Lon Timur is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information.

Click here to view PV table.

(a)

Determine the annual (1) net income and (2) net annual cash flows for the commuter service. (Round answers to 0 decimal places, e.g. 125.)

(b)

Compute (1) the cash payback period and (2) the annual rate of return. (Round answers to 2 decimal places, e.g. 10.50.)

(c)

Compute the net present value of the commuter service. (Round answer to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

A recent college graduate from Clayton State University has the choice of buying a new car for $33,500 or investing the money for four years with an 11% expected annual rate of return. He has an investment of $41,000 in equities and bonds which yields 8% expected annual rate of return. If the graduate decides to purchase the car, the best estimate of the opportunity cost of that decision is ________.

Question 2 options:

Being an auditor You have recently graduated from your university and started work with an accounting firm. You meet an old school friend, Kim, for dinner—you haven’t seen each other for several years. Kim is surprised that you are now working as an auditor because your childhood dream was to be a ballet dancer. Unfortunately, your knees were damaged in a fall and you can no longer dance. The conversation turns to your work and Kim wants to know how you do your job. Kim cannot understand why an audit is not a guarantee the company will succeed. Kim also thinks that company managers will lie to you to protect themselves, and as an auditor you would have to assume that you cannot believe anything a company manager says to you.

Required: Compose a letter to Kim explaining the concept of reasonable assurance, and how reasonable assurance is determined. Explain why an auditor cannot offer absolute assurance. Describe the concept of professional skepticism and how it is not the same as assuming that managers are always trying to deceive auditors. Explain to Kim why her perceptions are a perfect example of the expectations gap.

**For Accounting - Audit Class. Please write a short essay on the above. Please type your word. Do not send a picture or your handwriting.

Lon Timur is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information.

Click here to view PV table.

(a)

Determine the annual (1) net income and (2) net annual cash flows for the commuter service. (Round answers to 0 decimal places, e.g. 125.)

(b)

Compute (1) the cash payback period and (2) the annual rate of return. (Round answers to 2 decimal places, e.g. 10.50.)

(c)

Compute the net present value of the commuter service. (Round answer to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

The probability that a student graduating from West Texas A&M University has student loans to pay off after graduation is 0.60. If two students are randomly selected from this university, what is the probability (rounded to the nearest two decimal places) that neither of them has student loans to pay off after graduation?

The following table gives the frequency distribution of the number of telephones owned by a sample of 50 households selected from a city.

Number of Telephones Owned   Frequency (f)
0   3
1   20
2   14
3   3
4   10
The relative frequency of the first class, rounded to two decimal places, is:

The temperatures (in degrees Fahrenheit) observed during selected seven days of summer in Los Angeles are:

78 99 68 91 105 75 85

The standard deviation, rounded to two decimal places, of these temperatures is:

The ages of all high school teachers in New York state have a bell-shaped distribution with a mean of 39 years and a standard deviation of 7 years. According to the empirical rule, the percentage of teachers in this state who are 32 to 46 years old is approximately:

The waiting times (in minutes) for 11 customers at a supermarket are:

14 9 15 4 4 7 9 11 14 2 6

The percentile rank for the customer who waited 11 minutes is 64%. Give a brief interpretation of this percentile rank.

The following data give the starting salary for students who recently graduated from a local university and accepted jobs soon after graduation. The starting salary, grade-point average (GPA), and major (business or other) are provided.

1. Using a computer, develop a regression model that could be used to predict starting salary based on GPA and major.
2. Use this model to predict the starting salary for a business major with a GPA of 3.0.
3. What does the model say about the starting salary for a business major compared to a nonbusiness major?
4. Do you believe this model is useful in predicting the starting salary? Justify your answer, using information provided in the computer output.

PLEASE SHOW EXCEL CALCULATIONS

Using a luciferase reporter system in tissue culture cells, researchers from the University of California, San Francisco, found that ethanol stimulates transcription of genes in brain cells possibly involved in adaptive responses to alcohol. This process was found to depend on PKA activation. By analogy to other PKA-dependent transcription activation pathways, describe a possible pathway for this transcription induction. What other proteins would be involved?

Lon Timur is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information.

1.Five used vans would cost a total of $75,920 to purchase and would have a 3-year useful life with negligible salvage value. Lon plans to use straight-line depreciation.

