Consider a firm that exists in a world with two periods (time 0 and time 1) and two equally likely states of the world at time 1. At time 0 the firm’s securities are traded. At time 1 the state is revealed. In the up-state the firm’s assets are worth $120 and in the down-state they are worth $40. The firm has debt outstanding with a face value of $60. Assume that the required rate of return is zero and investors are risk neutral. a) Compute the market value of debt, equity and the total market value of the company at time 0. b) Suppose that the company issues some additional debt with a face value of $40. This debt is pari passu (equal priority) with respect to the existing debt and the proceeds are invested in a zero NPV riskless project (i.e., the money is put in a safe box). How much money is the company able to raise with this debt issue?

There are 3 industrial firms in Happy Valley:

The government wants to reduce pollution to 150 units and gives each firm 50 pollution permits.

1. What is the total cost of pollution abatement if the permits are not tradable?

2. What is the total cost of pollution abatement if the permits are traded at a

   price of $20 each?

There are 3 industrial firms in Happy Valley:

The government wants to reduce pollution to 150 units and gives each firm 50 pollution permits.

1. What is the total cost of pollution abatement if the permits are not tradable?

2. What is the total cost of pollution abatement if the permits are traded at a

   price of $20 each?

There are 3 industrial firms in Happy Valley:

The government wants to reduce pollution to 150 units and gives each firm 50 pollution permits.

1. What is the total cost of pollution abatement if the permits are not tradable?

2. What is the total cost of pollution abatement if the permits are traded at a

   price of $20 each?

Journalize the attached adjusting entries

Prepare the necessary adjusting entries at December 31 for Staples, Inc. based on the information from problem 1 and the following information:

1. On November 1, 2013 the company borrowed 65,000 from a bank. The note requires principal and interest at 10% to be paid on April 30, 2014.

2. On December 1, 2013 the company received $3,000 in cash from another company that is renting office space in Staples’ building. The payment, representing rent for December and January was credited to Sales Revenue.

3. On September 1, 2013 the company paid an insurance company $4,500 for a nine month insurance policy. The entire $4,500 was debited to Prepaid Insurance.

What three kinds of illicit drugs are used most commonly by persons aged 12 and older, according to 2006 data? Can you suggest any methods for prevention of illegal substance use among young people?

What is the USA PATRIOT Act, and what are the four traditional tools of surveillance expanded with the Act?

How has the Reauthorized USA PATRIOT ACT of 2006 changed the legal definitions of terrorism and responded to critiques against the original law?

Stellar, Inc. and Zytec, Inc. are two fabricating shops that compete with each other for business. Stellar an established company has been around for more than 20 years and consequently their equipment is somewhat dated. Zytec is a relatively new company and uses cutting edge equipment. Stellar employs 15 mechanics each at $25 per hour, 3 electricians each making $31 per hour, and 17 welders each making $27 per hour. Zytec on the other hand employs 12 mechanics each at $23 per hour, 5 electricians each making $29 per hour, and 21 welders each making $29 per hour. Is the labor cost between these companies significantly different at the .05 level?

13.18 In problem 13.6 on page 501, an owner of a moving company wanted to predict the labor hours, based on cubic feet moved (stored in Moving). Using the results of that problem,

A) Determine the coefficient of determination, r², and interpret its meaning.

B) Determine the standard error of the estimate

C) How useful do you think this regression model is for predicting labor hours?

Here is problem 13.6 on page 501.

The owner of a moving company typically has his most experienced manager predict the total number of labor hours that will be required to complete an upcoming move. This approach has proved useful in the past, but the owner has the business objective of developing a more accurate method of predicting labor hours. In a preliminary effort to provide a more accurate method, the owner has decided to use the number of cubic feet moved as the independent variable and has collected data for 36 moves in which the origin and destination were within the borough of Manhattan in New York City and in which the travel time was an insignificant portion of the hours worked.

A) Construct a scatter plot.

B) Assuming a linear relationship, use the least-squares method to determine the regression coefficients b₀ and b_1.

C) Interpret the meaning of the slope, b₁, in this problem.

D) Predict the mean labor hours for moving 500 cubic feet.

E) What should you tell the owner of the moving company about the relationship between cubic feet moved and labor hours?