1. Your firm designs training materials for computer training classes, and you have just received a request to bid on a contract to produce a complete set of training manuals for an 8-session class. From previous experience, you know that your firm follows an 85% learning rate. For this contract, it appears that the effort will be substantial, running 50 hours for the first session. Your firm bills at the rate of $100/hour and the overhead is expected to run a fixed $600 per session. The customer will pay you a flat fixed rate per session (Per Session Price.) If your profit markup is 20%, what will be the Total Price, the Per Session Price, and at what session will you break even?

Answer the following three questions:

1. What is the Total Price? This is what you would charge the customer so that you can have your profit markup of 20% over all of your costs. To calculate this, first figure out your cost per each session, add them up, and then add your profit.
2. What is the Per Session Price? This is the revenue that the customer pays you each time you complete a session. It is calculated by dividing the Total Price by the number of sessions.
3. What is the Break Even Point? At the beginning, your cost per session is more than your revenue per session. Gradually, your cumulative revenue matches the cumulative cost, and eventually exceeds it so that you can end up with the desired profit. The break-even point is the session at which, for the first time, your revenue exceeds your cost.

2. A manufacturing firm has set up a project for developing a new machine for one of its production lines. The most likely estimated cost of the project itself is $1 million, but the most optimistic estimate is $900,000 while the pessimists predict a project cost of $1,200,000. The real problem is that even if the project costs are within those limits, if the project itself plus its implementation cost exceed 1,425,000, the project will not meet the firm’s NPV hurdle. There are four cost categories involved in adding the prospective new machine to the production line: (1) engineering labor cost, (2) non-engineering labor cost, (3) assorted materials cost, and (4) production line down-time cost.

The engineering labor requirement has been estimated to be 600 hours, plus or minus 15% at a cost of $80 per hour. The non-engineering labor requirement is estimated to be 1500 hrs., but could be as low as 1200 hrs. or as high as 2200 hrs. at a cost of $35 per hour. Assorted material may run as high as $155,000 or as low as $100,000 but is most likely to be about $135,000. The best guess of time lost on the production line is 110 hours, possibly as low as 105 hours and as high as 120 hours. The line contributes about $500 per hour to the firms profit and overhead. What is the probability that the new machine project will meet the firm’s NPV hurdle? Use Crystal Ball simulation to answer the question.

1. Why are Treasury bills called “discount” securities? Briefly explain.

2. What are the major difference between money market securities and capital market securities? Briefly describe.

3. When the stock market goes into a panic mode, investors run to Treasury market. Why? Justify the phenomena called “flight to quality.” Look up chapter 3 and google it.

4. Read the article about Mark Cuban Jr. from my class web site under chapter 3. Describe what option strategy he used to hedge exposure of Yahoo stocks. How did he profit with the strategy? Under what circumstance would you employ such option strategy as Cuban did? Briefly explain.

5. You sell (go short) 10 gold futures contracts at $400 per ounce, where the contract size is 100 ounces. At contract maturity, gold is selling for $410 per ounce. What is your profit (+) or loss (−) on the transaction?

6. You buy 100 CJC put option contracts with a strike price of 92 at a quoted price of $8. At option expiration, CJC sells for $83.80. What is your net profit on the transaction?

7. You purchase 10 call option contracts with a strike price of $75 and a premium of $3.85. If the stock price at expiration is $82, what is your dollar profit? What if the stock price is $72?

8. You want to find the option prices for ConAgra Foods (CAG). Go to finance.yahoo.com, get a stock quote, and follow the “Options” link. What are the option premium and strike price for the highest and lowest strike price options that are nearest to expiring? What are the option premium and strike price for the highest and lowest strike price options expiring next month?

9. Go to www.cmegroup.com and find the contract specifications for corn futures. What is the size of the corn futures contract? On the Web site, find the settle price for the corn futures contract that will expire the soonest. If you go long 10 contracts, how much will the corn cost at the current price?

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends:

Year 1: $10,000
Year 2: 45,000
Year 3: 90,000

Determine the dividends per share for preferred and common stock for the first year

There are 100 coins in a jar. Two players take turns removing anywhere from 1-10 coins from the jar. The player who empties the jar by removing the remaining coin(s) wins the game. To guarantee that you win the game, would you choose to move first or second, and what strategy would you follow?

