Anderson Corp just issued a stock dividend of$2.00 yesterday. The company plans on increasing the dividend by 6% per year for the next 5 years. After which, the dividend will grow at 3% forever. The required rate of return is 10%.

A) Calculate the current price of the stock

B)Calculate what the price of the stock should be in 1 year

C) Calculate the Dividend yield and capital gains yield during the first year.

2. Consider a stock that pays no dividend trading at $100. Suppose one-year call options with strike prices of $95, $100, $105, and $110 can be bought for a premiums of $16.41, $12, $9, and $7.24 respectively. Suppose the annual effective interest rate is 5% (i.e., a $100 bond pays $105 one year from now).

a) What are the values of one-year puts with strike prices corresponding to those listed for the call options above?

b) Suppose you wished to enter into a short one-year forward position on the stock. What is the fair forward price?

c) Suppose a dealer offers to take the other side of your forward at a price of $106 (i.e., she agrees to buy the stock from you for $106 in one year). Is this a fair priced offer according to arbitrage pricing theory (assume that you can borrow and lend at an annual effective interest rate of 5%; and that you can buy and short the stock without transaction costs)? If not, what payment now (either from you to the dealer, or from the dealer to you) would make it fair? Specify in your answer the amount and who makes the payment and who receives it.

d) Suppose that you cannot find a counterparty for your desired short forward position. Using only the calls and puts described above, how would you synthesize a short (on market) forward position?

e) Suppose you had a long position in the stock and wished to hedge in such a way that your payoff would never be below $100. How could you accomplish this using the options (both the calls, and the puts) described above without incurring any net out of pocket cost? Assume there are no transactions costs.

The company Apple produces 2 types of plastic containers, type A and B. The products have following expenses on labor and material Container A Container B Direct material per 100 containers Plastic X ($0.2 per kg) 30 kg 70 kg Plastic Y ($0.1 per kg) 20 kg 30 kg Direct labour per 100 containers (12$ per hour) 0.25 hour 0.5 hour The following overheads are planned for the next period. The predetermined rate is based on production volume of 495,000 units of each product. Manufacturing overheads are applied on the bases of direct labor hours: Indirect material USD 10,500 Indirect labor USD 50,000 Utilities USD 25,000 Property taxes USD 18,000 Insurance USD 16,000 Depreciation USD 29,000 Total USD 148,500 The following selling and administrative expenses are planned: Salaries USD 75,000 Advertising USD 15,000 Management salaries USD 90,000 Other expenses USD 30,000 Below is expected level of sales: Container A 500,000 units@ price USD 90 per 100 containers Container A 500,000 units@ price USD 130 per 100 containers Information on finished goods and inventory is provided below: Expected level on Jan 1 Desired level on Dec 31 Finished goods Container A 10,000 units 5,000 units Container B 20,000 units 15,000 units Raw material Plastic X 15,000 kg 5,000 kg Plastic Y 5,000 kg 10,000 kg Required: Prepare master budget for the next year including income statement.

1. A publisher faces the following demand schedule for the next novel from one of its popular authors:

The author is paid $2 million to write the book,

Price 100 90 80 70 60 50 40 30 20 10 0

QD(1000s) 0 100 200 300 400 500 600 700 800 900 1000

and the marginal cost of publishing the book is a constant $10 per book.

a. Compute the total revenue, total cost, and profit at each quantity. What quantity would a profit-maximizing publisher choose? What price would it charge?

The total revenue at each level of production is given by the demand schedule above, using T R = P Q. The total cost is the constant fixed costs of $2 million plus the variable cost of ($10)Q. For convenience, the units of revenue, cost, and profit are given in millions. In the table below, we combine these equations with the calculation of marginal revenue. It turns out that the profit-maximizing level of output is 500,000 units, corresponding to a price of $50.

b. Compute marginal revenue. (Recall that MR = ∆T R/∆Q). How does marginal revenue compare to the price? Explain.

