On 1/1/2004, an insurance company invested $1,000,000 developing an annuity product that will produce returns of $150,000 per year for the next 10 years (assume at the end of each year) following which the product will have to be abandoned.

The net present value of the project is $100,000.

At the end of 5 years, the opportunity cost of capital for the project decreased by 3 percentage points (or 3%), with the rest of the project remaining unchanged.

The insurance company recalculates the net present value as the present value of the remaining cash flows at the new opportunity cost of capital.

Find the value of the project on 1/1/2009.

a.

485,000

b.

535,000

c.

585,000

d.

635,000

e.

685,000

Yasser Arafat, former chairman of the Palestine Liberation Organization (PLO), died in November 2004, after a brief illness. Not surprisingly, his death aroused considerable suspicion, particularly given that his symptoms were somewhat consistent with acute radiation poisoning. In November 2012, samples of tissue were obtained from his corpse and tested—by three independent research groups—for evidence of poisoning by a highly radioactive isotope of Polonium. The results, though far from conclusive, suggest that Arafat died as a result of polonium-210 poisoning.

Polonium-210 is a short-lived isotope in the uranium decay series. Together with thallium-206, polonium-210 is a penultimate daughter product in the 238U → 206Pb decay series. Polonium-210 occurs in trace amounts in uranium ores; annually, about 100 grams of 210Po is produced (synthetically) in reactors. 210Po decays to 206Pb via alpha emission with a radiogenic half-life of 138 days. The ejected alpha particle has an energy of 5.3 MeV. The biological half-life of 210Po is about 40 days, i.e. it takes your body about 40 days to excrete half the amount of 210Po originally ingested. For the purposes of this class, the fatal internal dose (D50) of radiation from an ingested alpha emitter like 210Po is approximately 0.25 Joule of energy absorbed per kilogram of body mass. (Note: The D50 notation indicates the dosage that proves fatal for half of a population; D50 ~ 0.25 J/kg for 210Po.) For those interested in dosage units, 0.25 J/kg = 0.25 Gy = 5 Sv = D50 for an alpha emitter absorbed internally (Q factor of 20).

1 (20 pts.): Assuming access to a ‘fresh’ polonium source, i.e. straight from the reactor, would one microgram (1 μg) of ingested 210Po kill Arafat? (FYI: 1 μg of 210Po is equivalent to approximately one grain of silt.) If yes, then approximately what time interval was required to absorb a fatal dose? Note: There is typically a lag time of days to weeks between the time at which a fatal dose is absorbed and the actual time of death. Arafat died about two weeks after the onset of symptoms. Discuss very briefly some of the complications we might expect in analyzing Arafat’s corpse for signs of 210Po poisoning in 2012.

1) clear and concise explanations of your reasoning and 2) careful calculations using scientific notation. The answer should be presented clearly and logically.

In 2004, Congress allocated over $20 billion to fight illegal drugs. About 60 percent of the funds was directed at reducing the supply of drugs through domestic law enforcement and interdiction. Some critics of this approach argue that supply-side approaches to reduce the drug supply actually helped drug producers.

• Demonstrate graphically the effect of supply-side measures on the market for illegal drugs.
• Explain how these measures affect drug producers. (Hint: Consider the elasticity of demand).
• Demonstrate the effect of demand-side measures such as treatment and prevention on the market for illegal drugs.
• How does the shift in demand affect the profitability of producers?

1. Fictitious data—real data is available and would be interesting]

In the period 1980-2004, 8.7% of named Atlantic tropical storms were measured as “strong” hurricanes (Category 3 or higher at some point in their active “lifetime”).

As a test of one predicted effect of climate change, we want to see if this proportion has remained the same for the period 2005-2017. Assume there were 183 named Atlantic tropical storms in this period. Assume also that the 8.7% is (at least very close to) the true long-term proportion of these storms [which is the correct approach for this test].

1. What are the mean proportion and the standard deviation in that proportion for the sample of 183 storms?
2. Can we use the normal approximation for the proportion?
3. How likely would it be to find more than 10% “strong” hurricanes in the 2005-2017 period? How about 12.5%? If 12.5% of the 2005-2017 storms were strong, would you classify this as very unusual?

Question # 1

Rothenberg et al. (2004) investigated the effectiveness of using the Hologic Sahara Sonometer, a portable device that measures bone mineral density (BMD) in the ankle, in predicting a fracture. They used a Hologic estimated bone mineral density value of

.57 as a cutoff. The results yielded the following data:

a. Compute the Sensitivity of the test. (6 points)

b. Compute the Specificity of the test. (6 points)

c. Compute the Positive Predictive Value (6 points)

Question # 2

According to the most recent Davenport student profile, 28% of students are male. Given a sample of 15 students:

a. Find the probability that none are male. (6 points)

b. Find the probability that 10 are male. (6 points)

c. Find the probability that at least six are male. (6 points)

A Disastrous Development project

In 2004, Marin country in California decided to replace its ageing financial management, payroll, and Human Resources systems with a modern SAP enterprise resources planning system. The country solicited proposals from various companies to act as software consultants on the implementation. Thirteen companies, including oracle, PeopleSoft, and SAP, submitted proposals. In April 2005 the country selected Deloitte consulting based on the firms representations concerning its in- depth knowledge of SAP systems and the extensive experience of its consultants.

