Problem 1: Conspicuous Consumption Inc., a prominent consumer products firm, is debating whether to convert its all-equity capital structure to one that is 35 percent debt. Currently, there are 8,000 shares outstanding and the price per share is $70. EBIT is expected to remain at $30,000 per year forever. The interest rate on new debt is 8 percent per year and there are no taxes.

a) Ms. Benson, a shareholder of the firm, owns 100 shares of the company. What is her cash flow under the current capital structure, assuming that the firm has a dividend payout ratio of 100 percent?

b) What will Ms. Benson’s cash flow be under the proposed capital structure of the firm? Assume that she keeps all 100 of her shares.

c) Suppose that the company does convert, but Ms. Benson prefers the current all-equity capital structure. Show how she could unlever her shares of stock to recreate the original capital structure.

d) Using your answer in part (c), explain why the company’s choice of capital structure is irrelevant.

Star, Inc., a prominent consumer products firm, is debating whether or not to convert its all-equity capital structure to one that is 50 percent debt. Currently there are 1,000 shares outstanding and the price per share is $65. EBIT is expected to remain at $37,500 per year forever. The interest rate on new debt is 8 percent, and there are no taxes.

1. Ms. Brown, a shareholder of the firm, owns 100 shares of stock. What is her cash flow under the current capital structure, assuming the firm has a dividend payout rate of 100 percent? (4 points)
2. What will Ms. Brown’s cash flow be under the proposed capital structure of the firm? Assume that she keeps all 100 of her shares? (6 points)
3. Suppose Star does convert, but Ms. Brown prefers the current all-equity capital structure. Show how she could unlever her shares of stock to recreate the original capital structure. (6 points)
4. Using your answer to part (c), explain why Star’s choice of capital structure is irrelevant. (4 points)

Problem 5.4 (LO1, 2) Variable and Full Costing: Earnings Management with Full Costing; Changes in Production and Sales Sampson Steel produces high-quality worktables. The company has been in operation for three years, and sales have declined each year due to increased competition. The following information is available:

Required

1. Calculate profit and the value of ending inventory for each year under full costing.
2. Calculate profit and the value of ending inventory for each year under variable costing.
3. Explain how management of Sampson could manipulate earnings in 2021 by producing more units than are actually needed to meet demand. Could this approach to earnings management be repeated year after year?

4. The product y = Ax of an m × n matrix A times a vector x = (x1, x2, . . . , xn) T can be computed row-wise as y = [A(1,:)*x; A(2,:)*x; ... ;A(m,:)*x]; that is y(1) = A(1,:)*x y(2) = A(2,:)*x ... y(m) = A(m,:)*x Write a function M-file that takes as input a matrix A and a vector x, and as output gives the product y = Ax by row, as defined above (Hint: use a for loop to define each entry of the vector y.) Your M-file should perform a check on the dimensions of the input variables A and x and return a message if the dimensions do not match. Call the file myrowproduct.m. Note that this file will NOT be the same as the myproduct.m example. Test your function on a random 5 × 3 matrix A and a random 3 × 1 vector x. Compare the output with A*x. Repeat with a 3 × 6 matrix and a 6 × 1 vector and with a 3 × 6 matrix and a 1 × 6 vector. Use the command rand to generate the random matrices for testing. Include in your lab report the function M-file and the output obtained by running it.

Explain the errors in the C code that cause the output NOT to be -10. (Hint: There are 2 errors):

#include <stdio.h>
#include <stdlib.h>
#include <pthread.h>
  
#define SIZE 5
void *threadFunc(void *arg);
int *changingVal;
int a[SIZE]; // Assume a[] = { 13444, 3320, 31020, 3302, 31313 };

int main() {
int i;
int min;
int * changeVal = malloc (sizeof(int*));
*changeVal = -10;
// Thread creation
pthread_t thread1;
pthread_attr_t attr;
pthread_attr_init(&attr);
  
for (i = 0; i < SIZE; i++) {
a[i] = rand();
printf("%d\n", a[i]);
}
min = a[0];
  
pthread_create(&thread1,&attr,threadFunc, &changeVal);

#pragma omp parallel for num_threads(1)
for (i = 1; i < SIZE; i++) {
if (a[i] < min) {
pthread_join(thread1, NULL);
#pragma omp critical

{
// compare a[i] and min again because min
// could have been changed by another thread after   
// the comparison outside the critical section
if (a[i] < min)
min = a[i];
}
}
}
printf("Min number found:\t%d\n", min);
}

void * threadFunc(void *arg) {
changingVal = (int*) arg;
a[3] = *changingVal;
pthread_exit(0);
}

1. If interest rates increase in South Africa, what will follow? Circle all of the correct responses based on the below option:

1. South Africa’s currency (the Rand) will depreciate in value
2. South Africa will import more than it exports
3. South Africa’s balance of trade position will lead to more of a surplus position
4. Countries that export products to South Africa will be pleased
5. Countries that import products from South Africa will be pleased

2. Australia suddenly experiences more of a balance of trade surplus. What can we attribute this to? Circle all of the correct responses based on the below option:

1. The Australian dollar depreciated in value
2. Interest rates increased in Australia
3. Interest rates decreased in Australia
4. The Australian dollar appreciated in value

3. BRL is the symbol for the Brazilian Real, the name of Brazil’s currency. USD/BRL 4. A Honda CTX700 motorcycle sells for $7,400 in the U.S. Is the Brazilian Real over or undervalued?

