In the year 2005, in Anytown, suppose that one person is willing to pay $1,000 for relief from hay fever; another two are willing to pay $350; about five more are willing to pay $50; one is willing to pay $40; one is willing to pay $35; one each is willing to pay $34, $32, $30, and $28; about a dozen are willing to pay $10; four are willing to pay $5; and half of the rest of the town (another 75 people) are willing to pay $1. a. Draw the demand curve for hay fever relief in Anytown. b. What is the potential total benefit (total of incremental value) from relief of hay fever if it is provided to everyone who asks? To everyone willing to pay $35 or more? c. If the price of hay fever medication is $20, what is the quantity demanded? What is the consumer surplus (total net value or benefit) for those who are willing and able to pay for the hey fever medication?

The data shows the number of capital prisoners (prisoners on death row) in 2005 in the western U.S. states.

1. Find the mean and the standard deviation.

Mean: ____________________

Standard Dev: _____________________

2. Find the median and the interquartile range (IQR).

Median: ________________________

IQR: ____________________________

3. Draw the boxplot for the data, make sure you include your number line.

4. What is the shape of your distribution?

Accounting

Read the case ‘April Company’ and answer the questions below:

April Company (‘April’) is a well-known diversified corporation with many different businesses in Hong Kong.

In order to meet the long term growth and diversification strategy under the direction of the new Chairman; the company has purchased assets and constructed a new building as its new head office in Hong Kong as follows:

i 1 Jan 2017: truck and equipment: These assets were purchased as a lump sum for $150,000 cash. The following information was gathered.

ii 1 Feb 2017: A new piece of machinery was acquired by trading in a used piece of machinery. (The exchange was with commercial substance.) Facts concerning the trade-in are as follows.

iii 1 Jan 2017: A building was constructed as the new head office of the company. Construction began on 1 January 2017 and would be completed in 15 months. The payments to the contractor in the first year (2017) were as follows.

On 1 January 2017, April Company secured a specific construction loan ($400,000) with an 8% interest rate to finance the construction of the new building. The building expenditures are qualifying assets of the construction in capitalization of interest costs and the capitalized interest costs should be included in the building. April drew down on the construction loan and other outstanding debt (if required) to meet the payment schedule shown above.

The other outstanding debt in the company during 2017:

* $1,000,000 bonds (due in year 2025), with 6% effective annual interest rate

* $500,000 long term note (due in 2030), with 7.5% interest rate per annum.

The company, according to the accounting standards in Hong Kong, will capitalize the maximum allowable interest costs for this construction.

The CFO of April estimated that the truck and the new machinery would be used for ten years, with an estimated residual value of $20,000 and $40,000 respectively. He also estimated that the equipment would have a useful life of five years and a residual value of $5,000. April’s depreciation policy specifies the 200% double-declining balance method for equipment and the straight-line method for the truck and machinery. (The building was not yet ready for use in 2017.)

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Required:

a     For each of the above assets purchased, traded or constructed, determine the amount of each of them clearly and record the transactions by journal entries in the books of April Company for the year ended 31 December 2017. Interest expense for the year has been recorded.

b     For each of the assets above (except the building), calculate April Company’s 2017 depreciation expense, for book purposes. Assume monthly depreciation had not been provided before the end of the year.

c     Discuss the arguments for and against the capitalization of interest costs.

Bynum and Crumpton Inc. (B&C), a small jewelry manufacturer, has been successful and has enjoyed a positive growth trend. Now B&C is planning to go public with an issue of common stock, and it faces the problem of setting an appropriate price for the stock. The company and its investment banks believe that the proper procedure is to conduct a valuation and select several similar firms with publicly traded common stock and to make relevant comparisons.
Several jewelry manufacturers are reasonably similar to B&C with respect to product mix, asset composition, and debt/equity proportions. Of these companies, Abercrombe Jewelers and Gunter Fashions are most similar. When analyzing the following data, assume that the most recent year has been reasonably "normal" in the sense that it was neither especially good nor especially bad in terms of sales, earnings, and free cash flows. Abercrombe is listed on the AMEX and Gunter on the NYSE, while B&C will be traded in the Nasdaq market.

1. B&C is a closely held corporation with only 500,000 shares outstanding. Free cash flows have been low and in some years negative due to B&C's recent high sales growth rates, but as its expansion phase comes to an end B&C's free cash flows should increase. B&C anticipates the following free cash flows over the next 5 years:

   Year	1	2	3	4	5
   FCF	$1,000,000	$1,050,000	$1,208,000	$1,329,000	$1,462,000

   After Year 5, free cash flow growth will be stable at 7% per year. Currently, B&C has no non-operating assets, and its WACC is 12%. Using the free cash flow valuation model, estimate B&C's intrinsic value of equity and intrinsic per share price. Do not round intermediate calculations. Round your answers for the value of equity to the nearest dollar and for the value of equity per share to the nearest cent.

   Value of equity	$
   Per share value of equity	$

2. Calculate debt to total assets, P/E, market to book, P/FCF, and ROE for Abercrombe, Gunter, and B&C. For calculations that require a price for B&C, use the per share price you obtained with the corporate valuation model in Part a. Do not round intermediate calculations. Round your answers to two decimal places.

