calculator $100 $200 Basic Calculator $30 $50 If you have an 100 home users and 100 commercial users that at most will buy 1 calculator each, you will maximize total revenue by setting what price for the fancy calculator? (Write answer without the dollar sign.)

Assume that you manage a firm that sells calculators. You want to sell calculators to both commercial users and home users, and so you have developed 2 types of calculators - fancy and basic calculators. Each customer type has the following valuations for each type of calculator:

Home User Commercial User

Fancy Calculator $100 $200

Basic Calculator $30 $50

If you have an 100 home users and 100 commercial users that at most will buy 1 calculator each, you will maximize total revenue by setting what price for the fancy calculator? (Write answer without the dollar sign.)

Assume that you manage a firm that sells calculators. You want to sell calculators to both commercial users and home users, and so you have developed 2 types of calculators - fancy and basic calculators. Each customer type has the following valuations for each type of calculator:

If you have an 100 home users and 100 commercial users that at most will buy 1 calculator each, you will maximize total revenue by setting what price for the fancy calculator? (Write answer without the dollar sign.)

1. Firm AAA’s stock is currently trading at $2 per share. The Total Shares Outstanding of Firm AAA is 3 billion. Based on this information is this a Mid-Cap firm, Micro-Cap firm, Large Cap firm, or small cap firm?
2. Firm DDD has Current Assets = $50 and Current Liabilities = $100. Which of the following is the correct Current Ratio of this firm? a. 0.5    b. 0.005        c. 1          d. 2
3. Which of the following financial ratio is forward-looking: (I) Asset turnover ratio, (II) Current ratio; (III) Price to Book ratio; (IV) Price to Earnings ratio.
4. Dividend per Share $15, Earnings per Share $150, Price Per Share $300.
   1. Based on the above information, which of the following is the correct result of Payout Propensity Ratio? 5%, 10%, 50%, or 100%
   2. Based on the above information, which of the following is the correct result of Dividend Yield? 5%, 10%, 50%, or 100%
5. Income Statement

EBIT 140

Interest Expense 50

Balance Sheet Statement

Total Assets (including Current Assets and Non-Current Assets) 1300

Long-Term Debt 400

Total Stockholders' Equity (Book Value of Equity) 1600

Tax Rate 35%

A. By computing the Leverage Ratio of this firm, which of the following is correct?

a. The firm has 0% Long-Term Debt and 100% Equity in Capital Structure

b. The firm has 20% Long-Term Debt and 80% Equity in Capital Structure

c. The firm has 80% Long-Term Debt and 20% Equity in Capital Structure

d. The firm has 100% Long-Term Debt and 0% Debt in Capital Structure

B. Which of the following is the correct (Return on Equity) ROE of this firm?

a) 0%     b) 4.50%    c)5.69%     d)3.66%

Acorn Limited is a listed company based in Vermont. On January 1, 2018, the company granted 1,000 share units to its CFO. Each share unit has a contractual service period of three years and a vesting condition based on the details below.

At the end of 2020, each share unit is convertible into 100 common shares of Acorn Limited if both of the following criteria are met:

2018-2020 Accumulated company net income is greater than $5 million.

2018-2020 Stock price increase is greater than 25%.

On the grant date, the company’s common shares had a fair value of $6 per share and the company was expected to meet both of the criteria above.

During 2018 and 2019, the company was expected to meet both of the criteria above. However, during 2020 the company’s stock price decreased and the company did not meet the stock price increase criteria at the end of the year.

The company’s accountant has asked for your help to check the compensation costs recorded for these share units during 2018-2019 and record the appropriate journal entry at the end of 2020.

End of 2018 -> 100*6*(1/3)=200

End of 2019-> (100*6(2/3))-200=200

Ignore the effects of taxes.

what are the journal entries for 2018,2019,&2020?

Sam is developing a business plan for starting Pizza business in Waltham. Sam specializes in pepperoni pizza. Based on the secondary data he has found out that there are 20,000 families in the area and about 20% of these families are strict vegetarians. He believes that he can get 10% of the market share of the potential customers. His research reveals an average family consumes 10 pizzas per year.

Dough costs $5 per pizza and annual lease for the plant is $16000 . Sam is planning to introduce his Pepperoni pizza at $8 and raise the price by $2 in the second year. Price elasticity of demand for pizza is 0.50

a. Estimate the demand for Sam’s pizza in the first year.

b. Calculate the % markup (profit margin %) on sales price and total cost in the first year.

c. Estimate the demand for Pizza in the second year with the new price.

d. Calculate the % mark up on sales price and total cost in the second year.