Summit Energy is an alternative energy producer. Your hedge fund is interested in investing into the company. As an analyst, you need to estimate firm value and its price per share using the NPV method and report it to the energy portfolio manager. So far you’ve partially forecasted its earnings for 2020-2022 (numbers are in millions).

Assume that annual net working capital represents 10% of revenues. In 2021 Summit plans to purchase new equipment for its new generation of wind mills for $200 million. No other purchases are planned in 2020 or 2022.

Please enter the answer in the following format: XX,XXX

A. Calculate Summit's free cash flow in 2022.

B. Summit Energy’s beta is 1.7. Calculate its expected rate of return if the market portfolio return is 12% and the risk free rate is 4%

C. Calculate Summit’s terminal value if free cash flows are expected to grow 2% perpetually starting 2023. Use its expected rate of return from question B as a discount rate.

D. Calculate Summit’s NPV as of 2020. Use its expected rate of return from question B as a discount rate

MBA 5008 Quanatitative Analysis

Most business decisions involve elements of uncertainty and randomness. The notion of probability is used everywhere, both in business and in our daily lives. I reviewed the following video and need some help answering this question: https://www.youtube.com/watch?v=_sY3ZRxhBaM

A. Explain the concept of probability by applying a specific application example of probability in business? B. Discuss the economic implications of the video?

Copper Bottom Pot Company manufactures one product, The Big Pot. The company has the following standards per unit for the The Big Pot:

Standard quantity Standard price Standard cost

Direct materials 6.0 KGs $14 per KG $84

Direct labour 1.5 Hours $20 per hour $30

The following is recorded by the company for The Big Pot for January 2020:

• The company produced 600 units during the month

• A total of 4000 KGS of material were purchased at a cost of $52,000

• On Jan 1, 2020, there was no beginning inventory of materials on hand, 200 KGs of materials

  remained in the warehouse unused at the end of the month.

• The company employs 12 people to produce The Big Pot. In January, each worked an average of

  65 hours at an average of $21 per hour.

0. Required:

   1. For Direct Materials used in the production of The Big Pot:

      1. Calculate the DM price variance

      2. Calculate the DM quantity variance

      3. The materials were purchased from a new supplier who would like to enter into a long-term

         contract with the company, would you recommend the company enter into this contract? Explain based on your interpretation of the variances for materials.

1. For Direct Labour employed in the production of The Big Pot:

   1. Calculate the DL rate variance

   2. Calculate the DL efficiency variance

   3. In the past, the 12 people employed in the production of The Big Pot consisted of four

      experienced workers and eight inexperienced assistants. During January, the company experimented with shifting the labour mix to six experienced workers and six inexperienced assistants. Would you recommend the new labour mix continue? Explain based on your interpretation of the variances for labour.

The senior management of SFU and UBC were deeply concerned about the enrollment for Fall 2020 in March because of the pandemic. However, it turned that the enrollment went up by 5 – 10% for Fall 2020. Please explain this phenomenon using concepts from this course.  

If the salary is paid at the end of the year, how much will John get?

1. He can keep his current job at the management firm D&L. His annual salary at the firm is $65,000 per year and is salary is expected to increase at 3% per year until retirement. He is currently 28 years old and he expects to work for 40 more years. His current job includes a full paid health insurance plan and is current average tax rate is 26%. John has a savings account with enough money to cover the entire cost of the MBA program.

2. The Carlton College offers a one-year MBA program. The tuition cost is $85,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,500. The Carlton program is a full-time one that does not allow students to work in the meantime. John thinks that after the Carlton degree he will be able to receive an offer of $92,000 per year with a $18,000 signing bonus. The salary at this job will increase at 3.5% per year. His average tax rate at this level of income will be 29%.

As a recently hired MBA intern, you are working in a consulting capacity to provide an analysis for Al Dente's Italian Restaurant. A financial income Statement is presented below: Sales $2,698,000 Cost of sales (all variable) $1,557,563 Gross Margin $1,140,438 Operating expenses: Variable $277,975 Fixed $213,675 Total operating expenses: $491,650 Administative expenses (all fixed) $564,375 Net operating income $84,413 This income statement presents the sales, expenses and pre-tax operating income for a local eating facility. At Al Dente, the average meal cost for lunches and dinners are $20 and $40 respectively. Al Dente serves both lunch and dinner 300 days per year and serves twice as many lunches as dinners. As the MBA intern you are to prepare a managerial accounting focused report to the owners of Al Dente's Italian Restaurant, to include the following:

1. Prepare a contribution margin income statement using the given financial data. Use the following format:

Sales

Variable costs

Cost of sales

Operating

Total variable costs

Contribution margin

Fixed costs

Operating

Administrative

Total fixed costs

Net operating income

Farmers Technology is a software company based in New Baden. On January 1, 2017, the company granted 20,000 shares of restricted stock to its CEO. The restricted stock had a par value of $1 and a fair value of $15 per share at issuance. The service period is 4 years. The restricted stock also has a performance condition, where the restricted stock will only vest if the company’s profits grow by 50% or more over the 4-year service period.
The likelihood that the company will meet the performance condition was determined at each of these dates as follows:
December 31, 2017 = not probable
December 31, 2018 = probable
Your task is to provide the necessary journal entries in 2017 and 2018.                  

1. On June 1, King Company paid $7,200 for one year of advertising, in advance. King Company recorded the transaction by debiting Prepaid Advertising and crediting Cash.

Required: Journalize the adjusting entry on December 31.

Note: Assume that the advertising is used evenly throughout the year

2. By the end of December, Brown Company has completed work, earning $2,500. Brown company has neither billed the clients nor recorded any of the revenue.

Required:
Journalize the adjusting entry on December 31.

3. On January 2, 2020, Collins Company purchased land that cost $500,000, a building on the land that cost $910,000, and equipment that cost $73,000. The building has an estimated useful life of 28 years. The equipment has an estimated useful life of 10 years.

Required:

Prepare the property, plant, and equipment section of the balance sheet as of December 31, 2020.

Note: Use straight-line depreciation with no salvage value.

1. The data below show the consumption of alcohol (X, liters per year per person, 14 years or older) and the death rate from cirrhosis, a liver disease (Y, death per 100,000 population) in 15 countries (each country is an observation unit).

   Country	Alcohol Consumption (x)	Death Rate from Cirrhosis (y)
   France	24.7	46.1
   Italy	15.2	23.6
   Germany	12.3	23.7
   Australia	10.9	7.0
   Belgium	10.8	12.3
   USA	9.9	14.2
   Canada	8.3	7.4
   England	7.2	3.0
   Sweden	6.6	7.2
   Japan	5.8	10.6
   Netherland	5.7	3.7
   Ireland	5.6	3.4
   Norway	4.2	4.3
   Finland	3.9	3.6
   Israel	3.1	5.4

a. Does the scatter plot show evidence of a linear correlation? If yes, what type?

c. Given:

E x= 134.2, E y=175.5, E x^2=1630.12, E y^2=3959.61, E xy=2419.61

Find= Sx=, Sy=, Sxy=,

d. Given slope = 1.98, find the regression line of  on  Write the answer in context of this problem.  

b= equation=

e. Interpret the slope (m) in context of this problem.

answer=

f.Given r = 0.938, find r squared. Round off to the nearest whole number.

r-squared=

g. Interpret r squared in context of his problem.

answer=