One year consumers spent an average of $22 on a meal at a restaurant. Assume that the amount spent on a restaurant meal is normally distributed and that the standard deviation is $4 Complete parts (a) through (c) below.
a. What is the probability that a randomly selected person spent more than $24
b. What is the probability that a randomly selected person spent between $12 and $19
c. Middle 95% of the amounts of cash spent will fall between X = $___ and X = $___
In: Statistics and Probability
Qd = 1025 – (10*P) + (3*Pe) + (.25*Pr) + (8*Y) + (25*F) - (.75*T)
And take the following values as constant:
Pe = 100 (in thousands of $)
Pr = 700 (in dollars per month)
Y = 45 (in thousands of $ per year)
F = 2.8 (in persons per household)
T = 120 (in $ of tax per home per year)
(The demand equation requires variables in the units mentioned for each of the five variables)
Solve for the reduced form linear demand function.
2. Turning to supply, assume that the price of new housing (P), the price of building materials (Pm), the wages of construction workers (W), the price of undeveloped land (Pu), and the level of impact fees they must pay to build a new house (IF) all affect the amount firms are willing to supply new homes. Take the specific functional form to be:
Qs = 100 + (12*P) – (8*Pm) – (20*W) – (8*Pu) – (10*IF)
And take the following values as constant and given:
Pm = 30 (in thousands of $ per house)
W = 18 (in $ per hour)
Pu = 15 (in thousands of $ per lot)
IF = 4 (in thousands of $ per new house)
(The supply equation requires variables in the units mentioned for each of the four variables)
Solve for the reduced form linear supply function.
3. Using the reduced form Linear Demand & Supply functions you found in problems 1 & 2, solve for the equilibrium price (P) and quantity (Q) in this market. If either does not turn out to be an integer, please round to one decimal point.
4. Mathematically derive an equation that shows how the price of new homes (P) varies with the price of existing homes (Pe). Assume all variables other than Pe are held constant at the values given in problems 1 & 2.
In: Economics
The net changes in the balance sheet accounts of KMD, Inc. for the year 2018 are shown below:
Account Debit Credit
Cash $ 130,000
Accounts receivable $ 14,000
Allowance for doubtful accounts 4,000
Inventory 80,000
Prepaid expenses 10,000
Held-to-Maturity Securities 100,000
Available-for-Sale Securities 300,000
Equipment 700,000
Accumulated depreciation:
Equipment 0 0
Goodwill 10,000
Accounts payable 105,000
Notes payable 325,000
Common stock 100,000
Additional paid-in capital—common 120,000
Retained earnings _________ 450,000
$1,224,000 $1,224,000
Additional information:
1. Net income for 2018 was $690,000
2. cash dividends declared/paid $240,000
3. Equipment costing $400,000 with a book value of $150,000 was sold for $150,000
4. Held-to-Maturity (HTM) stock sold for $135,000. There were no other HTM transactions
5. 10,000 Shares of Common Stock were issued for $22/share.
Instructions
Prepare a statement of cash flows (indirect method). Ignore tax effects. Use the format provided on next page. Please attach your supporting calculations or spreadsheets.
In: Accounting
a. Prepare the amortization schedule for a thirty-year loan of $100,000. The APR is 3% and the loan calls for equal monthly payments. The following table shows how you should prepare the amortization schedule for the loan. Month Beginning Balance Total Payment Interest Payment Principal Payment Ending Balance 1 $100,000.00
b. Use the annuity formula to find how much principal you still owe to the bank at the end of the third year. Check that this value is the same you have in your amortization schedule.
c. Suppose that in the beginning of the first month of the fourth year the interest rate decreased to 2%. Modify the amortization schedule in order to consider this change in the interest rate (you should change the values in your schedule that occur after the first month of the fourth year, not the ones before this date).
d. Use the annuity formula to find how much principal you still owe to the bank at the end of the fifth year. Check that this value is the same you have in your amortization schedule.
e. Suppose that in beginning of the first month of the fourth year (month 37) you are able to refinance your mortgage at the rate of 3%. Assume that there is no change in the time scheduled to pay the mortgage. If the cost of refinancing is $1,100, should your refinance your mortgage at the new rate of 2%, or keep the initial rate of 3%?
f. You are planning to sell you current house and buy a bigger one sometime in the future, at which point you will pay off your mortgage. For how long will you stay in your current house to be worth the refinancing described in the previous question?
g. Suppose that at the end of the seventh year you earned an unexpected amount of money (for example from your end of year bonus at work) and decided to pay a non-scheduled payment of $5,000 of the principal of the loan. You will keep paying the same monthly total payment that you were paying in the previous months. How can you change your amortization schedule, considering that you will keep paying the same total monthly amount? Prepare a new amortization schedule that accounts for these changes.
