NEW PROJECT ANALYSIS You must analyze a potential new product—a caulking com- pound that Cory Materials’ R&D people developed for use in the residential construction industry. Cory’s marketing manager thinks the company can sell 115,000 tubes per year at a price of $3 25 each for 3 years, after which the product will be obsolete. The required equipment would cost $150,000, plus another $25,000 for shipping and installation. Current assets (receivables and inventories) would increase by $35,000, while current liabilities (accounts payable and accruals) would rise by $15,000. Variable cost per unit is $1 95, fixed costs (exclusive of depreciation) would be $70,000 per year, and fixed assets would be depreciated under MACRS with a 3-year life. (Refer to Appendix 12A for MACRS depre- ciation rates.) When production ceases after 3 years, the equipment should have a market value of $15,000. Cory’s tax rate is 40%, and it uses a 10% WACC for average-risk projects.

Spreadsheet assignment: at instructor’s option Construct a spreadsheet that calculates the cash flows, NPV, IRR, payback, and MIRR.

With the ground broken for the construction of its new home (the Nicol Building), the Sprott School of Business needs someone to supply it with 250 customized computers per year for the next 5 years, and you have decided to bid on the contract. It will cost you $125,000 to install the equipment necessary to start production. The equipment will be depreciated at 30 percent (class 10), and you estimate that it can be salvaged for 20.00% (of the original cost) at the end of the 5- year contract. Your fixed production costs will be $50,000 per year, and your variable production costs should be $600 per computer. You also need an initial investment in net working capital of $13,000. Assuming that your tax rate is 34 percent and you require a 12 percent return on your investment:

1. a) What is the depreciation tax shield in the third year of this project?

2. b) What is the present value of the CCA tax shield?

3. c) What is the minimum price that your company should bid per single computer?

Assuming you believe that Sprott School of Business will pay $975.00 per customized computer, what is the NPV of this project? Should you submit a bid given this new information?

The Northwest Catering Company specializes in preparing tasty meals that are frozen and shipped to various restaurants in the Seattle Area. Currently, the company offers two different meal options. More options are planned in the future. The company prepares the meals on a daily basis and ships them via truck to customers. The delivery cost is the same regardless of the number of units shipped . The company’s bookkeeper prepared the following cost analysis:

Required

1. Assuming that all units are sold, compute the company net income for the year.

2. Assuming that the sales mix remains constant, compute the breakeven point. Round the sales mix percentage to 4 decimal places. (ex. 10.1234)

3. The Oyster and Octopus Pasta has not been as popular as expected. However, the smoked salmon pizza has been a hit. During the current period, the company sold 99,000 Oyster and Octopus Pasta Meals and 297,000 Smoked Salmon Meals. Compute the net income based upon the actual unit sales.

4. These sales mix percentage relationships are expected to continue throughout the upcoming year. Based on the original information, compute the expected income for the upcoming year assuming the following changes will occur:

Total Fixed Costs will decrease by 5%

The variable cost per unit for each product will increase by 25%

The selling price per unit will increase by 20%

Total Unit Sales will increase by 5%

Variable Costs, Contribution Margin, Contribution Margin Ratio

Super-Tees Company plans to sell 19,000 T-shirts at $25 each in the coming year. Product costs include:

Variable selling expense is the redemption of a coupon, which averages $1.25 per T-shirt; fixed selling and administrative expenses total $12,000.

Required:

1. Calculate the following values:
Round dollar amounts to the nearest cent and round ratio values to three decimal places (express the ratio as a decimal rather than a percentage).

2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearest cent.

3. What if the per unit selling expense increased from $1.25 to $2.65? Calculate new values for the following:
Round dollar amounts to the nearest cent and round ratio values to four decimal places (express the ratio as a decimal rather than a percentage):

An amusement park studied methods for decreasing the waiting time (minutes) for rides by loading and unloading riders more efficiently. Two alternative loading/ unloading methods have been proposed. To account for potential differences due to the type of ride and the possible interaction between the method of loading and unloading and the type of ride, a factorial experiment was designed. Use the following data to test for any significant effect due to the loading and unloading method, the type of ride, and interaction. Use α = .05. Use both p-Value and Critical-Value approaches.

1. You’re riding your bike in the bike lane through Golden Gate Park. Suddenly, you drift out of the bike lane and into automobile traffic. Fortunately, you quickly move back into the bike lane and continue toward Ocean Beach. This scenario is a metaphor for homeostasis, where the controlled condition (physiologic variable) is the position of the bike on the road (e.g., inside or outside the bike lane). Identify: (a) The established set point for the controlled condition (b) The receptor (c) The control center (integration center) (d) The effector There’s no need to explain the physiology of vision or muscle contraction. Rather, demonstrate your understanding of feedback systems by mapping the components of a feedback system onto this scenario.

2. The three-dimensional shape of a protein determines its function. Briefly explain these terms as they relate to protein shape and provide a supporting example for each: denature, conformational change, genetic mutation. Each example must include a specific protein.

3.Compare and contrast simple diffusion and facilitated diffusion. In other words, how are they similar and how are they different? Provide supporting examples for each.

4.(a) What is the osmolarity of a solution containing 85 mM C6H12O6, 120 mM KCl, and 24 mM CaCl2? Show your calculations. (b) What would happen to human blood cells put in the solution above? Explain.

3. United Park City Properties real estate investment firm took a random sample of five condominium units that recently sold in the city. The sales prices Y (in thousands of dollars) and the areas X (in hundreds of square feet) for each unit are as follows     (40 points)

The owner wants to forecast sales on the basis of the area. Which variable is the dependent variable? Which variable is the independent variable?

Determine the regression equation.

Interpret the values of the slope and the intercept.

Test the significance of the slope at 1% level of significance.

Determine the coefficient of correlation between the sales price and the area.

Interpret the strength of the correlation coefficient.

Determine the coefficient of determination and present its interpretation.

Determine the coefficient of non-determination.

On January 1, 2014, Park Corporation sold a $606,000, 6 percent bond issue (8 percent market rate). The company does not use a discount account. The bonds were dated January 1, 2014, pay interest each June 30 and December 31, and mature in five years. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry to record the issuance of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

On January 1, 20X0, Washington Park District issued $1000 of 5-year, 6% debentures. Interest is paid semiannually. The market interest rate at issuance was 10%.

1.   Compute the proceeds from issuing the debentures.

2.   Prepare an analysis of this bond transaction. Show entries for the issuer concerning (a) issuance, (b) first semiannual interest payment, (c) second semiannual interest payment, and (d) payment of maturity value.

Note: Use only the relevant present value information for Question 2.