a. In 2002 to 2004, there were 4948 Ontario residents applied to the province’s medical schools. Of these 4948 applicants, 4588 were from urban areas and the rest were from rural areas. Statistics Canada reported that 13% of the Ontario’s population live in rural areas. Do the data suggest that rural students were underrepresented among the applicants for this two-year period? Perform the test at the significance level of 0.01.

b. Assume a sample (x₁, . . . , x_n) from a normal population with mean µ and a known variance σ₀². A researcher is interested in testing if the true population mean is greater than µ₀. Find the range of the sample mean x̅ such that the researcher will reject the null hypothesis at 5% level of significance.

c. The result in part (b) is known as the rejection region. It is given to you that from a given sample, we have n = 25, σ₀² = 4 and the rejection region obtained in part (b) is x̅ > 1.658. What is the chance of a sample mean falling in the rejection region if the true µ is 2?

Proterra was founded by Dale Hill in 2004 with a vision to design and manufacture world-leading, advanced technology heavy-duty vehicles powered solely by clean domestic fuels. After launching a first successful fleet of alternative fuel buses in the 1990s, Proterra focused on developing the 'bus of tomorrow.' Proterra Inc. also designs and manufactures heavy-duty vehicles including EcoRide, a battery electric and zero-emissions bus, and Proterra Catalyst, an electric transit vehicle. The company manufactures a TerraFlex Energy System that enables customers to select amount and type of energy storage to meet specific route requirements, plus TerraVolt fast-charge batteries, TerraVolt extended range batteries, an on-route charge station and in-depot charging services. It offers financing solutions, route simulation analysis, battery lifecycle management, and standard warranty services (Proterra, 2015). It serves customers throughout the United States. The company is privately owned, but is in the process of becoming a public corporation. With this expectation, the firm's chief executive officer (CEO) has asked for determination of which of two companies appears to be a better peer to compare itself against, New Flyer Industries, Inc. (a Toronto-based firm), or Tesla. Tesla Motor Vehicles designs, develops, manufactures, and sells high-performance fully electric vehicles and stationary energy storage units similar to certain Proterra products. Tesla Motors has subsidiaries in North America, Europe and Asia, with the primary purpose of these subsidiaries being to market, manufacture, sell and/or service their vehicles (Tesla Motors, 2016). New Flyer was founded in 1930, and is now the largest transit bus and motorcoach manufacturer and parts distributor in North America with fabrication, manufacturing, distribution and service centers in Canada and the United States. It is North America's heavy-duty transit bus leader and offers clean diesel, natural gas, diesel-electric hybrid, electric-trolley and battery-electric. Information regarding Tesla and New Flyer is given here, for your use in comparing these firms.

Tesla Versus New Flyer

Significance

Measure

TSLA

NFI

Total Market Value of all outstanding shares.

Market capitalization

33.63B

1.831B

Number of outstanding shares currently held by all shareholders.

Outstanding shares of stock

147.28M

59.742M

A Beta coefficient indicates the systemic risk that an asset has relative to an average asset. A risk-free asset has a Beta of zero.

Beta

1.28

0.16

The return the firm must earn on its existing assets to maintain the value of its stock, and the required return on any investments by the firm that have essentially the same risks as existing operations.

WACC

9.03%

8.34

PE ratio divided by expected future earnings growth (after multiplying the growth rate by 100).

PEG Ratio

18.47

0.5

A measure of profit per dollar of assets.

ROA

-7.04%

6.26%

A measure of how the stockholders fared during the year.

ROE

-113.20%

13.21%

A measure of how much investors are willing to pay per dollar of current earnings. Higher PEs are often taken to mean the firm has significant prospects for future growth.

P/E Ratio

-29.17

25.3

Ratio of Net income to sales.

Profit Margin

-23.91%

-3.83%

References

Bloomberg. United States rates and bonds.

Federal Reserve. (2016). Federal Reserve economic data.

Korosec, K. (2015). This startup is gearing up to be the Tesla of electric buses. Fortune Magazine.

Proterra. (2015). About Proterra.

Securities and Exchange Commission. (n.d.) SEC.gov home.

Tesla Motors. (2016). Tesla Motors, Inc. 2016 annual report.

Yahoo. (n.d.) Yahoo finance.

