HR managers often discuss the concept of creating “a climate for motivation”. How would that contribute to better organizations?

2. Rowan Roadworks is considering the purchase of a new $124,500 road grader. Rowan expects the cash inflows to be $18,500 for the first three years, $15,000 for the following four years and $13,500 for three years after that. Rowan plans to sell the used grader at the end of the tenth year for $29,500. What is the NPV if the cost of capital is 7.25%?
A. more than $4,500
B. between $4,500 and $3,000
C. between $3,000 and $1,500
D . between $1,500 and – $2,500
E. between – $2,500 and – $6,000

3. Your business is considering the purchase of a new $9,850 machine. If you expect the cash inflows to be $2,500 for the first three years, – $1,550 in the fourth year (due to maintenance costs) and $2,200 for the following three years after that. You expect to sell the used machine at the end of the seventh year for $750. What is the NPV if the cost of capital is 8.5%?
A. more than $700
B. between $700 and $250
C. between $250 and – $200
D. between – $200 and – $550
E. between – $550 and – $900

Analysis of South American Operations

Claire Jackson (CEO) of Easy Learning (EL) is considering discontinuing operations in South America, which are based in Argentina. For a variety of reasons it has been a challenge for EL to grow the busi- ness in this region and costs continue to rise because of high inflation. Results from the most recent fiscal year just ended are shown below.

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $400,000

Variable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000

Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $220,000

Fixed expenses .................................                               310,000

Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . ($90,000)

If the South American operations are discontinued, Jackson has identified the following implications:

1.  Assets with an original cost of $485,000, mostly leasehold improvements and computer equipment, can be sold for $15,000. Assume that the assets are completely written off for both accounting purposes and tax purposes (i.e., $0 NBV and UCC) and that the salvage proceeds of $15,000 are not taxable. 


2. Severance pay for the three full-time employees will total $50,000. Severance pay is a tax deductible expense. 


3.  Of the total annual fixed expenses of $310,000, $40,000 represents an allocation from head office for computer support and will continue to be incurred even if the South American operations are discontinued. 


4.  The corporate tax rate in Argentina is 35%. 


Jackson is also considering the option of trying to make the South American operations profitable. She believes that with more emphasis on marketing and sales, EL could be successful. Details and assumptions made by Jackson for this option are as follows:

1.  To increase sales, an additional marketing specialist would be hired immediately at an annual cost of $110,000 including benefits. This is $20,000 higher than the next highest paid employee in EL's Argentina office. 


2.  The new marketing specialist should be able to acquire two new customers in each of the next two years and each customer will generate annual revenue of $100,000. One additional new customer will be acquired each year thereafter and each will generate annual revenue of $100,000. 


3.  Hiring a new marketing specialist will necessitate the purchase of office furniture with a total cost of $5,000. The CCA rate in Argentina for office furniture is 10%. Assume there is no CCA half- year rule in Argentina. 


4.  EL will not lose any existing customers over the next five years and will be able to retain all newly acquired customers over that same period. This contrasts with the typical churn rate for high-tech companies of about 20% per year. 


5.  Variable expenses will continue at the same rate as in the most recent fiscal period for the next five years. 


6.     The marketing specialist will receive a commission of 10% of revenue generated from new cus- tomer acquisitions. 


7.  Existing total fixed expenses of $310,000 per year, including the $40,000 allocation from head of- fice for computer support, will be unchanged for the next five years. 


Required:

1.    Should the South American operations be discontinued or should Jackson hire a new marketing 
specialist in an attempt to grow the business? Because of the uncertainty in the South American operating environment, Jackson wants you to preparee your analysis of the two options for a five- year period. EL has a required return of 12%. 


2.  Regardless of your recommendation for part 1, what qualitative factors should Jackson consider when deciding whether or not to discontinue operations in South America? 


3.  Assume that the marketing specialist will be able to acquire two new customers in the first year, but thereafter only one new customer will be acquired each year. Each new customer will generate an- nual revenue of $100,000. Given this new assumption, revise your analysis of the option to con- tinue operations in South America. Assume all other details and assumptions regarding this option remain unchanged. Should the operations be discontinued or should the new marketing specialist be hired? 


