McCormick & Company is considering a project that requires an initial investment of $24millionto build a new plant and purchase equipment. The investment will be depreciated as a modified acceleratedcost recovery system(MACRS) seven-year class asset. The new plant will be built on some of the company's land, which has a current, after-tax market value of $4.3million.The company will produce bulk units at a cost of $130 each and will sell them for $420 each. There are annual fixed costs of $500,000. Unit sales are expected to be $150,000each year for the next sixyears, at which time the project will be abandoned. At that time, the plant and equipment is expected to be worth $8million(before tax) and the land is expected to be worth $5.4million(after tax).  To supplement the production process, the company will need to purchase $1millionworth of inventory. That inventory will be depleted during the final year of the project. The company has $100millionof debt outstanding with a yieldtomaturity of 8percent, and has $150millionof equity outstanding with a beta of 0.9. The expected market return is 13percent,and the risk-free rate is 5percent.The company's marginal tax rate is 40percent.

6. Create an after-tax cash flow timeline.

7.What are the total expected cash flows at the end of year six?The $4.3millionis an opportunity cost and must be included at date zero as a cash outflow.If the project is accepted, however, the land can be sold in six years for $5.4million.

8.Find the NPV using the after-tax WACC as the discount rate.

9.Find the IRR.

10.Should the project be accepted? Discuss whether NPV or IRR creates the best decision rule.  

5. CarPoint is a comprehensive consumer-oriented automotive web site offering users

complete car-buying and care information on all makes and models. It provides fast, convenient

access to detailed specifications and pricing information on both new and used

cars. It also provides reviews and advice from leading automotive writers, and personalized

maintenance and recall information. Ford Motor Company was CarPoint’s first

partner. Ford’s concept is to allow consumers to order any model car to their exact specifications

and receive immediate feedback on availability. Consumers are able to schedule

delivery and service at their local dealership, making it easier for consumers to buy cars

over the Internet.

Once a consumer decides what car she wants to buy, CarPoint locates an existing car,

regardless of where in the country it is, or they place an order for a new custom car to be

built at the factory and delivered to the consumer’s local dealership. During the process,

both the manufacturer and the dealer will get instant, online status reports on the order

from the time the order is placed until it is delivered to the customer.

Ford sees its advantage in better managing its order-fulfillment process. It streamlines

production and allows better inventory management through its supply chain.

b. List the steps in the Internet value chain, and discuss the time, quality, and cost of the

experience to the consumer.

c. What cost, quality, and time benefits will Ford likely encounter with their new

arrangement with CarPoint? What causes these benefits?

d. How will a service like CarPoint likely affect dealers’ behavior toward their customers?

how do I fill in the blanks?

as well as graph the three average cost curves and the marginal cost curve.

A Peruvian human sacrificial temple, near Lima, Peru, has three
levels, levels J, M, and H, where tourists have the only access to
the temple.
The probabilities that a tourist visiting the temple will visit the
different levels are:
Visit level J: 0.74
Visit level M: 0.70
Visit level H: 0.62
Visit levels J and M: 0.52
Visit levels J and H: 0.46
Visit levels M and H: 0.44
Visit levels J and M and H: 0.34.
Find the probabilities that a person visiting the temple will:
A. Visit level M given that he will go to level J.
B. Visit level H given that he will go to level J and level M.
C. Not visit level J given that he will visit level M and/or visit
level H.
D. Visit level H and visit level J given that he will not visit level
M.

Study Guide #2

Thirty-three small communities in Connecticut (population near 10,000 each) gave an average of x = 138.5 reported cases of larceny per year. Assume that ? is known to be 42.9 cases per year.

(a) Find a 90% confidence interval for the population mean annual number of reported larceny cases in such communities. What is the margin of error? (Round your answers to one decimal place.)

(b) Find a 95% confidence interval for the population mean annual number of reported larceny cases in such communities. What is the margin of error? (Round your answers to one decimal place.)

(c) Find a 99% confidence interval for the population mean annual number of reported larceny cases in such communities. What is the margin of error? (Round your answers to one decimal place.)

(d) Compare the margins of error for parts (a) through (c).

As the confidence levels increase, do the margins of error increase?

As the confidence level increases, the margin of error increases.

As the confidence level increases, the margin of error remains the same.  

As the confidence level increases, the margin of error decreases.

(e) Compare the lengths of the confidence intervals for parts (a) through (c).

As the confidence levels increase, do the confidence intervals increase in length?

As the confidence level increases, the confidence interval increases in length.

As the confidence level increases, the confidence interval decreases in length.    

As the confidence level increases, the confidence interval remains the same length.

Account Analysis Method

Penny Davis runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some unused space at the back of the salon and bought two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients would be able to use the benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She accumulated the following data on four accounts:

Penny decided that wages and equipment depreciation were fixed. She thought supplies and maintenance would vary with the number of tanning visits and that electricity would vary with the number of tanning minutes.