In: Finance
A couple will retire in 40 years; they plan to spend about $35,000 a year in retirement, which should last about 20 years. They believe that they can earn 9% interest on retirement savings.
a. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Annual Savings =
b. How would the answer to part (a) change if the couple also realize that in 15 years they will need to spend $65,000 on their child’s college education? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Annual Savings =
In: Finance
A security is expected to pay a dividend of $2.50 next year. In addition, dividends are expected to grow at 4% per annum and investors have a 12% required rate of return. a. What will the dividends be in each year for the next 200 years? Set this up on an excel spreadsheet with the years going down a column using Excel. What is the present value of the above dividend stream ? What is the sum of the dividends expected to be paid?
In: Finance
A restaurant in London is in its first 12 months of business. The year was somewhat successful, with the owner averaging $1,000 net profit per month after all deductions and expenses. However, he is unhappy with the amount of time it has been taking staff to provide customer service (measured from the time the customer enters to the moment they leave with their food). The restaurant design team was convinced that the restaurant’s design would allow for an average delivery time of approximately 7 minutes. As the owner was concerned they might not be hitting the mark, the design team asked a consultant to conduct a small study to examine customer service delivery time. A sample of 20 restaurant customers was selected, and the delivery time was recorded to the nearest minute.
Minutes:
5, 6, 7, 10, 6, 4, 7, 6, 8, 5, 11, 8, 7, 9, 7, 8, 8, 7, 9, 3
(A) Does the empirical evidence suggest that it takes significantly longer on average to service customers than the 7 minutes anticipated by the design team? Construct a 90% confidence interval a estimate of the average customer service delivery time at this restaurant. Interpret the meaning of the interval. Ensure that the interpretation of the results addresses the owner’s concerns. Please use clear, easy-to-understand, non-technical language.
(B) How would the consultant explain what they did in (A) to the restaurant’s design team - if they do not understand technical statistical language, and you have to explain in an easy-to-understand way?
In: Statistics and Probability
You are on the police force in a small town. During an election year, a candidate for mayor claims that fewer police are needed because the average police officer makes only four arrests per year. You think the population mean is much higher than that, so you conduct a small research project. You ask 12 other officers how many arrests they made in the past year. The average for this sample of 12 is 6.3, with a standard deviation of 1.5. With your sample evidence, test the null hypothesis that the population mean is four arrests against the alternative that it is greater than four. Set your alpha level at .01.
In: Statistics and Probability
a. In a study of monthly salary distribution of residents in Paris conducted in year 2015, it was found that the salaries had an average of €2200 (EURO) and a standard deviation of €550. Assume that the salaries were normally distributed.
(i): Consider sampling with sample size 64 on the above population. Compute the mean of the sampling distribution of the mean (X).
(ii): Compute the standard deviation of the sampling distribution of the mean in Question 1 above.
(iii): A random sample of 64 salaries (sample 1) was selected from the above population. What is the probability that the average of the selected salaries is above €2330?
(iv): Would the calculation you performed in Question 3 still be valid if the monthly salaries were NOT normally distributed? Why?
(b) In another study conducted in the same year (2015), the average monthly salary of residents in Bordeaux was found to be about €2353. And the standard deviation of the monthly salaries was €420. A random sample of 81 salaries (sample 2) was selected from this population.
Set 1 = Paris (2015); 2 = Bordeaux (2015)
(i): Compute the mean of X1 − X2.
(ii): Compute the standard deviation of X1 − X2.
(iii): What is the probability that the average of the salaries in the sample 1 is less than the average of the salaries in sample 2?
(c) In 2017, a study on the salary distribution of Paris residents was conducted. Assume that the salaries were normally distributed. A random sample of 10 salaries was selected and the data are listed below: 3200 3500 3000 2100 2950 2050 2440 3100 3500 2500
(i): Assume that the standard deviation of the salaries was still the same as in 2015. Estimate the average salary (in 2017) with 95% confidence. Question 9: The assumption made in Question 8 was certainly unrealistic. Estimate the average salary (in 2017) with 95% confidence again assuming that the standard deviation had changed from 2015.
(ii): Estimate the variance of monthly salaries of Paris residents (in 2015) based on the sample provided above at a 95% confidence level.
(iii): How would you interpret the result in Question 10 above?
(d) A similar study was conducted on salary distribution of Paris residents in 2019. The research team aimed to estimate the average salary. They chose the 98% confidence and assumed that the population standard deviation was the same as in 2015. Assume again that those salaries were normally distributed.
(i) If they would like the (margin of) error to be no more than €60, how large a sample would they need to select?
In: Statistics and Probability
A.
| What is the payback period for the following set of cash flows? |
| Year | Cash Flow |
| 0 | −$ 5,300 |
| 1 | 2,300 |
| 2 | 2,300 |
| 3 | 1,400 |
| 4 | 1,100 |
B.
A project with an initial cost of $22,350 is expected to generate cash flows of $5,200, $7,300, $8,400, $7,300, and $6,000 over each of the next five years, respectively. What is the project's payback period?
C.
A new project has an initial cost of $133,000. The equipment will be depreciated on a straight-line basis to a book value of $39,000 at the end of the four-year life of the project. The projected net income each year is $14,000, $17,450, $22,100, and $13,900, respectively. What is the average accounting return?
In: Finance