4.  What do the results of the revised analysis in part 3 above suggest about the riskiness of the option to hire a new marketing specialist? How could this risk be incorporated in your analysis? 


Question 25 (1 point)

The Competitive firm's demand curve for labor is equal to:

Question 25 options:

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Question 26 (1 point)

The best example of a monopsonist is:

Question 26 options:

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Question 27 (1 point)

Suppose a powerful labor union negotiates a wage for its members above the equilibrium wage rate in a previously nonunionized competitive labor market. A likely result of this is that:

Question 27 options:

25. A relative price is:

A. the rate of inflation. B. a measure of overall prices at a particular point in time. C. the percentage change in a price index such as the CPI. D. the price of a specific good in comparison to the prices of other goods and services.

26.a specific good in comparison with other goods and services are called _______.

A. quality adjustments; substitution bias. B. changes in a relative price; inflation. C. inflation; changes in a relative price. D. price level adjustments; quality adjustments.

27. Suppose the value of the CPI is 1.10 in year 1, 1.16 in year 2, and 1.27 in year 3. Assume also that the price of computers increases by 3% between year 1 and year 2, and by another 3% between year 2 and year 3. The price level is increasing, the inflation rate is _______, and the relative price of computers is _________.

A. increasing; increasing B. constant; increasing C. constant; decreasing D. increasing; decreasing

28. Inflation _____ the signals sent by price changes to demanders and suppliers of goods and services.

A. amplifies B. obscures C. enhances D. has no impact on

29. The phenomenon known as _____ occurs when inflation causes people to pay an increasing percentage of their income in taxes even when their real incomes have not changed.

A. hyperinflation B. bracket creep C. the Fisher effect D. substitution bias

30. The shoe leather costs of inflation include all of the following EXCEPT:

A. the lost purchasing power of cash. B. the extra costs incurred to avoid holding cash. C. the cost of more frequent trips to the bank. D. the installation of a new cash management system. 31. Ann's Cookie Shop needs $1,000 cash per day for customer transactions. Ann has a choice between going to the bank first thing on Monday morning to withdraw $5,000 - enough cash for the whole week - or going to the bank first thing every morning for $1,000 each time. Ann puts the cost of going to the bank at $1 per trip. Assume that funds left in the bank earn precisely enough interest to keep their purchasing power unaffected by inflation. Ann's Cookie shop is open 5 days a week for 50 weeks each year. If Ann goes to the bank everyday when the inflation rate is 10%, then the annual cost of going to the bank is _____ and Ann's annual losses from holding cash are _____.

A. $50;$5,000 B. $50;$1,000 C. $250; $100 D. $250; $1,000

32. If workers and employers agree to a three-year wage contract expecting 3% inflation and inflation turns out to be 5%, then:

A. workers gain and employers gain. B. workers gain and employers lose. C. workers lose and employers gain. D. workers lose and employers lose.

33. When inflation turns out to be different than expected, wealth is ______.

A. destroyed B. redistributed C. increased D. decreased

34. It is difficult to engage in long-term financial planning when inflation is:

A. high and erratic. B. low and stable. C. accounted for through indexing. D. predictable.

35. The real interest rate is the:

A. market interest rate. B. annual percentage increase in the nominal value of a financial asset. C. annual percentage increase in the purchasing power of a financial asset. D. the interest rate charged on a loan in dollar terms.

36. The annual increase in the dollar value of a financial asset is called the:

A. real rate of return. B. inflation rate. C. real interest rate. D. nominal interest rate.

37. The market interest rate in Alpha is 7% and the market interest rate in Beta is 10%, but the inflation rate in Alpha is 3% and inflation rate in Beta is 8%. Which of the following statements is true?

A. The real interest rate is higher in Alpha, but the nominal interest rate is higher in Beta. B. The real interest rate is lower in Alpha, but the nominal interest rate is lower in Beta. C. Both the real and nominal interest rates are higher in Alpha. D. Both the real and nominal interest rates are higher in Beta.