Assume that you are the finance manager for Proterra and you have been asked to provide an analysis of the following issues, as the firm develops benchmarks for its cost of capital (WACC) estimates. The firm's CEO has instructed you to use the pure play approach to estimate its WACC cost of capital, and has chosen Tesla Motors (ticker symbol TSLA) and New Flyer (ticker symbol NYI.TO) as possible representative peers (Korosec, 2015).

QUESTION: Analyze the relative applicability or inapplicability of utilizing these firms as peers to evaluate Proterra's likely cost of capital, with the given above data about Proterra, Tesla and New Flyer, and the lessons of Capital Market History.

Proterra was founded by Dale Hill in 2004 with a vision to design and manufacture world-leading, advanced technology heavy-duty vehicles powered solely by clean domestic fuels. After launching a first successful fleet of alternative fuel buses in the 1990s, Proterra focused on developing the 'bus of tomorrow.' Proterra Inc. also designs and manufactures heavy-duty vehicles including EcoRide, a battery electric and zero-emissions bus, and Proterra Catalyst, an electric transit vehicle. The company manufactures a TerraFlex Energy System that enables customers to select amount and type of energy storage to meet specific route requirements, plus TerraVolt fast-charge batteries, TerraVolt extended range batteries, an on-route charge station and in-depot charging services. It offers financing solutions, route simulation analysis, battery lifecycle management, and standard warranty services (Proterra, 2015). It serves customers throughout the United States. The company is privately owned, but is in the process of becoming a public corporation. With this expectation, the firm's chief executive officer (CEO) has asked for determination of which of two companies appears to be a better peer to compare itself against, New Flyer Industries, Inc. (a Toronto-based firm), or Tesla. Tesla Motor Vehicles designs, develops, manufactures, and sells high-performance fully electric vehicles and stationary energy storage units similar to certain Proterra products. Tesla Motors has subsidiaries in North America, Europe and Asia, with the primary purpose of these subsidiaries being to market, manufacture, sell and/or service their vehicles (Tesla Motors, 2016). New Flyer was founded in 1930, and is now the largest transit bus and motorcoach manufacturer and parts distributor in North America with fabrication, manufacturing, distribution and service centers in Canada and the United States. It is North America's heavy-duty transit bus leader and offers clean diesel, natural gas, diesel-electric hybrid, electric-trolley and battery-electric. Information regarding Tesla and New Flyer is given here, for your use in comparing these firms.

Tesla Versus New Flyer

Significance

Measure

TSLA

NFI

Total Market Value of all outstanding shares.

Market capitalization

33.63B

1.831B

Number of outstanding shares currently held by all shareholders.

Outstanding shares of stock

147.28M

59.742M

A Beta coefficient indicates the systemic risk that an asset has relative to an average asset. A risk-free asset has a Beta of zero.

Beta

1.28

0.16

The return the firm must earn on its existing assets to maintain the value of its stock, and the required return on any investments by the firm that have essentially the same risks as existing operations.

WACC

9.03%

8.34

PE ratio divided by expected future earnings growth (after multiplying the growth rate by 100).

PEG Ratio

18.47

0.5

A measure of profit per dollar of assets.

ROA

-7.04%

6.26%

A measure of how the stockholders fared during the year.

ROE

-113.20%

13.21%

A measure of how much investors are willing to pay per dollar of current earnings. Higher PEs are often taken to mean the firm has significant prospects for future growth.

P/E Ratio

-29.17

25.3

Ratio of Net income to sales.

Profit Margin

-23.91%

-3.83%

References

Bloomberg. United States rates and bonds.

Federal Reserve. (2016). Federal Reserve economic data.

Korosec, K. (2015). This startup is gearing up to be the Tesla of electric buses. Fortune Magazine.

Proterra. (2015). About Proterra.

Securities and Exchange Commission. (n.d.) SEC.gov home.

Tesla Motors. (2016). Tesla Motors, Inc. 2016 annual report.

Yahoo. (n.d.) Yahoo finance.

