As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.:

Factory output and sales for 20Y9 are expected to total 25,000 units of product, which are to be sold at $120 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year.

Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows:

Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of $272,200 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of $1 per share are expected to be declared and paid in March, June, September, and December on 35,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $139,000 cash in May.

Required:

1. Prepare a budgeted income statement for 20Y9.

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Use information from the expected sales, cost of goods manufactured and sold, and selling and administrative expenses.

2. Prepare a budgeted balance sheet as of December 31, 20Y9.

A fund manager is concerned about the performance of the market over the next year and plans to use one-year futures contracts on the S&P 500 to hedge the risk. The current index level is 1,200, and the one-year risk-free interest rate is 4% p.a. with continuous compounding. The current one-year futures price on a stock-index portfolio is 1,220. Assume that a dividend of $20 is expected after a year for a $1,200 investment in the market portfolio.

a) (4 points) Is the contract mispriced? Why? If yes, by how much is it overpriced (underpriced)?

b) (8 points) Identify an arbitrage opportunity such that you can obtain a riskless profit equal to the futures mispricing.

c) (8 points) Suppose that when you short sell the stocks in the market index, you do not receive any interest on the funds; instead, the broker receive it. Is there still an arbitrage opportunity now (assuming you don’t own the shares originally)? Explain the reason.

d) (10 points) Under the assumption of (c), i.e., you do not receive any interest on the funds if you short sell the stocks, whhat is the no-arbitrage range? That is, how high and how low can the futures price be such that there is no arbitrage opportunity?

Following are the transactions and adjustments that occurred during the first year of operations at Kissick Co.

a. Issued 192,000 shares of $5-par-value common stock for $960,000 in cash.

b. Borrowed $530,000 from Oglesby National Bank and signed a 11% note due in three years.

c. Incurred and paid $390,000 in salaries for the year.

d. Purchased $720,000 of merchandise inventory on account during the year.

e. Sold inventory costing $590,000 for a total of $900,000, all on credit.

f. Paid rent of $220,000 on the sales facilities during the first 11 months of the year.

g. Purchased $180,000 of store equipment, paying $55,000 in cash and agreeing to pay the difference within 90 days.

h. Paid the entire $125,000 owed for store equipment and $600,000 of the amount due to suppliers for credit purchases previously recorded.

i.Incurred and paid utilities expense of $37,000 during the year.

j. Collected $845,000 in cash from customers during the year for credit sales previously recorded.

k. At year-end, accrued $58,300 of interest on the note due to Oglesby National Bank.

l. At year-end, accrued $20,000 of past-due December rent on the sales facilities.

Required:

a. Prepare an income statement (ignoring income taxes) for Kissick Co.'s first year of operations and a balance sheet as of the end of the year. (Hint: You may find it helpful to prepare a T-account for the Cash account since it is affected by most of the transactions.)

b. Prepare a balance sheet as of the end of the year. (Hint: You may find it helpful to prepare a T-account for the Cash account since it is affected by most of the transactions.) (Amounts to be deducted and net loss should be indicated with minus sign.)

Starting at the end of this year, you plan to make annual deposits of $5,000 for the next 10 years followed by deposits of $13,000 for the following 10 years. The deposits earn interest of 4.6%. What will the account balance be by the end of 33 years? Round to the nearest cent

You are interested in buying a house and renting it out. You expect to receive a monthly net income of $1450 from rent. You then expect to sell the house for $329,000 at the end of 54 months. If your discount rate on this investment is 9% per year (compounded monthly), how much is this property worth to you today? Assume that you receive rent at the beginning of each month and you receive the first rent the same day you purchase the property. Round to the nearest cent

A 68 year old women was admitted to a hospital because of headaches that began a month earlier. She was in good health, prior to developing severe headaches, vertigo, photophobia, lethargy, and forgetfulness. Her temperature was 98.9 degrees F, and she knew her name but not the date. She had some resistance to bending her neck, consistent with mild inflammation of the meninges. She also had past-pointing when reaching for objects. A lumbar puncture revealed a total white blood cell count of 18/microliter ( normal is up to 4) and 75% polymorphonuclear leukocytes. CSF glucose was low suggesting a microbe was present in the subarachnoid space. The lab tech performing the wbc count noticed cells that were not wbc. To investigate further, the tech centrifuged the CSF, and stained the sediment with India ink. The round cell appeared to be budding, much like yeasts. In addition, the cell appeared to have a capsule.

1. What type of microbe could be causing the meningitis? Give one reason to support your answer based on the information provided.

2. Of the following eukaryotic microbes, which one is characterized by having polysaccharide capsules? Candida albicans, Histoplasma capsulatum, Crytococcus neoformans.

In July of 2003 a construction worker came to a hospital in Palm Beach County complaining of fever, headaches, chills, nausea and malaise. After being treated for dehydration he was discharged. Two days later he returned to the hospital with worsening symptoms, and was admitted with a diagnosis of malaria. The next day his blood smear revealed Plasmodium. During July and August a plumber who worked outside, a fisherman who fished in the evenings, a golfer, a homeless individual, a carpenter and an outdoorsman all had Plasmodium infections. Six of the seven men had never traveled to a malarious region, none had had recent blood transfusions or was an IV drug user. Targeted mosquito trapping produced no Plasmodium-infected mosquitoes.

3. What could an epidemiologist infer from the interviews of the seven patients? What disease did all seven have?

4. How is this disease transmitted? How was it transmitted in this case?

Cindy, who will graduate from college in a year is deciding whether to go on for her master’s degree which will last two years. She figures that if she takes a job immediately, she can earn $40,000 per year in real terms for the remainder of her working years. If she goes on for two more years of graduate study, however, she can increase her earnings to $50,000 per year. The cost of tuition is $40,000 per year in real terms. Is this a worthwhile investment if the real interest rate is 5% per year?—(Assume she will retire after working for 40 years. AND SHOW YOUR WORK)—4 pts.

Suppose that the USDA expects that 53.3 billion bushels of soybeans will be produced this year at a price of $8.50/bushel. Assume that the elasticity of supply is 0.3 and that the elasticity of demand is -0.2 (both very inelastic).

2. What quota is required to increase the soybean price to $9.25/bushel? And what is the economic cost of this solution (i.e., what is the change in producer surplus and change in consumer surplus, and what is the sum of these changes)?

3. The Global pandemic in year 2020 has caused a decline in the prices of equity and credit securities. Many superannuation funds are expected to generate negative returns on investments during this period.

Required

Discuss how negative returns would affect employees and employers if the superannuation funds is a:

i.          defined benefit plan                                                                                        

ii.         defined contribution plan                                                                                

What is the value today of a money machine that will pay $4,319.00 per year for 24.00 years? Assume the first payment is made 2.00 years from today and the interest rate is 8.00%.