2.Ten drivers would have to be employed at a total payroll expense of $48,700.

3.Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline $16,100, Maintenance $3,200, Repairs $4,300, Insurance $4,000, and Advertising $2,500.

4.Lon has visited several financial institutions to discuss funding. The best interest rate he has been able to negotiate is 15%. Use this rate for cost of capital.

5.Lon expects each van to make ten round trips weekly and carry an average of six students each trip. The service is expected to operate 30 weeks each year, and each student will be charged $12 for a round-trip ticket.

a. Determine the annual (1) net income and (2) net annual cash flows for the commuter service. (Round answers to 0 decimal places, e.g. 125.)

b. Compute (1) the cash payback period and (2) the annual rate of return. (Round answers to 2 decimal places, e.g. 10.50.)

c. Compute the net present value of the commuter service. (Round answer to 0 decimal places, e.g. 125.)

After graduating with an accounting degree from Major Metropolitan University and five years in public accounting, you decided to explore other professional options. You recently accepted an offer from your former classmate to join his accounting firm and are excited about your future prospects with the firm.

Gloria Walstrom has been a long-time client of the consulting firm. Her work experience has been largely confined to the transportation business, in which she has broad administrative and marketing experience, but not much accounting experience. Recent events have motivated Gloria to consider starting a new package-delivery-service venture, the proposed name of which is ‘Pack-It-Up’. She is acutely aware of the fact that with electronic commerce, such as Amazon and eBay, there is an increase in business demands for package delivery. She wonders, therefore, whether the timing might be right for a smaller, focused competitor along the lines of the business envisioned by Pack-It-Up. Such a venture would initially focus on intra-city deliveries in a major metropolitan center.

Because of her lack of financial experience and her long-time professional association with your classmate, Gloria recently contacted your firm with a request that the firm help her perform some financial planning. You will work with Gloria to create a profit-planning model (otherwise referred to as cost-volume-profit, or CVP, analysis) that responds to numerous questions regarding the profitability and financial risk associated with Pack-It-Up.

You will need to consider the single-product case, with two decision options related to choice of cost structure. Under cost structure alternative 1, Pack-It-Up would essentially contract with delivery personnel who would be paid on a commission basis. Delivery personnel in this situation would use their own vehicles (bicycles, motor bikes, etc.). This would result in a reduced capital investment on the part of Pack-It-Up with lower fixed costs. Under cost structure alternative 2, Pack-It-Up would provide its own fleet of delivery trucks (with associated depreciation, insurance charges, scheduled/fixed maintenance costs, etc.) and would pay its delivery personnel a fixed salary per year. Thus, it would incur relatively higher fixed costs.

Fixed costs under both decision alternatives would also include some administrative salaries and office-related expenses as well as advertising/promotion costs determined on a yearly contract basis. Accounting and tax- consulting costs are fixed on an annual basis under both alternatives.

To facilitate the profit-planning process, Gloria has obtained from trusted colleagues in a related business estimated costs associated with each of the two alternative cost structures (see table below). These estimated data are to be used as the basis of the consulting report you prepare for Gloria in response to the questions, she has raised in conjunction with the proposed business venture.

Decision inputs (data)

Case A Requirements

Provide a written report to address the following questions. This report will be presented to the client, so it should be written professionally. Your report should show your calculations.

1. One issue of interest to your client is the volume of business (on an annual basis) needed for her to ‘break even’. Calculate the break-even point, in terms of number of deliveries (i.e. units per year) and dollars for cost structure alternative 1 and cost structure alternative 2.
2. Gloria estimates that sales volume will be 60,000 units for alternative 1 and 120,000 units for alternative 2. What is the margin of safety for cost structure alternative 1, in both units and in dollars at that sales volume? What is the margin of safety ratio for both alternatives? Explain to Gloria what is meant by margin of safety and what information it provides.

Lon Timur is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information.

Click here to view PV table.

(a)

Determine the annual (1) net income and (2) net annual cash flows for the commuter service. (Round answers to 0 decimal places, e.g. 125.)

Compute (1) the cash payback period and (2) the annual rate of return. (Round answers to 2 decimal places, e.g. 10.50.)

(c)

Compute the net present value of the commuter service. (Round answer to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided.)