Consider the following information on a stock and the market portfolio: For the next year, there will be two possible scenarios: Good and Bad. The probability of Good scenario happening is 0.6 and the probability of Bad scenario happening is 0.4. The return on the stock is 30% in Good scenario and -8% in Bad scenario. The return on the market portfolio is 20% in Good scenario and -5% in Bad scenario. Calculate the expected return for the stock and the market portfolio.

Select one:

a. 7.20%; 5.00%

b. 14.00%; 8.80%

c. 18.00%; -3.20%

d. 14.80%; 10.00%

For the above question, calculate the standard deviations for the stock and the market portfolio.

Select one:

a. 0.2378; 0.1581

b. 0; 0

c. 0.1862; 0.1225

d. 0.1960; 0.1127

For the above questions, calculate the covariance between the stock and the market portfolio.

Select one:

a. 0.03440

b. 0.03760

c. 0.02280

d. 0.02208

For the above questions, calculate the beta for the stock

Select one:

a. 1.7391

b. 0.5750

c. 0.6579

d. 1.5200

e. The questions do not provide enough information to calculate beta

For the above questions, suppose the risk-free rate of return is 5 percent. Use CAPM to calculate the required rate of return for the stock. Do you recommend purchasing the stock based on your calculation of required rate of return?

Select one:

a. The required rate of return for the stock is 12.60%. I do not recommend buying the stock

b. The required rate of return for the stock is 12.60%. I recommend buying the stock

c. The questions do not provide enough information to do the recommendation

d. The required rate of return for the stock is 11.61%. I recommend buying the stock

e. The required rate of return for the stock is 11.61%. I do not recommend buying the stock

At the end of the year, a company offered to buy 4,610 units of a product from X Company for a special price of $11.00 each instead of the company's regular price. The following information relates to the 61,300 units of the product that X Company has already made and sold to its regular customers:

The special order product has some unique features that will require additional material costs of $0.72 per unit and the rental of special equipment for $4,000.

5. Profit on the special order would be

6. The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with demand falling by 750 units. This loss in sales will cause firm profits to fall by

At the end of the year, a company offered to buy 4,200 units of a product from X Company for a special price of $11.00 each instead of the company's regular price. The following information relates to the 69,100 units of the product that X Company has already made and sold to its regular customers:

The special order product has some unique features that will require additional material costs of $0.90 per unit and the rental of special equipment for $3,000.

The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with demand falling by 800 units. This loss in sales will cause firm profits to fall by ______________?

Lizo is a public company with the following characteristics (in the most recent year):

• - At the start of the year, the firm had book value of equity of $400 million, debt outstanding (book value as well as market value) of $200 million, and cash balance of $100 million. These numbers did not change during the most recent year.

• - The cost of capital for the firm is 6% next year, 8% the year after and 9% thereafter (in perpetuity).

• - Shares outstanding: 200 million

• - After-tax operating income: $100 million

• - Revenues: $800 million

  a) Lizo’s after-tax operating income is expected to grow 20% in each of the next 3 years. You expect Lizo to maintain its current return on invested capital (ROIC) forever. Estimate the free cash flows to the firm in each of the next 3 years.

  b) At the end of year 3, you expect Lizo to be in stable growth, growing 5% a year in perpetuity, while maintaining its current return on invested capital. Estimate the terminal value at the end of year 3.

c) Estimate the market value of equity today.

d) Lizo has 50 million options outstanding. Assume that the market value of each option is $5. Using the “market value approach”, estimate the value per share for Lizo today.

The Winston Company estimates that the factory overhead for the following year will be $1,216,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 38,000 hours. The total machine hours for the year was 54,900. The actual factory overhead for the year was $1,746,000.

Required:

Chart of Accounts

Factory Overhead

(a) Determine the total factory overhead amount applied.

(b) Calculate the overapplied or underapplied amount for the year. Enter the amount as positive values.

General Journal

(c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold on December 31. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

As they get closer to the end of the current year, John and Chan begin to think about next year. John is the head of the budget team and he has already gathered some of the information he needs to prepare the next year’s budget. His sales forecast remains 30,000 Men’s Razors and 10,000 Women’s Razors at a selling price of $45.00 and $55.00 for the whole year. John would consider changing the selling price of one or both of the products if he felt it would increase profits or market share.

The Men’s Razor is made out of 1 pound of raw materials at a cost of $5.00 per unit. The Women’s Razor uses 1.5 pounds of raw materials at a cost of $7.00 per unit. Raw Materials are purchased on credit and paid for fifty percent in the first quarter following the purchase and the remainder in the second quarter following the purchase. The last year’s Q3 and Q4 purchases of raw materials were $45,000 and $95,000 respectively. John wants an ending balance of raw materials equal to ten percent of the raw materials needed in the next quarter. The beginning balance of raw materials was 1,200 pounds split equally between the two products.

Unit sales for 2017 are forecasted to be:

      Sales are forty percent cash and sixty percent credit. Credit sales are collected fifty percent in the quarter following the sale and forty-five percent in the second quarter following the sale. Five percent of credit sales are expected to go uncollected. Total sales for Q3 and Q4 of the previous year, which are expected to be partially collected during this year, were $300,000 and $850,000.

12. Prepare a Sales (Revenues) Budget and Cash Collection schedule for the year ended December 31, 2017.

13. Prepare a Raw Materials Purchases budget and Cash Payments schedule for the year ended December 31, 2017.

14. Prepare a Direct Labor budget for the year ended December 31, 2017. Recall from a previous part of the project that the Men’s Razor takes 1.5 DL hours to manufacture and the Women’s Razor takes 2.0 DL hours and that the subcontractors who assembly the razors get paid $10.00 per hour.

Hit or Miss Sports is introducing a new product this year. It is a see at night soccer ball. If the balls are a hit, the firm expects to be able to sell 50,000 balls at a price of 60$ each. If the new product is a bust, only 30,000 units can be sold at a price of $55. The variable cost of each ball is $30 and fixed costs are zero. The cost of the manufacturing equipment is $6 million and the project life is estimated at 10 years. The firm will use straight line depreciation. The firm’s tax rate is 35% and the discount rate is 12%

1. If each outcome is equally likely what is the expected NPV?
2. Now if the firm can abandon the project after 1 year if the sales are weak and sell of the remaining manufacturing equipment for 5.4 million, would this change the decision?

One year ago, a machine was purchased at a cost of $2,000, to be useful for 6 years. However, the machine has failed to perform properly and has a cost of $500 per year per year for repairs, adjustments, and shutdowns. A new machine is available to accomplish the functions desired and has an initial cost of $3,500. Its maintenance costs are expected to be $50 per year during its service life of 5 years. The approximate market value of the present machine has been roughly $1,200. If the operating costs (other than maintenance) for both machines are equal, show whether it is economical to purchase the new machine. Perform a before-tax study using an interest rate of 12%, and assume that the salvage values will be negligible.

In 2018, as a way of commemorating the 10-year anniversary of the release of the first smartphone, an undergraduate student polled a random sample of 26 her peers in hopes of estimating the average time (in hours) such students spend on their smartphone each day, on average. Using the data she collected, she produced a 95% confidence interval for the true mean time college students spend on their phone each day: (5.035, 6.165)

1. What was the margin of error of this confidence interval?

2. What was the sample mean time (in hours) for the n = 26 students?

3. What was the sample standard deviation (in hours) for the n = 26 students? Submit your answer rounded to four decimals.

Show work please and thank you.