The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $10 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.2 million with a 0.2 probability, $2.9 million with a 0.5 probability, and $0.9 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.

Debt/Capital ratio is 0.

Debt/Capital ratio is 10%, interest rate is 9%.

Debt/Capital ratio is 50%, interest rate is 11%.

Debt/Capital ratio is 60%, interest rate is 14%.

A wheel alignment shop wants to improve his service by purchasing a new wheel alignment system. He is faced with three outcomes related to the demand on wheel alignment service, and three alternative decisions on alignment system purchase. The table below displays the estimated daily payoffs resulting from all combinations of decisions with outcomes.

Alternative Decisions Outcomes (demand)
O1: High O2: Moderate O3: low
A1: high performance alignment system AED 10,000 AED 5,000 AED -10,000
A2: ordinary alignment system AED 5,000 AED 3,000 AED -5,000
A3: no purchase AED 3,000 AED 2,000 AED 0
Probabilities 0.2 0.5 0.3

1. If the decision is taken under uncertainty, find the best decision using the Maximax criterion. (3.5 Marks)
2. Now with the given outcomes’ probabilities, what is the best decision according to the EMV criterion? (3.5 Marks)
3. Use the EVPI to decide if the shop manager should buy perfect information for AED 2500 or not.

The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $16 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.5 million with a 0.2 probability, $2.2 million with a 0.5 probability, and $0.4 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations. Debt/Capital ratio is 0. RÔE = % σ = % CV = Debt/Capital ratio is 10%, interest rate is 9%. RÔE = % σ = % CV = Debt/Capital ratio is 50%, interest rate is 11%. RÔE = % σ = % CV = Debt/Capital ratio is 60%, interest rate is 14%. RÔE = % σ = % CV =

The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $17 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.9 million with a 0.2 probability, $3.2 million with a 0.5 probability, and $0.5 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.

Debt/Capital ratio is 0.

Debt/Capital ratio is 10%, interest rate is 9%.

Debt/Capital ratio is 50%, interest rate is 11%.

Debt/Capital ratio is 60%, interest rate is 14%.

The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $14 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $5.8 million with a 0.2 probability, $3.4 million with a 0.5 probability, and $0.6 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.

Debt/Capital ratio is 0.

Debt/Capital ratio is 10%, interest rate is 9%.

Debt/Capital ratio is 50%, interest rate is 11%.

Debt/Capital ratio is 60%, interest rate is 14%.

The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $13 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $5 million with a 0.2 probability, $2.9 million with a 0.5 probability, and $0.4 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.

Debt/Capital ratio is 0.

Debt/Capital ratio is 10%, interest rate is 9%.

Debt/Capital ratio is 50%, interest rate is 11%.

Debt/Capital ratio is 60%, interest rate is 14%.

A white van is parked in the sun. The direct irradiance (Gdir) from the sun is 1065 W/m² with an incidence angle of 20^o from perpendicular to the roof of the van (area 3 m x 1.8 m). The roof has an absorptivity of 0.9 to solar radiation and emissivity of 0.2 to the surroundings (which have an effective temperature of 25^oC). A gentle breeze of 25^oC air blows over the van, with a speed of 6 m/s along the length of the van roof (3 m).

Assuming the bottom side of the roof is well insulated, calculate:

a) The convective heat transfer coefficient for the top surface of the roof of the van, assuming it is an isothermal flat plate and using the properties of air at 25^oC.

b) The irradiance and the total radiative energy absorbed by the roof (assume Kirchoff's law applies for diffuse radiative transfer between the surroundings and the roof of the van).

c) The temperature of the roof of the van and its radiosity.

d) A supplier offers to apply a reflective coating that reduces the absorptivity at solar wavelengths to 0.7 but reduces the emissivity at ambient conditions to 0.05. Would you recommend this as a solution to reduce heat transfer to the van? Why or why not?

Find b₀, b_1, and b₂  to fit the second degree parabola =b₀+b₁ x+b₂ x² for the following data: