We are considering hiring a catering company. Currently, we are preparing meals for employees. The following is the cost of preparing a meal: Food $3.00 Labor 2.00 Fixed overhead 1.00 Total $6.00 The caterer has quoted a price of $5.50 per meal. Please help us to determine whether we should buy meals from this catering company.

Company A can order meals for its employees from a catering company or prepare meals on-site. Use the information in the exhibit to complete the following items.

The company has paid a constant cash dividend of 7$ on an annual basis for the last decade. For the dividend payment it used all its earnings. The business outlook is stable with no growth. Currently there are 250.000 outstanding shares at 50$ per share. The company earned again just about the right amount to pay its dividend. The CFO decides to switch instantly from cash dividends to repurchases for this year (T0). Project and compare the stock price for the old and the new policy for next year (T1).

Do the necessary calculations and fill the following table:

3. A rival music streaming company wishes to make inference for the proportion of individuals in the United States who subscribe to Spotify. They plan to take a survey. Let S1, . . . , Sn be the yet-to-be observed survey responses from n individuals, where the event Si = 1 corresponds to the ith individual subscribing to Spotify and the event Si = 0 corresponds to the ith individual does not subscribe to Spotify (i = 1, . . . , n). Assume that S1, . . . , Sn are i.i.d. Ber(π).

(a) What distribution does the random variable S = Pn i=1 Si have? Compute E(S) and var(S). The formulas should involve π and n.

(b) Suppose that n = 30 and π = 0.2. Run a Monte Carlo simulation with m = 10000 replications to verify the formulas for E(S) and var(S) from the previous question. That is, simulate 10000 i.i.d. copies of S and compare the observed average of these to the true mean, and the observed (sample) variance to the true variance. Comment. 1

(c) Let S¯ = n ⁻¹S = n ⁻¹ Pn i=1 Si . What is the mean and variance of S¯?

(d) Verify your answers to the previous question by a Monte Carlo simulation with m = 10000 replications.

(e) Is S¯ a continuous random variable? Explain.

(f) Run a Monte Carlo simulation to estimate the probability P(S¯− 1/ √ n ≤ π ≤ S¯ + 1/ √ n) when π = 0.2 and n = 10, 20, 80, 160. Hint: For every n considered, do the following m = 10000 times: generate a random variable S˜ with the same distribution as S¯ and record whether |S˜−0.2| ≤ 1/ √ n. The Monte Carlo estimate of the desired probability is the number of times this happened divided by the total number of simulations, m = 10000.

What factors lead you to believe that the US will still be the leader of the free world 50 years from now?

What factors lead you to believe that the US will NOT still be the leader of the free world 50 years from now?

The national average on a certification exam in the US last year was 68. For a sample of participants (n=64) who participated in a preparatory program before the exam, the mean was 76 with a sample standard deviation of 4. Using alpha = .05, is there a statistically significant difference between the study participants’ mean and the national average?

1.) How should we define poverty? Please explain your conception of "poverty" and tell us how you would recognize poverty when you observe it. Please be specific here - simply saying "people who don't have enough" or "people who don't have adequate shelter" doesn't define the issue. Who decides what is "enough" or what "adequate shelter" is?

2.) What is meant by "Systemic Poverty" and "Generational Poverty"? Are the two terms interchangeable?

3.) Is there a 'cure' for poverty? Do you believe we can eliminate poverty in our society? In the world? If so, how? If not, why not?

New Dawn pharma is considering the acquisition of a small biotech company—Sunset Pharmaceuticals. Sunset is developing a new drug that, if successful, would revolutionize the treatment of pancreatic and/or liver cancer. Sunset is about to start Phase I of the clinical testing for the new drug. New Dawn estimates that if they acquired Sunset the costs associated with Phase I testing would be around $60 million. They believe the probability of successful Phase I testing is 30%. Phase 2 testing for the pancreatic cancer and/or liver cancer indication would cost $170 million. The probability that Phase 2 testing will show effectiveness for pancreatic cancer is 25%. The probability that Phase II will show clinical efficacy for liver cancer only is 45%. Phase 3 testing for the pancreatic cancer indication will cost $300 million. The probability that Phase 3 testing for pancreatic cancer will be successful is 40%, and the cost of launching the drug for the pancreatic indication only will be $250 million. New Dawn estimates that future cash flows from a successful pancreatic cancer indication will be in the vicinity of $10 billion. Phase 3 testing for the liver cancer indication only will cost $350 million. The probability that Phase 3 testing will show effectiveness for liver cancer is 70%, and the cost of launching the drug for the liver indication only will be $200 million. Estimates for future cash flows from a successful liver cancer launch are in the vicinity of $20 billion. (All cash flows are expressed in after-tax present values discounted to time zero, including capital expenditure.)

B. Sunset has about $70 million in fixed assets and $500 million in debt/outstanding obligations to investors that will have to be paid off before the merger can proceed. Sunset is being sued by an academic partner for patent infringement on their new drug line. If the lawsuit is settled, they will have to pay around $200 million to the University. New Dawn’s lawyers are saying that this is likely to happen with probability 95%. However, if the University is not willing to settle and they go to court, there is a 30% probability that the University will receive 30% of any and all proceeds from the drug’s sales and will not share any of the costs of development. Based on this information, what is the value of Sunset as a stand-alone company?

A clinical psychologist wished to compare three methods for reducing hostility levels in university students using a certain psychological test (HLT). High scores on this test were taken to indicate great hostility, and 11 students who got high and nearly equal scores were used in the experiment. Five were selected at random from among the 11 students and treated by method A, three were taken at random from the remaining six students and treated by method B, and the other three students were treated by method C. All treatments continued throughout a semester, when the HLT test was given again. The results are shown in the table.

Let μ_A and μ_B, respectively, denote the mean scores at the end of the semester for the populations of extremely hostile students who were treated throughout that semester by method A and method B.

(a) Find a 95% confidence interval for μ_A. (Round your answers to two decimal places.)

(b) Find a 95% confidence interval for μ_B. (Round your answers to two decimal places.)

(c) Find a 95% confidence interval for (μ_A − μ_B). (Round your answers to two decimal places.)