Without using excel

Quasar Tech Ltd is investing $6 million in new machinery that will produce the next-generation routers. Sales to its customers will amount to $1 750 000 for the next 3 years and then increase to $2.4 million for 3 more years. The project is expected to last 6 years and cost the company annually $898 620 (excluding depreciation). The machinery will be depreciated to zero by year 6 using the straight-line method. The company’s tax rate is 30 per cent, and the cost of capital is 16 per cent.

(a) What is the payback period?

(b) What is the average accounting return (ARR)?

(c) Calculate the project NPV.

(d) What is the IRR for the project?

Dear Math Students:

I recently bought a restaurant in Chicago.  It is pretty small, but well-located.  We are open every day, but Mondays, from 4 PM until 11 PM.  Our menu is basically Italian.  We offer individual pizzas, pastas, salads, and a special of the day. We also have really good desserts. We offer cookies, ice cream and superb cakes.  Last month we had 800 customers.  Our salads are considered a whole meal, so people don’t usually order another entrée with them.  Last month, we sold 400 pizzas, 200 pasta dishes, 130 salads, and 70 specials of the day. Not everyone orders a dessert, but last month we sold 200 cookies, 100 ice creams, and 250 cakes.  Next week we are expecting 250 to 300 customers.  I need to know how many of each of the entrees and how many of each of the desserts I can expect to sell.

I would also like to know how much money I can expect to make.  Perhaps you could also let me know how much the average customer spends. Let me tell you the prices.  The pizzas are $7.95.  The pastas are sold for $8.95.  The salads are $6.95.  The special of the day is $9.95.  As for the desserts, the cookies are $1.00, the ice cream is $1.50, and the cakes are $3.00

Thanks a lot for your help, I am not very good at math, but perhaps you could try to explain your answers in such a way that I could estimate them for myself next time.

Yours sincerely,

Chris Smith

Pizza Plus

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Put the results of your calculations here and the explanation of your calculations o the back of this sheet.

Estimates for 250 customers

Average customer spends: $________________

Estimates for 300 customers

Average customer spends: $________________

Explanation of Calculations:

1) You estimate Bayleaf Inc. has free cash flows of $70 million arriving in 1 year, $74 million in 2 years, and $80 million in 3 years. After year 3, the long term growth rate of FCF will be 3% (thus year 4 FCF is $82.4 million). Bayleaf has $241 million in net debt and a weighted average cost of capital of 14%. What is your estimate of the Enterprise Value of Bayleaf (in millions)?

2)You believe Orange Inc. has an enterprise value of $833 million. Orange's balance sheet shows $77 million in cash and $165 million in debt. What is your estimate for the stock price if Orange has 5 million shares outstanding?

The annual salaries (in thousands of dollars) for the employees of a small technology firm are as follows:

Construct a frequency table. Use 7 classes, start with a lower class limit of 59, and use a whole number for the class width.

The data below shows height (in inches) and pulse rates (in beats per minute) of a random sample of women. Find the value of the linear correlation coefficient r, using a significance level of 0.05 Is there sufficient evidence to conclude that there is a linear correlation between height and pulse rate?

Height | Pulse Rate

61.7    80

64.3    74

60.1    89

60.3 61

59.3 75

61.5 66

59.6    83

61.1    61

67.5    68

59.7 68

67.1 81

63.3 76

61.8 70

58.9    74

59.2 71

59.5    72

66.6    83

60.8 79

69.6 76

58.2 76

5. It is of interest to Starbucks on campus, the average spending of students in one week, this with the aim of creating a promotion for their students. It is said that they spend 163 pesos on average and it is known from experience that the standard deviation in spending is 52 pesos. a. What is the probability of a student on campus spending at least 180 pesos?

6. The following are the partial ratings of the group: 79, 87, 90, 74, 83, 72, 80, 56, 84, 83, 92, 70, 65, 69, 87, 88, 74, 72, 82, 91, 63. a. Draw up a basic frequency distribution table (1 pts.) b with the grades. Make a histogram

Roy constructs an options portfolio based on the MXC stock. He writes a call option with exercise price $74 and writes a put option with exercise price $70. Both options have the same expiration date.

MXC Call Option price $0.42

Exercise price $74

MXC Put $0.58 $70

1. Draw the payoff diagram of this portfolio at option expiration as a function of MXC stock price at that time.

2. What will be the profit/loss on this position if MXC is selling at $72 on the option expiration date? What if MXC is selling at $77?

3. At what two stock prices will Roy break even on his position?

Roy constructs an options portfolio based on the MXC stock. He writes a call option with exercise price $74 and writes a put option with exercise price $70. Both options have the same expiration date.

   MXC Call MXC Put

Option price $0.42    $0.58

Exercise price $74     $70

a. Draw the payoff diagram of this portfolio at option expiration as a function of MXC stock price at that time.

b. What will be the profit/loss on this position if MXC is selling at $72 on the option expiration date? What if MXC is selling at $77?

c. At what two stock prices will Roy break even on his position?

Roy constructs an options portfolio based on the MXC stock. He writes a call option with exercise price $74 and writes a put option with exercise price $70. Both options have the same expiration date. MXC Call MXC Put Option price $0.42 $0.58 Exercise price $74 $70

a. Draw the payoff diagram of this portfolio at option expiration as a function of MXC stock price at that time.

b. What will be the profit/loss on this position if MXC is selling at $72 on the option expiration date? What if MXC is selling at $77?

c. At what two stock prices will Roy break even on his position?

Roy constructs an options portfolio based on the MXC stock. He writes a call option with exercise price $74 and writes a put option with exercise price $70. Both options have the same expiration date

a. Draw the payoff diagram of this portfolio at option expiration as a function of MXC stock price at that time. b. What will be the profit/loss on this position if MXC is selling at $72 on the option expiration date? What if MXC is selling at $77? c. At what two stock prices will Roy break even on his position?