   	Abercrombe		Gunter		B&C
   D/A		%		%		%
   P/E
   Market/Book
   ROE		%		%		%
   P/FCF

3. Using Abercrombe's and Gunter's P/E, Market/Book, and Price/FCF ratios, calculate the range of prices for B&C's stock that would be consistent with these ratios. For example, if you multiply B&C's earnings per share by Abercrombe's P/E ratio you get a price. What range of prices do you get? Do not round intermediate calculations. Round your answers to the nearest cent.

   The range of prices:
   from $   to $  

   How does this compare with the price you get using the corporate valuation model?

   The price obtained with the corporate valuation model is -Select-withinout ofItem 20 this range of prices.

New Stock Issue

Bynum and Crumpton Inc. (B&C), a small jewelry manufacturer, has been successful and has enjoyed a positive growth trend. Now B&C is planning to go public with an issue of common stock, and it faces the problem of setting an appropriate price for the stock. The company and its investment banks believe that the proper procedure is to conduct a valuation and select several similar firms with publicly traded common stock and to make relevant comparisons.
Several jewelry manufacturers are reasonably similar to B&C with respect to product mix, asset composition, and debt/equity proportions. Of these companies, Abercrombe Jewelers and Gunter Fashions are most similar. When analyzing the following data, assume that the most recent year has been reasonably "normal" in the sense that it was neither especially good nor especially bad in terms of sales, earnings, and free cash flows. Abercrombe is listed on the AMEX and Gunter on the NYSE, while B&C will be traded in the Nasdaq market.

1. B&C is a closely held corporation with only 500,000 shares outstanding. Free cash flows have been low and in some years negative due to B&C's recent high sales growth rates, but as its expansion phase comes to an end B&C's free cash flows should increase. B&C anticipates the following free cash flows over the next 5 years:

   Year	1	2	3	4	5
   FCF	$1,000,000	$1,050,000	$1,208,000	$1,329,000	$1,462,000

   After Year 5, free cash flow growth will be stable at 7% per year. Currently, B&C has no non-operating assets, and its WACC is 12%. Using the free cash flow valuation model, estimate B&C's intrinsic value of equity and intrinsic per share price. Do not round intermediate calculations. Round your answers for the value of equity to the nearest dollar and for the value of equity per share to the nearest cent.

   Value of equity	$
   Per share value of equity	$

2. Calculate debt to total assets, P/E, market to book, P/FCF, and ROE for Abercrombe, Gunter, and B&C. For calculations that require a price for B&C, use the per share price you obtained with the corporate valuation model in Part a. Do not round intermediate calculations. Round your answers to two decimal places.

   	Abercrombe		Gunter		B&C
   D/A		%		%		%
   P/E
   Market/Book
   ROE		%		%		%
   P/FCF

3. Using Abercrombe's and Gunter's P/E, Market/Book, and Price/FCF ratios, calculate the range of prices for B&C's stock that would be consistent with these ratios. For example, if you multiply B&C's earnings per share by Abercrombe's P/E ratio you get a price. What range of prices do you get? Do not round intermediate calculations. Round your answers to the nearest cent.

   The range of prices:
   from $   to $  

   How does this compare with the price you get using the corporate valuation model?

   The price obtained with the corporate valuation model is -Select-withinout ofItem 20 this range of prices.

New Stock Issue

Bynum and Crumpton Inc. (B&C), a small jewelry manufacturer, has been successful and has enjoyed a positive growth trend. Now B&C is planning to go public with an issue of common stock, and it faces the problem of setting an appropriate price for the stock. The company and its investment banks believe that the proper procedure is to conduct a valuation and select several similar firms with publicly traded common stock and to make relevant comparisons.
Several jewelry manufacturers are reasonably similar to B&C with respect to product mix, asset composition, and debt/equity proportions. Of these companies, Abercrombe Jewelers and Gunter Fashions are most similar. When analyzing the following data, assume that the most recent year has been reasonably "normal" in the sense that it was neither especially good nor especially bad in terms of sales, earnings, and free cash flows. Abercrombe is listed on the AMEX and Gunter on the NYSE, while B&C will be traded in the Nasdaq market.

1. B&C is a closely held corporation with only 500,000 shares outstanding. Free cash flows have been low and in some years negative due to B&C's recent high sales growth rates, but as its expansion phase comes to an end B&C's free cash flows should increase. B&C anticipates the following free cash flows over the next 5 years:

   Year	1	2	3	4	5
   FCF	$1,000,000	$1,050,000	$1,208,000	$1,329,000	$1,462,000

   After Year 5, free cash flow growth will be stable at 7% per year. Currently, B&C has no non-operating assets, and its WACC is 12%. Using the free cash flow valuation model, estimate B&C's intrinsic value of equity and intrinsic per share price. Do not round intermediate calculations. Round your answers for the value of equity to the nearest dollar and for the value of equity per share to the nearest cent.

   Value of equity	$
   Per share value of equity	$

2. Calculate debt to total assets, P/E, market to book, P/FCF, and ROE for Abercrombe, Gunter, and B&C. For calculations that require a price for B&C, use the per share price you obtained with the corporate valuation model in Part a. Do not round intermediate calculations. Round your answers to two decimal places.