From 2005 to 2009, Marin Country paid increasing consulting fees to Deloitte as its staff grappled with serious fiscal problems. Essentially, the staff could not program the SAP system to perform even routine financial functions such as payroll and accounts receivable. A grand jury probe concluded that the system had cost taxpayers $28.6 million as of April 2009.

At that time, Marin Country voted to stop the ongoing SAP project acknowledging that it had wasted some $30 million on software and related implementation services from Deloitte.

The Marin Country information systems and technology group conclude that fixing the Deloitte-instlled SAP system would cost nearly 25 percent more over a 10 year period than implementing a new system.

In 2010, Marin country filed a complaint alleging that Deloitte's representations were fraudulent. The complaint accused Deloitte of using the country SAP project as a training ground to provide young consultant with public sector SAP experience, at the country's expense. It further charged that Deloitte intentionally failed to disclose its lack of SAP and public sector skills; withheld information about critical project risks: falsely represented to the country that SAP system was ready to "go live" as originally planned: conducted inadequate testing; and concealed the fact that ist had failed to perform necessary testing , thereby ensuring that system defects would remain hidden prior to the go-live date.Finally, the country maintained that, although it had paid substantial consulting fees to Deloitte, the system continued to have crippling problems.

Deloitte filed a counterclaim over the country failure to pay more than $550000 in fees and interest. The company maintained that it had fulfilled all of its obligations under the contract, as evidenced by the fact that all of Deloitte's work was approved by the country officials who were responsible for overseeing the project.

In December 2010, Marin Country sued Deloitte and two SAP subsidiaries, alleging that Deloitte had "engaged in a pattern of racketeering activity designed to designed to defraud the country of more than $20 million, The country lawsuit also names as defendant Ernest Culver, a former country employee who served as director on the SAP project. The country alleged that Culver interviewed for jobs at Deloitte and SAP, where he now works in SAP's public services division, It further claimed that during the SAP project, Culver "was approving Deloitte's deficient work on the project, approving payment, and causing Marin Country to enter into new contracts with Deloitte and SAP public services, Inc.

In late December 2011, a judge ruled that Marin Country failed to allege sufficient facts to bring a racketeering claim against SAP under the terms of the federal Racketeer Influenced and corrupt organisations Act ( RICO). However, he also ruled that Marin Country could fly an amended complaint. The judge further found that Marin Country hd alleged sufficient facts to bring a "plausible" bribery claim against SAP with aspect to Culver. Finally, the judge denied SAP's motion to dismiss claims against against its SAP America division.

In mid January 2012, Marin Country filed an amended complaint in federal court related to its actions against SAP, Deloitte Consulting, and Ernest Culver. The president of. the Main Country Board of supervisors stated that the board is committed to ensuring accountability for its taxpayers.

1- debate the lawsuit from the point of view of Deloitte and SAP.

2- Debate the lawsuit from the point of view of Marin Country.

Buckler Company manufactures desks with vinyl tops. In 2004, a 1,000 desk production run cost for the vinyl used per Model S desk is $27.00 based on 12 square feet of vinyl at a cost of $2.25 per square foot. A production run of 1,000 desks in 2003 resulted in the usage of 12,600 square feet of vinyl at a cost of $2.00 per square foot, a total cost of $25,200.

Resulting from the above production run what is the material volume variance ______, the materials efficiency variance_____, and the materials price variance ______?

Case Study- Microsoft Solving a Good Problem for a Company to Have (2004)

Strategic Overview:

Microsoft announced at the annual shareholders meeting in November 2002 that, despite having $40 billion in cash on its balance sheet, the company would be taking any substantive measures to distribute the cash to its roughly 4.2 billion shareholders. Microsoft state that the cash was needed to satisfy judgements that could arise from ongoing corporate and private antitrust lawsuits. While the company had a history of buying back its stock, Microsoft had never paid a dividend since going public in 1986. The no dividend policy made sense historically as high-tech, growth companies with high P/E’s, typically don’t issue dividends, but instead elect to plow their profits back into the business. But as of the shareholder meeting, Microsoft’s growth had slowed to about 10 percent annually, from 30 percent or more in the company’s early years, and the stock, as evidenced by its inclusion in the Dow Jones Industrial Average, had begun to look more like a stable blue chip that a high-flying tech issue. The announcement made at the 2002 meeting angered many shareholders. Growth had stagnated and the company was sitting on a pot of cash. It was an efficient business that was generating $1 billion a month in free cash. In a shrinking interest rate environment, Microsoft’s returns on short term investments were insignificant and reduced the firm’s return on equity. The state of affairs led one investor at the meeting to comment, “We need a reason to hold the stock. We need a dividend. We need something.”