Air at 10°C and I atm flows over a flat plate (30 cm x100 cm) at 20 m/s. The plate is maintained at 70°C. (a) calculate the boundary layer thikness at distances of 30 cm and 100 cm, (b) calculate the heat transfer from first 30 cm and from whole the plate.

Research a career possibility in the field of accounting. Describe the career you chose and the salary. Why did you choose this career? Please include a link to the website where you conducted your research(do not use .com). Put your career choice in the first sentence of your post. Posts must be at least 100 words.

A generator whose reference voltage is 1 [_0 ° pu, feeds a load of 150 Mwatts and 50 Mvars through a lossless line whose reactance is j 0.15 in pu based on 100 MVA.- Find the value of the voltage in the load (magnitude and angle) for the first iteration using the Newton Raphson method assuming an initial stress of 1.0 [_0 °

Paramel Beverages bottles two soft drinks under licence to Cadaver Ltd. at its Newcastle plant. Bottling at this plant is highly repetitive, automated process. Empty bottles are removed from their carton, placed on a conveyor, and cleaned, rinsed, dried, filled, capped and heated (to reduce condensation). The only stock held is direct materials or else finished goods. There is no work in process. The two soft drinks bottled by Paramel Beverages are lemonade and diet lemonade. The syrup for both soft drinks is purchase from Cadaver Ltd. Syrup for the regular brand contains a higher sugar content than the syrup for the diet brand. Paramel Beverages uses a lot size of 1,000 cases as the unit of analysis in its budget. (Each case contains 24 bottles). Direct materials are expressed in terms of lots, where one lot of direct materials is the input necessary to yield one lot (1,000 cases) of beverage. In 2010, the following purchase prices ae forecast for direct materials: Lemonade Diet Lemonade Syrup $1,200 per lot $1,100 per lot Containers (bottles, caps, etc.) $1,000 per lot $1,000 per lot Packaging $800 per lot $800 per lot The two soft drinks are bottled using the same equipment. The equipment is cleaned daily, but it is only rinsed when a switch is made during the day between diet lemonade and 3 lemonade. Diet lemonade is always bottled first each day to reduce the risk of sugar contamination. The only difference in the bottling process for the two drinks is syrup. Summary data used in developing budgets for 2010 are as follows: a Sales • Lemonade, 1080 lots at $9,000 selling price per lot • Diet lemonade, 540 lots at $8,500 selling price per lot b Opening (1 January 2010) stock of direct materials • Syrup for lemonade, 80 lots at $1,100 purchase price per lot • Syrup for diet lemonade, 70 lots at $1,000 purchase price per lot • Containers, 200 lots at $950 purchase price per lot • Packaging, 400 lots at $900 purchase price per lot c Opening (1 January 2010) stock of finished goods • Lemonade, 100 lots at $5,300 per lot • Diet lemonade, 50 lots at $5,200 per lot d Target closing (31 December 2010) stock of direct materials • Syrup for lemonade, 30 lots. • Syrup for diet lemonade, 20 lots. • Containers, 100 lots. • Packaging, 200 lots. e Target closing (31 December 2010) stock of finished goods • Lemonade, 20 lots. • Diet lemonade, 10 lots. f Each lot requires 20 direct manufacturing labour hours at the 2010 budgeted rate of $25 per hour. Indirect manufacturing labour costs are included in the manufacturing overhead budget. g Variable manufacturing overhead is forecast to be $600 per hour of bottling time; bottling time is the time the filling equipment is in operation. It takes 2 hours to bottle 4 one lot of lemonade and 2 hours to bottle one lot of diet lemonade. Fixed manufacturing overhead is forecast to be $1,200,000 for 2010. h Hours of budgeted bottling time is the sole allocation base for all fixed manufacturing overheads. I Administration costs are forecast to be 10% of the cost of goods manufactured for 2010. Marketing costs are forecast to be 12% of sales for 2010. Distributions costs are forecast to be 8% of sales for 2010. Required: Assume Paramel Beverages uses the first in– first out (FIFO) method of costing all stock. On the basis of the preceding data, prepare the following budgets (in units and/or dollars as applicable) for 2010: 7. Closing finished goods stock budget 8. Cost of goods sold budget 9. Marketing cost budget (1 mark) 10. Distribution cost budget (1 mark) 11. Administration cots budget 12. Budgeted profit & loss.

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