Assume that you are the finance manager for Proterra and you have been asked to provide an analysis of the following issues, as the firm develops benchmarks for its cost of capital (WACC) estimates. The firm's CEO has instructed you to use the pure play approach to estimate its WACC cost of capital, and has chosen Tesla Motors (ticker symbol TSLA) and New Flyer (ticker symbol NYI.TO) as possible representative peers (Korosec, 2015). You will deliver your analysis in the form of a memo, or formal communication addressed to the firm's CEO. In this discussion, you are to present this memo in which you:

QUESTION:

Using the information provided here and speaking of Finance Director of Proterra, brief the firm's CEO, analyzing: Analyze the relative applicability or inapplicability of utilizing these firms as peers to evaluate Proterra's likely cost of capital, given what you know about Proterra, Tesla and New Flyer, and the lessons of Capital Market History.

In the 2004 baseball season, Ichiro Suzuki of the Seattle Mariners set the record for most hits in a season with a total of 262 hits. In the following probability distribution, the random variable X represents the number of hits Ichiro obtained in a game.

1. What is the probability that in a randomly selected game, Ichiro got at least 3 hits? =.2112
2. Compute the mean of the random variable X. (round to two decimal places) =1.63
3. Compute the standard variation of the random variable X. (round to two decimal places) =1.18

4) What would be the upper limit of range that would include the number of hits Ichiro obtained in 75% of the games?

The Kaiser Family Foundation commissioned an extensive survey in 2004 that investigated the degree to which American youth from ages 8-18 have access to various forms of media. They distributed written questionnaires to a random sample of 2032 youths in this age range. One of the many questions asked youths about whether or not they have a television in their bedroom, to which 68% answered yes. Additionally, 49% reported having a video game player and 31% reported having a computer in their bedroom.  

Determine a 95% confidence interval for the population proportion of American youths who have a video game player in their bedrooms. Report the lower endpoint of the interval.

Determine a 95% confidence interval for the proportion who have a computer in their bedrooms. Report the upper endpoint of the interval.

Find and report the margin of error for the 95% confidence interval for the proportion of American youths with a computer in their bedrooms.

In late 2004 and early 2005, the price of raw coffee beans jumped as much as 50% from the previous year. In response, the price of roasted coffee rose about 14%. Similarly, in late 2014 and early 2015, the price of raw beans fell by about 25%, yet the price of roasted coffee fell by only a few percentage points. Why did the roasted coffee price change less than in proportion to the rise in the cost of raw beans?

1. In 2004, Murthy, Krumholz, & Gross investigated disparities in access to clinical trials in an article entitled “Participation in cancer clinical trials: race-, sex-, and age-based disparities”.

Does the distribution of participants in clinical trials correspond to the population distribution, given that…

a.

b.

3. What would you conclude based on these findings?

17. You are interested in purchasing a new 2004 Corvette at Rainbow Chevrolet Pontiac. If you will have to make monthly payments of $1,000.00 for four years, and the loan rate equals 5.9%, what amount is being borrowed to finance the cost of the car? Place the appropriate values in the proper cells in row 11, given the columns as provided below. The remaining instructions are stated in Q1.

2. In 2004, a team of researchers published a study of contaminants in farmed salmon. Fish from many sources were analyzed for 14 organic contaminants. The study expressed concerns about the level of contaminants found. One of those was the insecticide mirex, which has been shown to be carcinogenic and is suspected to be toxic to the liver, kidneys, and endocrine system. Summaries for the mirex concentrations (in parts per million) in the farmed salmon are: n=150, X ̅=0.0913 ppm, s=0.0495 ppm. (1) What assumptions and conditions must be checked before finding a confidence interval? (2) Find a 95% confidence interval for the mean level of mirex concentrations. Show the formula, not just by Minitab. (3) Interpret this confidence interval. (4) Explain what 95% confidence means.

In 2004 the Pandora made a rights issue at $5 a share of one new share for every four shares held. Before the issue there were 100 million shares outstanding and the share price was $6. For questions (a) to (c) assume that all rights were exercised.

(a) What was the total amount of new money raised?

(b) What was the value of the right to buy one new share?

(c) What was the prospective stock price after the issue?

(d) How far could the stock price after the issue fall before shareholders would be unwilling to take up their rights?

(e) Suppose that the rights issue is at $4 rather than $5 per share. How many new shares would it have needed to sell to raise the same sum of money? How do your answers to (b) and (d) change? Are the shareholders any better or worse off with the $4 exercise price?