QD(1000s) 0 100 200 300 400 500 600 700 800 900 1000

TR ($ millions) 0 9 16 21 24 25 24 21 16 9 0

TC ($ millions) 2 3 4 5 6 7 8 9 10 11 12

Profit ($ millions) -2 6 12 16 18 18 16 12 6 -2 -12

Marginal Revenue ($) 90 70 50 30 10 -10 -30 -50 -70 -90

Marginal Cost ($) 10 10 10 10 10 10 10 10 10 10

c. Graph the marginal-revenue, marginal-cost, and demand curves. At what quantity do the marginal-revenue and marginal-cost curves cross? what does this signify?

The relevant information is given in the table above. In the table, we can see that marginal cost and marginal revenue are equal at Q = 50. That is MR(50) = MC(50) = 10. Not coincidentally, this is also the profit-maximizing level of output that we found earlier.

d. In your graph, shade in the deadweight loss. Explain in words what this means.

The social surplus maximizing level of output would set the price equal to marginal cost. In that case, P = 10 and then turning to the demand schedule this corresponds to output of Q(10) = 900, 000. The deadweight loss is the surplus that is lost because we do not makes the units from 500,000 to 900,000. In this case, the deadweight loss if represented with a triangle with base 900, 000− 500, 000 = 400, 000 and the height of 50 − 10 = 40. The area of this triangle is 0.5(400000)(40) = 2 million

e. If the author were paid $3 million instead of $2 million to write the book, how would this affect the publisher’s decision regarding what price to charge? Explain.

Recall that there are two questions for the firm — how much to produce, and how whether to stay in business. The first question — how much to produce — is based on comparing marginal costs and benefits (e.g. should I go from 3 to 4? From 4 to 5, and etc.). By definition, marginal costs are variable costs i.e. they are related to how much output is chosen. The increase in the fee to the author is a type of fixed cost. In the current exercise, the fee paid to the author has no affect on the market demand schedule or on the production costs of the book. Thus, there is no affect of the author’s fee on any of the MARGINAL factors in our exercise. The publisher’s profit will go down, but otherwise there is no effect on what choices it will want to make.

IN C++ (THIS IS A REPOST)

Design a class, Array, that encapsulates a fixed-size dynamic array of signed integers.

Write a program that creates an Array container of size 100 and fills it with random numbers in the range [1..999]. (Use std::rand() with std::srand(1).) When building the array, if the random number is evenly divisible by 3 or 5, store it as a negative number.

Within your main.cpp source code file, write a function for each of the following processes.

1. Print the array ten values to a line. Make sure the values are aligned in columns. Each column should have a width of 5.
2. Return the sum of all values in the array.
3. Return the address of the smallest value in the array.

Requirements

Demonstrate each of the functions above and several of the Array class member functions in your main function.

Need 3 files Array.h, Array.cpp, main.cpp

You must use the interface provided below. Do not modify any function signatures. Do not use any form of base+offset addressing within repetition structures (i.e., use pointers to traverse the array).

Array Class Interface (Array.h)

#ifndef ARRAY_H_
#define ARRAY_H_

#include <cstddef>

class Array {
public:
    /// Default constructor. Constructs a new container with 'count' copies of
    /// elements with value 'value'.
    /// @param count The number of elements.
    /// @param value Value to fill each element.

    Array(std::size_t count, int value = 0);

    /// Copy constructor. Constructs the Array with a copy of the
    /// contents of 'other'.
    /// @param other Array to copy.

    Array(const Array& other);

    /// Free the resources used by the container.

    virtual ~Array();

    /// Returns a reference to the element at specified position 'pos'.
    /// @param pos Position of the element to return.
    /// @return Reference to the requested element.

    int& at(std::size_t pos);
    const int& at(std::size_t pos) const;

    /// Returns a reference to the first element in the container.
    /// Calling front on an empty container is undefined.
    /// @note For a container c, the expression 'c.front()' is equivalent
    /// to '*c.begin()'.
    /// @return Reference to the first element.

    int& front();
    const int& front() const;