Required:

1. Calculate the average account balance for each account. Calculate the average monthly amount for each of the two drivers. (Round all answers to the nearest dollar or the nearest whole unit.) Use your rounded answers in all subsequent computations.

2. Calculate fixed monthly cost and the variable rates for the account averages. Round your answers to the nearest cent and use your rounded answers in all subsequent computations.

Express the results in the form of an equation for total cost. (Round to the nearest cent.)

3. In April, Penny predicts there will be 342 visits for a total of 3,720 minutes. What is the total cost for April? If required, round your answer to the nearest dollar.
$

4. Suppose that Penny decides to buy a new tanning bed at the beginning of April for $9,552. The tanning bed is expected to last four years and will have no salvage value at the end of that time.

What will be the new equation for total cost? If required, round your answers to the nearest cent.

Cost = $ + $ (visit) + $ (minute)

What is the new expected cost in April based on the prediction provided in Requirement 3 (above)? When required, round your answer to the nearest dollar.
$

The Prairie Island nuclear power plant near Red Wing, Minnesota, produces about 2×10⁹watts. A watt is one Joule per second.

b. Calculate the Joules of energy produced by the Prairie Island plant in one day.

c. Recall that E = m c². Use E from part b. Calculate m, the minimum mass that was converted to energy in one day. (Because of inefficiency, the actual mass converted must be larger.)

d. During fission of U-235, 0.1% of uranium's mass is converted to energy.  What mass of U-235 is required for the mass loss you calculated in part c?

e.  Combustion of bituminous coal produces 30 kJ/g (Chemistry in Context Table 5.2). That is heat, not electrical power, but ignore inefficiency and suppose that all the heat is converted to electrical energy. What mass of coal will produce the daily energy calculated in part b?

Read the following scenario below:

Leighton Beridon owns "Jeemp Farms", located near Weimar, TX. The farm produces pecan trees and sod. He has so many orders from the Houston metropolitan area that he is able to sell all his inventory each year, but he is not netting as much as he has in past years. His daughter, Liesl Beridon, came home from college over Thanksgiving and mentioned ABC costing, which she learned about in her cost accounting class. Mr. Beridon does not really know what ABC costing is and is skeptical as to whether it would be right for his business. He has hired your company to educate him about ABC and whether or not he should use an ABC system. Over the next few weeks, you will work towards helping Mr. Beridon decide what is the best route for his company to take.

Shortly after you get started, Mr. Beridon sends you an email stating that he feels he needs to discontinue the sod portion of his business and focus on his tree sector, as he can charge more per tree than he can charge for a foot of sod. He sends you an email stating, "I can charge so much more for a tree than a foot of grass. Therefore, I am planning on discontinuing the sod portion of the business immediately as I make so much more on the trees! I am going to plant all my sod acres with trees".

Questions:

• Project potential benefits Mr. Beridon could gain from using an ABC system.
• Describe any factors that could skew your results. In other words, explain if there is one method of costing that could make a product look more favorable than it really is
• Explain ABC costing and how it is different than traditional costing.
• Explain the advantages/disadvantages of using ABC costing.

Read the following scenario below:

Leighton Beridon owns "Jeemp Farms", located near Weimar, TX. The farm produces pecan trees and sod. He has so many orders from the Houston metropolitan area that he is able to sell all his inventory each year, but he is not netting as much as he has in past years. His daughter, Liesl Beridon, came home from college over Thanksgiving and mentioned ABC costing, which she learned about in her cost accounting class. Mr. Beridon does not really know what ABC costing is and is skeptical as to whether it would be right for his business. He has hired your company to educate him about ABC and whether or not he should use an ABC system. Over the next few weeks, you will work towards helping Mr. Beridon decide what is the best route for his company to take.

Shortly after you get started, Mr. Beridon sends you an email stating that he feels he needs to discontinue the sod portion of his business and focus on his tree sector, as he can charge more per tree than he can charge for a foot of sod. He sends you an email stating, "I can charge so much more for a tree than a foot of grass. Therefore, I am planning on discontinuing the sod portion of the business immediately as I make so much more on the trees! I am going to plant all my sod acres with trees".

Questions:

• Project potential benefits Mr. Beridon could gain from using an ABC system.
• Describe any factors that could skew your results. In other words, explain if there is one method of costing that could make a product look more favorable than it really is
• Explain ABC costing and how it is different than traditional costing.
• Explain the advantages/disadvantages of using ABC costing.

Q.1. Ms. Moonmoon is going to start a new coffee shop near Sylhet Osmani International Airport. Suggest a Brand name for her coffee shop. Why do you think that your proposed brand
name is perfect for her business? 4

Q.2. Do you consider BRAND when you are going to purchase something? Why or why not? 3

Q.3. Suppose, you have started an online business recently. Your business is Sylhet metropolitan area based and you sell imported Laptops, Tabs, Mobile phones, smartwatches, and headphones. Which pricing strategy will you follow; Market penetration pricing or market skimming pricing? Why?