Please answer all questions, need to check my answers.

I'm very confused about this whole import & export concept and how it is affected by rising or declining interest rates. If you could please explain it to me I'd really appreciate it

The demand for personalised point-to-point passenger transportation (traditionally known as “taxi”)

service is given by

P = 100 − Q

where P and Q are the price ($ per hour) and quantity (in hours) of taxi service, respectively. There are infinitely many people who are willing to supply taxi service as long as they can get $30 per hour for driving a taxi. In other words, the market supply of taxi service is horizontal at P = 30.

All passengers and drivers in the taxi markets are price-takers. However, one must have a taxi licence in order to drive a taxi. The government issues taxi licences to the effect that at most 30 hours of taxi services can be provided to the market.

(a) What is the market price for an hour of taxi service? (b) Calculate the total value of all taxi licences.

Technological innovation has allowed consumers to hire a taxi service from drivers without a taxi licence through an app called “Umber”. For the remaining parts of the questions, assume that Umber cannot set a price for its drivers, nor does it charge any person (passengers and drivers alike) anything for using its app. Also assume that passengers consider the service from Umber drivers the same as that from drivers with a taxi licence.

At first, the government makes driving for Umber illegal. As such, Umber drivers need to spend an extra cost of c per hour to avoid being caught. In other words, there are infinitely many drivers who are willing to provide a taxi service through Umber for $(30 + c) per hour.

(c) Suppose c = 30. What is the new market price for taxi service? If taxi licence holders continue to charge the price you solved in part (a), would any passenger take a taxi from a taxi licence holder?

4. (d) What must c be in order for (at least some) passengers to take a taxi from a taxi licence holder?

5. (e)   Calculate the consumers’ surplus in the taxi market when c is at the the level you have calculated in part (d).

6. After some consideration, the government decides to legalise the use of Umber while imposing a per unit tax of $30 on taxi service (whether or not the driver holds a taxi licence). Umber drivers no longer have to pay the amount c

7. (f) Find the amount of tax revenue collected. Would the tax revenue be enough to compensate taxi licence owners for the amount they have paid for their licences (i.e., the amount you solved in part (b))?

8. (g) Calculate the consumers’ surplus in the taxi market under this per unit tax scheme. Is it higher, lower or the same as the amount you have calculated in part (e)?

Code in C++

Must show: unit testing

------------------------------------

UsedFurnitureItem

1. Create a class named UsedFurnitureItem to represent a used furniture item that the store sells.
2. Private data members of a UsedFurnitureItem are:
   1. age (double) // age in years – default value for
   2. brandNewPrice (double) // the original price of the item when it was brand new
   3. description (string) // a string description of the item
   4. condition (char) // condition of the item could be A, B, or C.
   5. size (double) // the size of the item in cubic inches.
   6. weight (double) // the weight of the item in pounds.
3. Private member functions of a UsedFurnitureItem object are
   1. double CalculateCurrentPrice( ): Current price depends on age, brandNewPrice, and condition of the used furniture Item. If the item is in A-condition, the current price will go down by extra 10% of the brandNewPrice for each year of its age until 7 years (e.g., After the first year, and item with a $100 brandNewPrice will cost $90, after 2 years, $ 80, and so on). If the age is greater than 7 years, the price is fixed at 30% of the brandNewPrice. The current price of B-condition items goes down by extra 15 % of the brandNewPrice for each year until the 5^th year. After that, the current price is fixed at 20% of the brandNewPrice. Items with C-condition are priced at 10% of the brandNewPrice regardless of age.
4. 2. double CalculateShippingCost( ): Shipping cost of a UsedFurnitureItem depends on weight, size, and distance. While weight and size are member variables, shipping distance is provided as an additional argument to this function. Shipping rate is 1 cent per mile for items that are smaller than 1000 cubic inches and smaller than 20 pounds. Items with larger size or weight cost 2 cents per mile.
5. Public member functions of a UsedFurnitureItem
   1. Constructors – default and overloaded [default values: age = 1.0, brandNewPrice = 10.00, description = “Not available”, condition = ‘A’, size = 1.0, weight = 1.0]
   2. Accessors (getters)
6. 1. Mutators (setters) – You should ensure that invalid (zero or negative) values do not get assigned to age, brandNewPrice, size or weight data members. An invalid character (other than ‘A’, ‘B’ or ‘C’) should not be allowed to be assigned

-------------------------------------

Test Program:

The test program will test each setter (for objects of both types in a sequence) by calling the setter to set a value and then call the corresponding getter to print out the set value. This test should be done twice on data members that could be set to invalid values (that have numerical or character data type) – once after trying to set invalid values and subsequently, once after setting them to valid values. The data members with string data types (model, description) can be tested just once.