Vandelay Industries is evaluating a project that costs $1,350,000 and has a 20 year life.  Depreciation will be straight-line to zero over the life of the project. Management believes they will be able to sell the equipment at the end of the project for $50,000.  Sales are projected to be 50,000 units in the first year, 70,000 units in the second year, and 25,000 units for all additional years.  Price per unit is $34.50, variable cost per unit is $15.50 and fixed costs are $300,000 per year.  The project also requires an initial investment in net working capital of $150,000 and for the project to maintain a net working capital balance equal to $150,000 plus 15% of sales while the project is ongoing.  All net working capital will be recouped at the end of the project.  This project will have an additional spillover effect that will impact existing sales negatively.  The net pre-tax impact of the spillover effect will be -$75,000 per year.  This project will also have a positive spillover effect.  Specifically, the project will generate additional sales of 100 units of an existing product at a price of $15 each.  The existing product has variable costs of $9 and fixed costs of $5,000 per year. The company’s marginal tax rate is 35%. The required return on similar projects is 11%.

1) What is the project’s NPV?

2) What is the project’s payback period?

3) What is the project’s profitability index?

4) Why might this company decide to pursue this project?

16) DAB manufacturing uses wholesalers and retailers—wholesalers markup was 20 percent and retailers markup of 40 percent. If the retail selling price is $100 and the manufacturer's cost is $30, what is the gross profit DAB receive on the sale of one unit? A) $16.00 B) $13.50 C) $15.00 D) $18.00 E) $17.25

17) Gordon Jones is considering purchasing a computer from Best Buy. He has created a scale for rating eight different computers on three different characteristics. He plans to make a short list of only those computers that score at least a 7 on his scale on all three characteristics. Which of the following choice heuristics has he chosen? A) elimination-by-aspects heuristic B) lexicographic heuristic C) conjunctive heuristic D) anchoring and adjustment heuristic E) representativeness heuristic

18) Costco purchases a 24-pack of bottled water from a wholesaler for $4.80 and wants a markup of 20 percent. What is the price that Costco charges its customers? A) $6.25 B) $6.75 C) $5.95 D) $6.00 E) $7.25

19) If a consumer sets a minimum acceptable level for each attribute and chooses the first alternative that meets those conditions then she is using the following decision rule: A) primary B) lexicographic C) elimination-by-aspects D) conjunctive E) compensatory model

Auckland lazertag just paid a dividend of $2.50 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year, indefinitely. Investors require a 13 percent return on the stock for the first three years, 11 percent return for the next five years, and then a 9 percent return thereafter.

1. What is the price of the stock at the end of Year 8?

2. What is the price of the stock at the end of Year 3?

3. What is the price of the stock today?

Green Tree Corporation is paying a dividend of $4 today. It expects dividends to grow at 25 percent for the next three years and to stabilize at 10 percent per year thereafter. If the required rate of return of this corporation is 15 percent, what is the current price of this corporation's stock? What percentage of the current stock price is due to the dividends in the first three years? What percentage of the current stock price is due to the dividends from Year 4 onwards?

Growth Rate 4%

Required Return 11%

Year 1 Rent 20,000

Years Stable Rent 3

Years Growing Rent 7

Year Sold 10

Sale Price in 10 Years 325,000

Ask Price Today 200,000cash flows

Determine cash flows period 0-10

Consider a 3-month put option. Suppose that the underlying stock price is $25, the strike $26, the interest rate is 5% p.a., stock volatility is 6% per month. Use the same data to answer questions a) – h).

a) What is the level of annual volatility (compute)?

b) Define in your own words implied volatility.

c) How would you compute implied volatility? Explain (no need to compute).

d) What is the probability of stock price going down (Note: use annual volatility, number of steps in a tree is N=3)?

e) Build the binomial tree for the underlying asset (stock). Note: the tree nodes can be edited. Show computations for first up and first down nodes.

f) Compute the price of the European put option using a 3-step binomial tree. Show computations for terminal and two non-terminal nodes.

g) If the market price on the European put option is $1.5, what should be the price of the European call option of the same strike and maturity to prevent arbitrage?

h) Compute the price of the American put option using a 3-step binomial tree. Show computations for two non-terminal nodes.

Consider the following scenario for questions 21-23. In a market with 100 people who want to sell their used
cars and 100 people who want to buy a used car, everyone knows that 50 of the cars are “plums” and 50 are
“lemons”. The current owner of each car knows its quality. The owner of a lemon is willing to part with it for
$1000 and the owner of a plum is willing to part with it for $2000. The buyers of the car are willing to pay
$2400 for a plum and $1200 for a lemon.
21. If prospective buyers can observe the quality of the cars, then there will be __ cars sold in total.
a) 0 b) 50 c) 100 d) None of the above
22. If prospective buyers cannot observe the quality of the cars, then there will be __ cars sold in total.
a) 0 b) 50 c) 100 d) None of the above
23. If prospective buyers cannot observe the quality of the cars, which of the following is a possible price
that lemons could sell at?
a) $0 b) $500 c) $1000 d) None of the above

which of the following factors that influence well-being are not measured in GDP?

Environmental damage sustained in producing final goods and services

the distribution of income in the economy

useful goods that are produced in the home

all of the above

none of the above

17, the price index which measures inflation using the market basket of goods consumed by the average urban household is the :

CPI

PPI

GDP deflator

CPX inflator

18, the measure of GDP which adjusts for inflation is called:

constant GDP

nominal GDP

real GDP

deflated GDP

19, the official u-3 unemployment rate is measured as

(#of persons unemployed/civilian labor force)*100

(#of persons employed/#of persons unemployed)*100

(#of person unemployed-civilian labor force)*100

(#of persons unemployed/total population)*100

20 the unemployment measure includes discouraged marginally attached and involuntary part-time workers is

u-1

u-2

u-3

u-5

u-6

A 76.00-pound flask of mercury costs $138.50 The density of mercury is 13.534 g/cm3. a) Find the price of one cubic inch of mercury by calculating the following intermediate values. Find the price of one cubic inch of mercury by calculating the following immediate value. A) What is the price of one pound of mercury? B)What is the price of one gram of mercury? C)What is the price of one cubic centimeter of mercury? D)What is the price of one cubic inch of mercury? F) It takes 3.850 cubic inches of mercury to make one manometer. Find the price of the mercury used to make 15 manometers by first calculating the cost of mercury for one manometer. G) What is the price of mercury used to make one manometer? H) What is the price of mercury used to make 15 manometers?

Kindly provide a detailed explanation to the following question. So i can understand and solve on my own

Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas. Cost of goods sold $35 per unit sold Advertising expense $10,000 per quarter Sales commissions 6% of sales Shipping expenses $145,000 per quarter Administrative salaries $9,000 per quarter Insurance expense $76,000 per quarter Depreciation expense

Management has conducted that shipping expense is mixed cost, containing both variable and fixed cost elements. Units sold and the related shipping expense over the last quarters follows: Quarter Units sold Shipping expense Year 1: 10,000 $113,000 First 16,000 $175,000 Second 18,000 $190,000 Third 15,000 $164,000 Year 2: First 11,000 $130,000 Second 17,000 $185,000 Third 20,000 $210,000 Fourth 13,000 $147,000 Milden Company’s president would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter. Required: 1. Using the high-low method, estimate a cost formula derived for shipping expense. 2. In the first quarter of Year 3, the company plans to sell 12,000 units at a selling price of $100 per unit. Prepare a contribution format income statement for the quarter.