    /// Returns a reference to the last element in the container.
    /// Calling back on an empty container is undefined.
    /// @note For a container c, the expression return 'c.back()' is equivalent
    /// to '{ auto tmp = c.end(); --tmp; return *tmp; }'
    /// @return Reference to the last element.

    int& back();
    const int& back() const;

    /// Returns a pointer to the first element of the container.
    /// If the container is empty, the returned pointer will be equal to 'end()'
    /// @return Pointer to the first element.

    int* begin() { return m_list; }
    const int* begin() const { return m_list; }

    /// Returns a pointer to the element following the last element of the
    /// container. This element acts as a placeholder; attempting to dereference
    /// this pointer is undefined.
    /// @return Pointer to the element following the last element.

    int* end() { return m_list + size(); }
    const int* end() const { return m_list + size(); }

    /// Checks if the container has no elements, i.e., whether
    /// 'begin() == end()'.
    /// @return true if the container is empty, false otherwise.

    bool empty() const;

    /// Returns the number of elements in the container, i.e., the distance
    /// between 'begin()' and 'end()'.
    /// @return The number of elements in the container.

    std::size_t size() const { return m_size; }

    /// Assigns the given value 'value' to all elements in the container.
    /// @param value The `value` to assign to the elements.

    void fill(int value);

    /// Exchanges the contents of this container with another.
    /// @param other Container to exchange the contents with.

    void swap(Array& other);
    
protected:
    std::size_t m_size;  ///< Number of elements allocated.
    int*        m_list;  ///< Pointer to base of array.
};

// Non-Member Function(s)

/// Compares the contents of two arrays. Returns true if the contents of
/// lhs and rhs are equal, that is, whether each element in lhs compares
/// equal with the element in rhs at the same position.
/// Otherwise, returns false.
/// @param lhs Container to compare.
/// @param rhs Container to compare.
/// @return true if lhs and rhs compare equal, otherwise false.

bool equal(const Array& lhs, const Array& rhs);

#endif  // ARRAY_H_ 

/* EOF */

7. Application: Elasticity and hotel rooms The following graph input tool shows the daily demand for hotel rooms at the Big Winner Hotel and Casino in Las Vegas, Nevada. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. Demand Factor Initial Value Average American household income $50,000 per year Round trip airfare from Los Angeles (LAX) to Las Vegas (LAS) $100 per round trip Room rate at the Lucky Hotel and Casino, which is near the Big Winner $250 per night Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 0 50 100 150 200 250 300 350 400 450 500 500 450 400 350 300 250 200 150 100 50 0 PRICE (Dollars per room) QUANTITY (Hotel rooms) Demand Graph Input Tool Market for Big Winner's Hotel Rooms Price (Dollars per room) 200 Quantity Demanded (Hotel rooms per night) 300 Demand Factors Average Income (Thousands of dollars) 50 Airfare from LAX to LAS (Dollars per round trip) 100 Room Rate at Lucky (Dollars per night) 250 For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Big Winner is charging $200 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Big Winner from rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Big Winner are . If the price of a room at the Lucky were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Big Winner from rooms per night to rooms per night. Because the cross-price elasticity of demand is , hotel rooms at the Big Winner and hotel rooms at the Lucky are . Big Winner is debating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, you can see that this would cause its total revenue to . Decreasing the price will always have this effect on revenue when Big Winner is operating on the portion of its demand curve.

050100150200250300350400450500500450400350300250200150100500PRICE (Dollars per room)QUANTITY (Hotel rooms)Demand  

Graph Input Tool

Assigning manufacturing overhead cost to activity pools is referred to as first-stage allocation because costs are assigned first to the activity pools before being assigned to

Omer Limited produces and sells electronic sound equipment. The company has production capacity of 20,000 units and currently production schedule is for 18,000 units. Each unit has a selling price of $25, variable product cost of $15, and variable selling cost of $2. Another division wishes to purchase 500 units. If Omer sells the units to the other division, it will avoid $1 of the variable selling costs. What is the minimum transfer price that will maximize corporate profits?