The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $19 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $5.5 million with a 0.2 probability, $3 million with a 0.5 probability, and $0.3 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.

Debt/Capital ratio is 0.
RÔE =

σ =

CV =

Debt/Capital ratio is 10%, interest rate is 9%.

RÔE =

σ =

CV  =

Debt/Capital ratio is 50%, interest rate is 11%.

RÔE =

σ =

CV  =

Debt/Capital ratio is 60%, interest rate is 14%.

RÔE =

σ =

CV  =

The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $16 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.4 million with a 0.2 probability, $3.2 million with a 0.5 probability, and $0.3 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.

Debt/Capital ratio is 0.

RÔE = % ? = % CV =

Debt/Capital ratio is 10%, interest rate is 9%.

RÔE = % ? = % CV =

Debt/Capital ratio is 50%, interest rate is 11%.

RÔE = % ? = % CV =

Debt/Capital ratio is 60%, interest rate is 14%.

RÔE = % ? = % CV =

The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $11 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.5 million with a 0.2 probability, $1.5 million with a 0.5 probability, and $0.3 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.

Debt/Capital ratio is 0.

Debt/Capital ratio is 10%, interest rate is 9%.

Debt/Capital ratio is 50%, interest rate is 11%.

Debt/Capital ratio is 60%, interest rate is 14%.

The equation of a regression line, unlike the correlation, depends on the units we use to measure the explanatory and response variables. Here is the data on percent body fat and preferred amount of salt. Preferred amount of salt x 0.2 0.3 0.4 0.5 0.6 0.8 1.1 Percent body fat y 19 31 22 29 39 24 31 In calculating the preferred amount of salt, the weight of the salt was in milligrams. (a) Find the equation of the regression line for predicting percent body fat from preferred amount of salt when weight is in milligrams. (Round your answers to one decimal place.) ŷ = + x (b) A mad scientist decides to measure weight in tenths of milligrams. The same data in these units are as follows. Preferred amount of salt x 2 3 4 5 6 8 11 Percent body fat y 19 31 22 29 39 24 31 Find the equation of the regression line for predicting percent body fat from preferred amount of salt when weight is in tenths of milligrams. (Round your intercept to one decimal place and your slope to two decimal places.) ŷ = + x (c) Use both lines to predict the percent body fat from preferred amount of salt for a child with preferred amount of salt 0.9 when weight is measured in milligrams, which is the same as 9 when weight is in tenths of milligrams. (Round your answers to one decimal place.) in milligrams % body fat in tenths of milligrams % body fat Are the two predictions the same (up to any roundoff error)? Yes No

Cherub purchased a financial asset on 1 October 2019, which it measured at fair value through other comprehensive income, in accordance with its business model. The asset had a nominal value of $12 million, a coupon rate of 3% payable in arrears and was purchased on market for $10 million. The effective rate of interest is 6% and the fair value of the asset at the reporting date of 30 September 2020 was $9 million. At the reporting date, the financial asset’s credit risk was low, with twelve-month expected credit losses of $0.3 million and lifetime expected credit losses of $0.8 million.

Required:

Discuss how this financial asset is recognised and measured in the year ended 30 September 2020, with calculations.         

Even within a particular chain of hotels, lodging during the summer months can vary substantially depending on the type of room and the amenities offered. Suppose that we randomly select 50 billing statements from each of the computer databases of the Hotel A, the Hotel B, and the Hotel C chains, and record the nightly room rates. The means and standard deviations for 50 billing statements from each of the computer databases of each of the three hotel chains are given in the table.

Hotel A Hotel B Hotel C

Sample average ($) 145 160. 125

Sample standard deviation 17.6 22.6. 12.5

(a) Find a 95% confidence interval for the difference in the average room rates for the Hotel A and the Hotel C chains. (Round your answers to two decimal places.)

Rocky Mountain National Park is a popular park for outdoor recreation activities in Colorado. According to U.S. National Park Service statistics, 46.7% of visitors to Rocky Mountain National Park in 2018 entered through the Beaver Meadows park entrance, 24.3% of visitors entered through the Fall River park entrance, 6.3% of visitors entered through the Grand Lake park entrance, and 22.7% of visitors had no recorded point of entry to the park.† Consider a random sample of 175 Rocky Mountain National Park visitors. Use the normal approximation of the binomial distribution to answer the following questions. (Round your answers to four decimal places.)

(a)
What is the probability that at least 65 visitors had a recorded entry through the Beaver Meadows park entrance?

(b)
What is the probability that at least 60 but less than 70 visitors had a recorded entry through the Beaver Meadows park entrance?

(c)
What is the probability that fewer than 11 visitors had a recorded entry through the Grand Lake park entrance?

(d)
What is the probability that more than 40 visitors have no recorded point of entry?

Rocky Mountain National Park is a popular park for outdoor recreation activities in Colorado. According to U.S. National Park Service statistics, 46.7% of visitors to Rocky Mountain National Park in 2018 entered through the Beaver Meadows park entrance, 24.3% of visitors entered through the Fall River park entrance, 6.3% of visitors entered through the Grand Lake park entrance, and 22.7% of visitors had no recorded point of entry to the park.† Consider a random sample of 175 Rocky Mountain National Park visitors. Use the normal approximation of the binomial distribution to answer the following questions. (Round your answers to four decimal places.)

(a)

What is the probability that at least 85 visitors had a recorded entry through the Beaver Meadows park entrance?

(b)

What is the probability that at least 80 but less than 90 visitors had a recorded entry through the Beaver Meadows park entrance?

(c)

What is the probability that fewer than 11 visitors had a recorded entry through the Grand Lake park entrance?

(d)

What is the probability that more than 40 visitors have no recorded point of entry?