1. Suppose that under the terms of an international agreement, U.S. CO2 emissions are to be reduced by 200 million tons and those of Brazil by 50 million tons.

Here are the policy options that the United States and Brazil have to reduce their emissions:

United States:

Policy Options: Total Emissions Reduction: Cost:

A: Efficient Machinery 60 12

B: Reforestation 40 20

C: Replace coal-fueled power plants 120 30

Brazil:

A: Efficient Machinery 50 20

B: Reforestation 30 3

C: Replace coal-fueled power plants 40 8

A) which policies are most efficient for each country in meeting their reduction targets? How much will be reduced using each option, at which cost, if the two countries must operate independently? Assume that any of the policy options can be partially implemented at a constant marginal cost. For example, the United States could choose to reduce carbon emissions with efficient machinery by 10 million tons at a cost of $2 billion. (Hint: start by calculating the average cost of carbon reduction in dollars per ton for each of the six policies)

B) Suppose a market of transferable permits allow the United States and Brazil to trade permits to emit CO2. Who has an interest in buyng permits? Who has an interest in selling permits? What agreement can be reached between the United States and Brazil so that they can meet the overall emissions reduction target of 250 million tons at the least cost? Can you estimate a range for the price of a permit to emit one ton of carbon? (Hint: use your average cost calculations for the first part of the questions)

Q. 1 (Max. Marks:30) John Smith, a college student, plans to sell CD players over the internet & by mail order during the semester to help pay his expenses. He buys the players for $29 & sells them for $50. If payment by cheque accompanies the mail order (estimated to be 40% of sales), he gives 10% discount. If customers include a credit card number for either internet or mail order (estimated 30% of sales), they receive 5% discount. The remaining collections are estimated as follows: One month following 15% Two months following 8% Three months following 5% Uncollectable 2% Sales forecast are as follows: September 150 units October 250 units November 350 units December 450 units January Business terminated John plans to pay his supplier 60% in the month of purchase, and 40% in the following month. A 5% discount is granted on payments made in the month in the month of purchase. However, John will not be able to take any discounts on the September purchases because of cashflow constraints. All September purchases will be paid for in October. John has 50 players on hand (purchased in August and to be paid in September), and plans to maintain enough end-of-month inventory to meet 60% of the next month's sales. John also wished to maintain a closing cash balance of $1,500 in the bank once the business commences in September. The current interest rate on short term loans is 3.5% pa. 3 Required: Prepare schedules for monthly budgeted cash receipts & cash disbursements & the cash budget . During which month will John need to organise a short- term loan & for how much?

1. A financial manager should be more interested / concerned with the book balance than the net float and bank cash. True&False

2. ..........refers to the time required to clear a cheque through the banking system.

a. Mail float

b. Availability float

c. Disbursement float

3. Short term marketable securities are usually referred and considered as cash equivalents?

True&False

4. The differnce between bank cash and book cash is called float. True&False

5. .................are incurred with a firm runs out of cash and needs to sell Marketable Securities or borrow money from lenders.

a. Operating Costs

b. Trading Costs

c. Investment Costs

d. None of the above

6. As a measurement of long-term solvency, a company that has a low total debt ratio is a sign of a healthy firm. True&False

7. the decision to grant credit to a client depends only on:

a. the inmediate costs of granting credit

b. all of the above

c. the required rate of return for delay cash flows

d. the probability of payment

e. The delayed revenues from granting credit

Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period.

P0 Q0 P1 Q1 P2 Q2

A 90 100 95 100 95 100

B 50 200 45 200 45 200

C 100 200 110 200 55 400

a. Calculate the rate of return on a price-weighted index of the three stocks for the first period ( t 5 0 to t 5 1).

b. What must happen to the divisor for the price-weighted index in year 2?

c. Calculate the rate of return for the second period ( t 5 1 to t 5 2).

You are a data science consultant! In each of the following cases, decide whether you would suggest a flexible regression model or an inflexible one. Provide your reasons as clearly as possible.

(a) In the study of breast cancer, a scientist is trying to find the genes associated with breast cancer. The total number of genes in the study is 50,000 and the number of patients is 120.