   	Abercrombe		Gunter		B&C
   D/A		%		%		%
   P/E
   Market/Book
   ROE		%		%		%
   P/FCF

3. Using Abercrombe's and Gunter's P/E, Market/Book, and Price/FCF ratios, calculate the range of prices for B&C's stock that would be consistent with these ratios. For example, if you multiply B&C's earnings per share by Abercrombe's P/E ratio you get a price. What range of prices do you get? Do not round intermediate calculations. Round your answers to the nearest cent.

   The range of prices:
   from $    to $   

   How does this compare with the price you get using the corporate valuation model?

   The price obtained with the corporate valuation model is -Select-withinout ofItem 20  this range of prices.

Bynum and Crumpton Inc. (B&C), a small jewelry manufacturer, has been successful and has enjoyed a positive growth trend. Now B&C is planning to go public with an issue of common stock, and it faces the problem of setting an appropriate price for the stock. The company and its investment banks believe that the proper procedure is to conduct a valuation and select several similar firms with publicly traded common stock and to make relevant comparisons.
Several jewelry manufacturers are reasonably similar to B&C with respect to product mix, asset composition, and debt/equity proportions. Of these companies, Abercrombe Jewelers and Gunter Fashions are most similar. When analyzing the following data, assume that the most recent year has been reasonably "normal" in the sense that it was neither especially good nor especially bad in terms of sales, earnings, and free cash flows. Abercrombe is listed on the AMEX and Gunter on the NYSE, while B&C will be traded in the Nasdaq market.

The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

1. B&C is a closely held corporation with only 500,000 shares outstanding. Free cash flows have been low and in some years negative due to B&C's recent high sales growth rates, but as its expansion phase comes to an end B&C's free cash flows should increase. B&C anticipates the following free cash flows over the next 5 years:

   Year	1	2	3	4	5
   FCF	1,000,000	1,050,000	1,208,000	1,329,000	1,462,000

   After Year 5, free cash flow growth will be stable at 7% per year. Currently, B&C has no non-operating assets, and its WACC is 12%. Using the free cash flow valuation model, estimate B&C's intrinsic value of equity and intrinsic per share price. Do not round intermediate calculations. Round your answer for the value of equity to the nearest dollar. Round your answer for the value of equity per share to the nearest cent.

   Value of equity	$
   Per share value of equity	$

2. Calculate debt to total assets, P/E, market to book, P/FCF, and ROE for Abercrombe, Gunter, and B&C. For calculations that require a price for B&C, use the per share price you obtained with the corporate valuation model in part a. Do not round intermediate calculations. Round your answers to two decimal places.

   	Abercrombe		Gunter		B&C
   D/A	%		%		%
   P/E
   Market/Book
   ROE	%		%		%
   P/FCF

3. Using Abercrombe's and Gunter's P/E, Market/Book, and Price/FCF ratios, calculate the range of prices for B&C's stock that would be consistent with these ratios. For example, if you multiply B&C's earnings per share by Abercrombe's P/E ratio you get a price. What range of prices do you get? Do not round intermediate calculations. Round your answers to the nearest cent.

   The range of prices:
   from $   to $  

Using PROC FORMAT and PROC FREQ for following data:

(a) Define an appropriate format for the gender variable.

(b) Produce a 2 X 2 table with gender as the rows and lenses as the columns.

(c) Calculate the relative risk and provide a one sentence written interpretation explicitly stating which groups are being compared and defining the outcome.

(d) Perform a chi-squared test of association between gender and needing contact lenses. What are the results of the test (i.e. do you reject the hypothesis?)

Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers.

Colleen sells its products at $290 per unit. The firm’s gross margin ratio is 20%. Both Jerry and Kate pay their accounts promptly and no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs:

Required:

1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Inc. and Kate Co.

2. Compare the profitability of these two customers.

Xi ~ Uniform [USD 0, USD 40,000] Population is equally distributed between robust (good health people) and frail people (low health people). Robust population do not demand this insurance contract as they expect to have their health care costs lower than the premium amount P= USD 20,000. On the other hand, Frail population decide to purchase this insurance deal as they expect their health care costs greater than the premium amount P= USD 20,000.

• Please define and explain the market situation that insurance company ABC is exposed to in 2019. Please draw a figure with a uniform distribution and clearly show the regions defining market demand for insurance. Summarize insurance company ABC’s financial statement and find expected profit or loss per customer on average. [Hint: Find receivables from customers and payables to customers for health care].

• You are a consultant and you suggest insurance company ABC to raise its insurance premiums to P= USD 30,000 for 2020. Does this new premium save the insurance company’s cash flow when each custumer’s health care costs is USD 30,000 to an insurance company? Please draw a figure with a uniform distribution and clearly show the regions defining market demand for insurance with the new premium. Summarize insurance company ABC’s financial statement and find expected profit or loss per customer on average. [Hint: Find receivables from customers and payables to customers for health care]. Please define and explain the market situation that insurance company ABC is exposed to in 2020 with the new premium.