The Tax Cut and Jobs Act, 2017 The changes made by the Tax Cut and Jobs Act, 2017 to the tax provisions have changed tax rate for 2018 and people are getting a first hand experience of what it means to them. Go over the Act and address the questions below in full paragraphs: If you had the power to revise the Act, what changes would you make? How have the changes in taxes affected you personally? Many articles have been written analyzing the Tax Cut and Jobs Act, 2017. Infuse these expert opinions with your own.

1. The process for the cost of debt assumes the times interest earned is a good proxy for measuring credit risk, what other financial variable if any should be considered? Does this assumption limit the results? ( each time the level of debt changes. Will this occur and does this limit the applicability of your results?
2. The base level of interest rates, the risk free rate, changes over time. Is this important in calculating the optimal level. Since the estimate is based on the current environment does it matter if this changes?
3. The beta may change over time, does keeping it constant limit your results or is that an acceptable assumption?

The time taken by an automobile mechanic to complete an oil change is random with mean 29.5 minutes and standard deviation 3 minutes.

a. What is the probability that 50 oil changes take more than 1500 minutes?

b. What is the probability that a mechanic can complete 80 or more oil changes in 40 hours?

c. The mechanic wants to reduce the mean time per oil change so that the probability is 0.99 that 80 or more oil changes can be completed in 40 hours. What does the mean time need to be? Assume the standard deviation remains 3 minutes.

4. Suppose that investment demand increases by $100. Assume that households have a marginal propensity to consume of 80 percent. Compute the first three rounds of multiplier effects as follows:

a) What are the first cycle changes in spending? Total cumulative change equals?

b) What are the second cycle changes in spending? Total cumulative change equals?

c) What are the third cycle changes in spending? Total cumulative change equals?  

5. If a balanced budget government passes a new fiscal stimulus or restraint, it can lead to a deficit or surplus. In order to avoid an imbalance, how much of a tax hike or tax cut would be required? In the event of an extra $50 Billion of government purchases, $30 Billion of transfer payments, what should be the offsetting tax package?

Contribution Margin Analysis

Mathews Company manufactures only one product. For the year ended December 31, the contribution margin increased by $10,864 from the planned level of $464,436. The president of Mathews Company has expressed some concern about this increase and has requested a follow-up report.

The following data have been gathered from the accounting records for the year ended December 31:

Required:

1. Prepare a contribution margin analysis report for the year ended December 31.

Mathews Company manufactures only one product. For the year ended December 31, the contribution margin increased by $41,616 from the planned level of $764,784. The president of Mathews Company has expressed some concern about this increase and has requested a follow-up report.

The following data have been gathered from the accounting records for the year ended December 31:

Required:

1. Prepare a contribution margin analysis report for the year ended December 31.

Do a VECM analysis in STATA by using the variables FDI, GDP, Trade openness, and Exchange rate. FDI is chosen as the dependent variable.
Indicate the commands for the stationarity, lag choice, and model stability.
Provide the Impulse Response Functions where FDI is the response function.

The data for the per capita demand for chicken ( pounds per household) in the United States from 1990 to 2013 is given in the table below.

475 = unique initial income number.

AVG = AVERAGE

The data suggests that the per capita demand for chicken (Qd) depends on the following factors:

Pc = Price of chicken ( $ per capita)

I = real disposable income per capita ($)

Ad = Advertising dollars per capita

Pj = price of juice – ( a related product) per capita ($)

Using regression analysis, the attached data and a linear functional form, estimate the demand for CHICKEN.

Include the computation and explanation of the following in your report:

1. Write your regression equation i.e. demand function
2. Enter data provided into excel or statplus as per instructions attached and run your regression / derive your coefficient estimates. Interpret all the coefficients in % ( .i.e if PC = - 0.06768, interpret as: - 6.77%
3. Use the average values for the independent variables and your estimated demand function, compute the demand for CHICKEN in a typical market.
4. Define and interpret the standard error of the estimate AND estimate the range within which actual demand for Chicken is expected to fall with a 95% confidence level.
5. Define the coefficient of determination (R-squared). What percentage of demand variation is explained by this model?
6. Define and explain the usefulness of the F-Statistics
7. Are the coefficient’s statistically significant? i.e. does each of the independent variables have a significant effect on the dependent variable? Explain using t-stats.
8. Calculate and interpret the point price, cross price, point advertising and point income elasticity of demand for CHICKEN.

The Russell 1000 is a stock market index consisting of the largest U.S. companies. The Dow Jones industrial Average is based on 30 large companies. The data giving the annual percentage returns for each of these stock indexes for 25 years are contained in the Excel Online file below. Construct a spreadsheet to answer the following questions.

a. Which of the following scatter diagrams accurately represents the data set?

_________Scatter diagram #1Scatter diagram #2Scatter diagram #3Scatter diagram #4

b. Compute the sample mean and standard deviation for each index (to 2 decimals).

c. Compute the sample correlation coefficient for these data (to 3 decimals).

d. Discuss similarities and differences in these two indexes.

_________There is a strong positive linear association between DJIA and Russell 1000There is a moderate positive linear association between DJIA and Russell 1000There is neither a positive nor a negative linear association between DJIA and Russell 1000There is a moderate negative linear association between DJIA and Russell 1000There is a strong negative linear association between DJIA and Russell 1000

The variance of the Russell 1000 is slightly _________largersmaller than that of the DJIA.

a. Which of the following scatter diagrams accurately represents the data set?

_________Scatter diagram #1Scatter diagram #2Scatter diagram #3Scatter diagram #4

b. Compute the sample mean and standard deviation for each index (to 2 decimals).

c. Compute the sample correlation coefficient for these data (to 3 decimals).

d. Discuss similarities and differences in these two indexes.

_________There is a strong positive linear association between DJIA and Russell 1000There is a moderate positive linear association between DJIA and Russell 1000There is neither a positive nor a negative linear association between DJIA and Russell 1000There is a moderate negative linear association between DJIA and Russell 1000There is a strong negative linear association between DJIA and Russell 1000

The variance of the Russell 1000 is slightly _________largersmaller than that of the DJIA.

Below is a spreadsheet that has the annual return measured for 12 different stock investments. The spreadsheet shows the average return and standard deviation of the return for the past 15 years. Use this spreadsheet and spreadsheet commands to do the following:

Compute the return for each year on a portfolio that contains an equal investment in all 12 securities.

Compute the 15-year average return and standard deviation of return for the portfolio that consists of all 12 securities with equally weighted investment.

Compute the correlation and covariance between the return on company #12 and the return on the equally-weighted portfolio. Hint: There is a spreadsheet command that does this calculation.

Compute the beta of Company #12 using the information you have collected.

Now using the beta you created for Company #12, compute the required rate of return using the Capital Asset Pricing Model (CAPM), assuming that the average market return is the return of your equally-weighted portfolio and the risk-free rate of return is 2.5%.

If you were told analysts estimate that Company #12 will have a 5% rate of return next year, would you buy the stock? Why or why not?

COMPUTE ALL CALCULATIONS IN AN EXCEL SPREADSHEET AND POST IT HERE, THANK YOU