(b) The Ministry of Education in a certain country wants to identify students who need extra help. They wish to design a system which estimates student performance in the final 8th grade math exam based on their math, science and history grades in the 7th grade. To do this, they want to run a regression on the data from all the students who have graduated from the 8th grade in the last 10 years.

(c) Kelly is a very hardworking chemistry student and she has run an experiment to find a mathematical expression that relates the speed of corrosion of iron to the humidity and temperature of the environment, and the percentage of different elements in the alloy. Unfortunately, the lab that she is working in was established in 1967 and the equipment has not been changed since then. This has caused measurements to vary significantly between different experimental runs, even when the parameters were the same. She is skeptical about the quality of her measurements of the speed of corrosion.

(d) Kelly’s advisor won the Nobel prize in chemistry and used the prize money to outfit the lab with the most modern equipment. Kelly ran her experiments again with the new equipment and now she can trust her numbers. However, her advisor believes that she should not expect that the real relationship be linear.

A website for a small motel chain averages seven visitors every ten minutes.   Solve the probability questions for Scenario 5 by hand. (Round all probabilities to 4 decimals)

What is the mean number of visitors in a 3-minute period?

What is the probability of no visitors in a 3-minute period?

What is the probability of exactly one visitor in a 3-minute period?

What is the probability of exactly two visitors in a 3-minute period?

What is the probability of three or more visitors in a 3-minute period?

What is the expected number of visitors to the website in six minutes?

What is the variance of the number of expected visitors to the website in six minutes?

What is the standard deviation of the number of expected visitors to the website in six minutes? (Round to two decimals

Chapter 11 Depreciation, Impairements and Depletion

Mueller Company purchased equipment 8 years ago for $1,000,000. The equipment has been depreciated using the straight-line method with a 20-year useful life and a $100,000 residual value. Mueller’s operations have experienced significant losses for the past two years and as a result, the company has decided that the equipment should be evaluated for possible impairment. The management of Mueller Company estimates that the equipment has a remaining useful life of 7 years. Net cash inflows from the equipment are estimated to be $80,000 per year. The fair value of the equipment is $240,000.

(a) Determine if an impairment loss should be recognized.

(b) If an impairment loss has occurred, prepare the journal entry to record the loss.

(c) How would your answers change if the net cash inflows from the equipment were estimated to be $100,000 per year for the remaining seven years?

(d) Going back to the original information, how would your answers to parts (a) and (b) change if the fair value of the equipment was $500,000?

INTERMEDIATE ACCOUNTING 2 -- CHAPTER 11

3. Mueller Company purchased equipment 8 years ago for $1,000,000. The equipment has been depreciated using the straight-line method with a 20-year useful life and a $100,000 residual value. Mueller’s operations have experienced significant losses for the past two years and as a result, the company has decided that the equipment should be evaluated for possible impairment. The management of Mueller Company estimates that the equipment has a remaining useful life of 7 years. Net cash inflows from the equipment are estimated to be $80,000 per year. The fair value of the equipment is $240,000.

Required (show all work for credit):

(a) Determine if an impairment loss should be recognized.

(b) If an impairment loss has occurred, prepare the journal entry to record the loss.

(c) How would your answers change if the net cash inflows from the equipment were estimated to be $100,000 per year for the remaining seven years?

(d) Going back to the original information, how would your answers to parts (a) and (b) change if the fair value of the equipment was $500,000?

The manufacturer of an MP3 player wanted to know whether a 10% reduction in price is enough to increase the sales of its product. To investigate, the owner randomly selected eight outlets and sold the MP3 player at the reduced price. At seven randomly selected outlets, the MP3 player was sold at the regular price. Reported below is the number of units sold last month at the regular and reduced prices at the randomly selected outlets.

Regular price 138 121 123 116 116 122 132 Reduced price 143 133 151 136 144 123 130 131 picture Click here for the Excel Data File At the 0.01 significance level, can the manufacturer conclude that the price reduction resulted in an increase in sales? Hint: For the calculations, assume reduced price as the first sample.

Compute the pooled estimate of the variance. (Round your answer to 3 decimal places.)

Compute the test statistic. (Round your answer to 2 decimal places.)

State your decision about the null hypothesis. Reject H0 Fail to reject H0