1. Metrocity Inc. is a private company and interested in determining its cost of equity. Bistro Inc. is very similar to Metrocity and its stock is publicly traded. Bistro’s common stock has a beta of 1.5 and its debt ratio is 1/3. Metrocity Inc., on the other hand, is an all-equity firm. If the expected market premium is 5% and the risk-free rate is 3%, what is Metrocity’s cost of equity? (Assume debt beta is zero and that there are no corporate taxes).

1. 8%
2. 11%
3. 15%
4. 17%
5. 23%

Look up the beta value for three publicly traded corporations operating in the same industry. Create a small table reporting your findings. Now choose three publicly-traded companies in very different industries and add these results to your table. Discuss your expectations for the similarities or differences in betas within the two categories, and then discuss how the results in your table compare to your expectations. Upload your work.

Use the following information to work Problem1 a) and b).

Why the tepid response to higher gasoline prices?

Most studies report that when U.S. gas prices rise by 10 percent, the quantity purchased falls by 1 to 2 percent. In September 2005, the retail gasoline price was $2.90 a gallon, about $1.00 higher than in September 2004, but purchases of gasoline fell by only 3.5 percent.

Source: The New York Times, October 13, 2005

1.   (2 points) Calculate the price elasticity of demand for gasoline implied by what most studies have found.

2.   (2 points) Compare the elasticity implied by the data for the period from September 2004 to September 2005 with that implied by most studies. What might explain the difference?

Describe what factors contribute to the pension benefit obligation. Discuss the effect of the increase or decrease on the PBO. How is this change reported in the financial statements and what other accounts are affected? Provide an example from a publicly-traded company. Please respond to at least one additional post.

Using the Securities and Exchange Commissions’ website, select a publicly traded company and review their 10K report for controls and procedures (Item 9 and Item 9A). Discuss your findings and share your thoughts on what the company has disclosed.

EDGAR Company Filing: U.S. Securities and Exchange Commission. Retrieved from http://www.sec.gov/edgar/searchedgar/companysearch.html

Keeping in mind the importance of fraud prevention, please select a company that your are interested in and that is publicly traded.  You can access annual reports on line in the company investor relations page.  Please identify your company and post in the discussion forum  the actions that they have taken to prevent and detect fraud. Please support your work with relevant references and copies of the documents.

Use the Internet and/or Strayer Library to research a publicly-traded company that manufactures technology products. Recommend one (1) approach that your selected company can take to lower either the direct labor or direct material costs of technology products while remaining competitive with global markets. Provide a rationale for your recommended approach.

QUESTION 14

1. Table 24-1
   
   The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 10 bushels of peaches and 15 bushels of pecans.
   

   Year	Price of Peaches	Price of Pecans
   2005	$11 per bushel	$6 per bushel
   2006	$9 per bushel	$10 per bushel

   
   
   Refer to Table 24-1. If 2006 is the base year, then the CPI for 2006 was

   	a.	100.
   	b.	83.3.
   	c.	120.
   	d.	240.

QUESTION 15

1. Table 24-1
   
   The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 10 bushels of peaches and 15 bushels of pecans.
   

   Year	Price of Peaches	Price of Pecans
   2005	$11 per bushel	$6 per bushel
   2006	$9 per bushel	$10 per bushel

   
   
   Refer to Table 24-1. If 2005 is the base year, then the inflation rate in 2006 was

   	a.	16.7 percent.
   	b.	40 percent.
   	c.	20 percent.
   	d.	44.1 percent.

QUESTION 16

1. Table 24-1
   
   The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 10 bushels of peaches and 15 bushels of pecans.
   

   Year	Price of Peaches	Price of Pecans
   2005	$11 per bushel	$6 per bushel
   2006	$9 per bushel	$10 per bushel

   
   
   Refer to Table 24-1. If 2006 is the base year, then the inflation rate in 2006 was

   	a.	44.1 percent.
   	b.	16.7 percent.
   	c.	40 percent.
   	d.	20 percent

QUESTION 18

1. The substitution bias in the consumer price index refers to the

   	a.	substitution by consumers toward a smaller number of high-quality goods and away from a larger number of low-quality goods.
   	b.	substitution by consumers toward new goods and away from old goods.
   	c.	substitution by consumers toward goods that have become relatively less expensive and away from goods that have become relatively more expensive.
   	d.	substitution of new prices for old prices in the CPI basket of goods and services from one year to the next.

Problem 1 At a local supermarket, customers spend an average of 74 AED. The standard deviation is 30 AED. If 60 customers come to the supermarket today, what is the probability that the total revenue of the supermarket will be between 4000 AED and 5000 AED.

4. Do the following problems, using data set #3:

(a) Use the naïve forecasting method, the average of historical data method, and a 3-period moving average to estimate values of X.

(b) Calculate the Mean Absolute Error, the Mean Squared Error, and the Mean Absolute Percentage Error for each forecasting method.

(c) Based on your answers to (b), which the best forecasting method?

5. Do the following, using data set #3:

(a) Calculate a linear trend regression for X.

(b) Calculate a quadratic trend regression for X, using a 2-period model.

(c) Calculate the Mean Absolute Error, the Mean Squared Error, and the Mean Absolute Percentage Error for each forecasting method.

(d) Which model is better (a) or (b)? Explain.

#3