5. The dollar return for a semiannual bond with the following characteristics assuming that you can earn the same yield on a 9-year certificate of deposit are:

Coupon rate

Time to maturity

Price

YTM (BEY)

6.10%

9 years

$109.79

4.75%

a. Calculate the realized rate of return for the buy and hold investor if market interest rates increase by 50 basis points after purchase and before the first coupon payment.

b. Calculate the realized rate of return of the investor who sells the bond after 5 years, but interest rates decrease by 50 basis point after purchase and before the first coupon payment.

Please help me solve this! please show equations used

The price of oil is currently $50 per barrel (bbl), but the long-run mean is believed to be $75, and the annual speed of mean reversion is 15%. An oil drilling company wishes to value a prospective new property. The financial details are below:

a. Production levels will start at 500,000 bbl for the first 10 years, and will drop to 250,000 bbl for the next 10 years, at which time the oil will be exhausted.

b. The fixed costs of producing the oil will be $5,000,000 per year.

c. The variable costs of producing oil will be $10 per barrel

d. The discount rate is 9% per year, and the first cash flow is in one year. What is the value of the oil well today?

What is the value of the oil well today?

1) Using the multi-stage Dividend Discount Model (DDM), calculate the value, today, of a share which pays no dividend as yet, but expects to pay its first ever dividend of $0.50 per share in exactly 3 years from today (t=3), a dividend of $1 in year 4, and then expects the dividend to grow at 3% per annum indefinitely. The required return is 12% per annum.

b) A fast growth share has the first dividend (t=1) of $1.94. Dividends are then expected to grow at a rate of 7 percent p.a. for a further 4 years. It then will settle to a constant-growth rate of 3.0 percent. . If the required rate of return is 16 percent, what is the current price of the share?

1.CAPACITY PLANNING
1.1 In what case should capacity plan be revised?

2.SUPPLIER MANAGEMENT
2.1 How can suppliers (who wants highest price) and buyer firm (who wants lowest cost) be partners?

3.LEARNING CURVE
There are 2 firms: Company A and Company B.

3.1 Company A took 150 hours to produce its first unit.
This month it wants to product 500 units.

Using 80% learning curve, how many hours will it
take to produce those 500 units?

3.2 Comany B also produced 500 units.

However, it took B only 50 hours to produce its first unit.
What was was B's learning curve?

Gilbert Moss and Angela Pasaic spent several summers during their college years working at archaeological sites in the Southwest. While at those digs, they learned how to make ceramic tiles from local artisans. After college they made use of their college experiences to start a tile manufacturing firm called Mossaic Tiles, Ltd. They opened their plant in New Mexico, where they would have convenient access to a special clay they intend to use to make a clay derivative for their tiles. Their manufacturing operation consists of a few relatively simple but precarious steps, including molding the tiles, baking, and glazing. Gilbert and Angela plan to produce two basic types of tile for use in home bathrooms, kitchens, sunrooms, and laundry rooms. The two types of tile are a larger, single- colored tile and a smaller, patterned tile.In the manufacturing process, the color or pattern is added before a tile is glazed. Either a single color is sprayed over

the top of a baked set of tiles or a stenciled pattern is sprayed on the top of a baked set of tiles.The tiles are produced in batches of 100. The first step is to pour the clay derivative into

specially constructed molds. It takes 18 minutes to mold a batch of 100 larger tiles and 15 minutes to prepare a mold for a batch of 100 smaller tiles. The company has 60 hours available

each week for molding. After the tiles are molded, they are baked in a kiln: 0.27 hour for a batch of 100 larger tiles and 0.58 hour for a batch of 100 smaller tiles. The company has 105 hours

available each week for baking. After baking, the tiles are either colored or patterned and glazed. This process takes 0.16 hour for a batch of 100 larger tiles and 0.20 hour for a batch of 100

smaller tiles. Forty hours are available each week for the glazing process. Each batch of 100 large tiles requires 32.8 pounds of the clay derivative to produce, whereas each batch of smaller

tiles requires 20 pounds. The company has 6,000 pounds of the clay derivative available each week. Mossaic Tiles earns a profit of $190 for each batch of 100 of the larger tiles and $240 for

each batch of 100 smaller patterned tiles. Angela and Gilbert want to know how many batches of each type of tile to produce each week to maximize profit. In addition, they have some questions about resource usage they would like answered.