38. On January 1, 2004, Anna invested $5,000 at 5% interest for one year. The CPI on January 1, 2004 stood at 1.60. On January 1, 2005, the CPI was 1.68. The real rate of interest earned by Anna was ____ percent.

A. -5 B. 0 C. 5 D. 8

39. Unexpectedly high inflation ______ borrowers and _____ lenders. A. helps; hurts B. helps; helps C. hurts; hurts D. hurts; helps 40. The Fisher effect is the tendency for ____ interest rates to be ______ when inflation is high.

A. real; high B. real; low C. market; low D. nominal; high

a.   Compare Means of Three of More Groups

2. Compare and contrast the means of three or more groups. Are households with more children more likely OR less likely to recommend their favorite Mexican restaurant than are households with fewer children? Explain fully your conclusion. Don't guess. Support your answer by providing the mean that was computed.    

You have recently been hired as a cost accountant at Travenol Laboratories. The controller is an "old school" accountant and has heard that you recently graduated with a degree in accounting. One day he summons you to his office to assign you a task. He says, "I understand that recently educated accountants are using a variety of statistical tools to determine causality between costs and their respective drivers. We have been using direct labor hours as our cost driver for our manufacturing overhead costs for as long as I have been here. In the last few years our production processes have become more automated and I am not sure whether direct labor hours is the appropriate allocation basis for our manufacturing overhead costs. I would like you to use some of those statistical tools to determine whether there is a more appropriate cost driver."

You leave his office recognizing that this is a tremendous career opportunity. If you can convince your boss that you can use statistical analysis to determine the best cost driver, you will have established yourself in the department as a knowledgeable professional. It is good fortune that one of your projects in your cost class dealt specifically with this type of analysis.

Requirement:

Asylum Applications and GDP

Economic research provides evidence for a positive relationship between Gross Domestic Product (GDP) and Asylum Applications across the EU. This provides support for the view that a strong economy tend to have higher level of asylum applications.

The Table below gives Asylum Applications and an index of GDP per capita (written as GDP for short) for each year from 2003 to 2014. A regression analysis with Asylum Applications as the response variable and GDP as the predictor variable is shown at the end of the question.

Table: Asylum Applications and GDP in each year

Regression Analysis: Asylum Applications versus GDP (GDP per Capita (index))

1. Discuss the interpretation of the panel in the Regression Analysis output below which relates to the regression coefficients stating the Null Hypothesis
2. Obtain and interpret a confidence interval for the slope parameter and explain how it relates to the corresponding t-test of part (a)

3. How would you interpret the expected response of the Asylum Applications to an increase of 1 unit in GDP per capita?

4. The output contains intervals corresponding to values for GDP of 140 and 177 respectively. Explain how the two types of interval should be interpreted for both levels of absences

5. Given the true GDP value in 2015 turned out to be 177 and the actual level of Asylum Applications was 3,276, would you be willing to use this model for future predictions?Explain your answer taking into consideration the Adj-R squared value

Explain your answer taking into consideration the Adj-R squared value

Regression Equation

Asylum Applications = -19.720 + 166 GDP

Analysis of Variance

Predicted Values for New Observations

XX denotes an extremely unusual point relative to predictor levels used to fit the model

This question requires the use of the Excel file ‘Assignment 3 Data’ found on ACORN. In the file, you will find the annual returns for Enbridge Inc. (ENB) and the S&P/TSX Composite Index (which we will use for the market portfolio). All parts of this question are to be done in Excel with your results printed and submitted with the other questions in this assignment.

1. Use the data for each of ENB and the S&P/TSX Composite Index to find the historical 95% confidence interval of each. [10 points]

2. Plot the returns of the market against the returns of ENB. Add a trendline to the graph and determine the beta of the stock from your trendline. [5 points]

3. Determine the variance and average annual return of the market portfolio. [3 points]

4. Determine the correlation coefficient between the market portfolio and ENB. [3 points]

5. What is the calculated beta for ENB using the information derived from parts a, c, and d? How does this compare with your answer to part b? [2 points]

6. The current Government of Canada Benchmark 10 Year Bond Yield (which will be our risk-free rate) is 1.61%. What is the required return on ENB stock according to the CAPM? [2 points]