Options:

Management was under pressure to act. They could choose between a myriad of options including: 1) Doing nothing, 2) Using the cash to finance acquisitions and expansion, 3) Returning the cash to shareholders by beefing-up the ongoing stock repurchase program, a program that had the company buying back shares at the rate of up to $ 6 billion a quarter, or 4) Returning cash to shareholders by issuing dividends. Given the company had virtually no debt (see below), share repurchase appeared to be an efficient way to solve the problem. Buybacks are tax efficient to individua investors and protect shares from dilution due to option exercise. Unlike repurchases, investors assume that dividends payments, once begun, will continue indefinitely.

Decision:

In mid-January of 2003, three months after the November 2002 shareholder meeting, the company surprised the investment community by announcing its first-ever annual cash dividend of 8 cents per share (2 cents per quarter). The dividend represented a total outlay of more than $850 million which translated into just over a quarter of 1 percent of the share price. While the dividend made big news, it was met with criticism that the dollar amount was insignificant. Following the announcement speculation immediately rose over Microsoft’s change in philosophy. One suggested reason for the dividend was President Bush proposed tax reform plan which would exempt shareholders from income tax on dividends (later changed to a 0.15 tax rate). Another possible reason, and the one that Microsoft stated publicly, is that many of the company’s legal risks are largely behind them. The company settled with the Justice Department and many private antitrust claimants and has made progress with the European Union.

Shareholder Reaction and Company Update:

Microsoft’s stock price dropped about $4 or 7% the day following the dividend announcement. This was partially attributable to the relatively weak outlook for the current quarters, but the falling price was likely an indication that some investors concluded that Microsoft had exhausted its growth options and the future looked uncertain. Despite the dividend payments and despite the stock buy back, Microsoft continued to increase its cash balance. In July of 2004, the company announced it would issue a special cash dividend of $3 per share payable on December 2, 2004. With almost 11 billion shares outstanding, the special dividend would return almost $33 billion in cash to shareholders. In July of 2004, the company also announced that it would begin to pay a regular quarterly dividend of $0.08 per quarter. The move represented a doubling of the dividend – the second time the dividend had doubled since the initial dividend issuance. But even with the latest doubling, Microsoft’s yield will still be below the 1.7% average yield for the S&P 500.

Questions:

1. Was the decision to start paying a cash dividend of $0.02 per share per quarter a good decision?

2. Was the $3 per share special dividend desirable?

3. What, if anything, should Microsoft have done with its $64 billion of cash and short term investments?

Rocky Guide Service provides guided 1–5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Wilderness sells. Rocky receives $1,900 per tour day, and shortly after the end of each month Rocky learns whether it will receive a $190 bonus per tour day it guided during the previous month if its service during that month received an average evaluation of "excellent" by Wilderness customers. The $1,900 per day and any bonus due are paid in one lump payment shortly after the end of each month.

• On July 1, based on prior experience, Rocky estimated there is a 40% chance it will earn the bonus for July tours. It guided a total of 10 days from July 1–July 15.
• On July 16, based on Rocky’s view that it had provided excellent service during the first part of the month, Rocky revised its estimate to an 90% chance it would earn the bonus for July tours. Rocky also guided customers for 15 days from July 16–July 31.
• On August 5 Rocky learned it did not receive an average evaluation of “excellent” for its July tours, so it would not receive any bonus for July, and received all payment due for the July tours.

Rocky bases estimates of variable consideration on the expected value it expects to receive.

1.) Prepare Rocky's July 15 journal entry to record revenue for tours given from July 1 - July 15

2.) Prepare Rocky's July 31 journal entry to record revenue for tours given from July 16 - July 31 and any adjustment needed for July 1 – July 15

3.) Prepare Rocky's August 5 journal entry to record the receipt of payment from Wilderness

4.) Prepare Rocky's August 5 journal entry to record any necessary adjustments to revenue

Journalize the five transactions for Mirmax Rentals described below:

August 1 Mirmax purchases two new saws on credit at $375 each. The saws are added to Mirmax’s rental inventory. Payment is due in 30 days.

August 8 Mirmax accepts advance deposits for tool rental of $75 that will be applied to the cash rental when the tools are returned.

August 15 Mirmax receives a bill from Macon Utility Company for $150. Payment is due in 30 days.

August 20 Mirmax charges Customers $750 for tool rentals. Payment is due in 30 days.

August 31 Mirmax receives $500 in payments from the customers that were bill for rentals on August 20.

Given the following balances for Garry’s Tree Service, prepare a Trial Balance

Financial Statements

Prepare an Income Statement, Statement of Owner’s Equity and Balance Sheet

Problem 3                              
Financial Statements                              
           Income Statement                  
                               
                              
                              
It should be in excel format could not upload the excel form that I had worked on boy should be in

Problem 3                              
Financial Statements      

Income Statement      
           Income Statement