A) Formulate a linear programming model on excel for Mossaic Tiles, Ltd. to determine the mix of tiles it should manufacture each week.

B) For artistic reasons, Gilbert and Angela like to produce the smaller, patterned tiles better. They also believe that in the long run, the smaller tiles will be a more successful product.

What must the profit be for the smaller tiles in order for the company to produce only the smaller tiles?

C) Mossaic believes it may be able to reduce the time required for molding to 16 minutes for a batch of larger tiles and 12 minutes for a batch of the smaller tiles. How will this affect

the solution?

D) The company that provides Mossaic with clay has indicated that it can deliver an additional 100 pounds each week. Should Mossaic agree to this offer? Explain.

Single-Price Monopoly:

Consider a single-price monopolist (i.e. the monopolist cannot price discriminate) facing the following market demand curve:

P = 120 − Q.

The monopolist has constant marginal cost of $20 and zero fixed cost.

(a) Determine the monopolist’s profit maximizing quantity, denoted Q_M, and profit-maximizing price, denoted P_M. (b) Determine the quantity and price that would result in the market if this instead were a competitive market, denoted Q_C and P_C, respectively. (c) Draw a picture of the market demand and marginal cost curves. Label the intercepts of the two curves, the monopoly outcome, and the competitive outcome. Determine the dead-weight loss resulting from market power.

The table above shows the market basket for a beach lover. Use this data to calculate the Beach Lover Price Index (BLPI).

Suppose the base year is 2017. What is the value of the price index in 2017? Show Work, please.
Suppose the base year is 2017. What is the value of the price index in 2018? Show Work, please.
Suppose the base year is 2017. What is the value of the price index in 2019? Show Work, please.

What is the rate of inflation from 2018 to 2019? Show Work, please.
Suppose a beach lover’s wage is $25 per hour in 2017 and $27 per hour in 2019. In which year is this beach lover earning more in real terms? Show Work, please.

LIFO Perpetual Inventory

The beginning inventory of merchandise at Rhodes Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the last-in, first-out method. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.

2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period.

3. Determine the ending inventory cost on June 30.
$

You have been hired as a project management consultant to assist the Acme Company in evaluating two different project proposals they are considering. Proposal A calls for the construction of a new plant which will require three years to complete and will have much greater capacity than the old plant. Because the plant will have to be built on the current site, the old plant will have to be razed. Proposal B involves the renovation of this plant. This renovation will require two years to complete, but the plant can remain in operation in a reduced capacity during this upgrade. Once the renovation is complete revenue will be increased by 25% per year, however annual maintenance will be 50% higher than Proposal A.

Proposal B: Renovate Existing Plant

        Year1   Year2 Year3 Year4 Year5   Year6 Year7 Year8 Year9 Year10

Revenue 100   100   350     350    350     350    350   350    350    350

Expense 500   500   75      75     75      75     75    75     75      75

Questions:

a.   What is the profit associated with the project carried out in Proposal A? Proposal B?

b.   When does payback occur on the project carried out in Proposal A? Proposal B?

c.   What is the present value of revenue for the project carried out in Proposal A? Proposal B? (In computing present value, do not discount the value for the first year being examined.) (Assume i = 0.10)

d.   What is the present value of expense for the project carried out in Proposal A? Proposal B? (In computing present value, do not discount the value for the first year being examined.) (Assume i = 0.10)

e.   What is net present value for the project described in Proposal A? Proposal B? (In computing present value, do not discount the value for the first year being examined.) (Assume i = 0.10)

f.    What is the internal rate of return for the project described in Proposal A? Proposal B?

g.   Which project would you recommend? Why? What are the merits? What are the risks?

The beginning inventory of merchandise at Rhodes Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the last-in, first-out method. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.

2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period.

3. Determine the ending inventory cost on June 30.
$