An unlevered company with a cost of equity of 12% generates $7 million in earnings before interest and taxes (EBIT) each year. The decides to alter its capital structure to include debt by adding $1 million in debt with a pre-tax cost of 6% to its capital structure and using the proceeds to reduce equity by a like amount as to keep total invested capital unchanged. The firm pays a tax rate of 26%.

Assuming that the company's EBIT stream can be earned into perpetuity and that the debt can be perpetually issued (or rolled), what will be the firm's new cost of equity?

An unlevered company (just common stock, no preferred) with a cost of equity of 12% generates $1 million in earnings before interest and taxes (EBIT) each year. The decides to alter its capital structure to include debt by adding $2 million in debt with a pre-tax cost of 6% to its capital structure and using the proceeds to reduce equity by a like amount as to keep total invested capital unchanged. The firm pays a tax rate of 33%. Assuming that the company's EBIT stream can be earned into perpetuity and that the debt can be perpetually issued (or rolled), what is the firm's new weighted average cost of capital?

1. Complete Table 2 by calculating the expected deaths for Indiana (columns a and b) and Alaska (columns a and d) based on the standard population distribution of the US in 1992. The age-specific deaths are obtained from your calculations in Table 1.

Table 2

Column b will be taken directly from Table 1. Calculate the age-adjusted rates: Add the expected deaths for each state, i.e. columns (c) and (e). Divide the total expected deaths in each state by the total standard population of the US.

Calculate the age-adjusted rates: Add the expected deaths for each state, i.e. columns (c) and (e). Divide the total expected deaths in each state by the total standard population of the US.

7.           Calculate the age-adjusted death rate per 1000 for each state:    (5 points)

Y

ou have recently been hired by Layton Motors, Inc. (LMI), in its relatively new treasury management department. LMI was founded eight years ago by Rachel Layton. Rachel found a method to manufacture a cheaper battery that will hold a larger charge, giving a car powered by the battery a range of 700 miles before requiring a recharge. The cars manufactured by LMI are midsized and carry a price that allows the company to compete with other mainstream auto manufacturers. The company is privately owned by Rachel and her family, and it had sales of $197 million last year.

LMI primarily sells to customers who buy the cars online, although it does have a limited number of company-owned dealerships. The customer selects any customization and makes a deposit of 20 percent of the purchase price. After the order is taken, the car is made to order, typically within 45 days. LMI's growth to date has come from its profits. When the company had sufficient capital, it would expand production. Relatively little formal analysis has been used in its capital budgeting process. Rachel has just read about capital budgeting techniques and has come to you for help. For starters, the company has never attempted to determine its cost of capital, and Rachel would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company. Rachel wants you to use the pure play approach to estimate the cost of capital for LMI, and she has chosen Tesla Motors as a representative company. The following questions will lead you through the steps to calculate this estimate.

QUESTIONS

Most publicly traded corporations are required to submit quarterly (10Q) and annual reports (10K) to the SEC detailing the financial operations of the company over the past quarter or year, respectively. These corporate filings are available on the SEC website at www.sec.gov. Go to the SEC website, follow the “Search EDGAR for Company Filings” link, and search for SEC filings made by Tesla Motors (TSLA). Find the most recent 10Q or 10K, and download the form. Look on the balance sheet to find the book value of debt and the book value of equity.

To estimate the cost of equity for TSLA, go to finance.yahoo.com and enter the ticker symbol TSLA. Follow the links to answer the following questions: What is the most recent stock price listed for TSLA? What is the market value of equity, or market capitalization? How many shares of stock does TSLA have outstanding? What is the most recent annual dividend? Can you use the dividend discount model in this case? What is the beta for TSLA? Now go back to finance.yahoo.com and follow the “Bonds” link. What is the yield on three-month Treasury bills? Using the historical market risk premium, what is the cost of equity for TSLA using CAPM?

You now need to calculate the cost of debt for TSLA. Go to finra-markets.morningstar.com/BondCenter/, enter TSLA as the company, and find the yield to maturity for each of TSLA's bonds. What is the weighted average cost of debt for TSLA using the book value weights and using the market value weights? Does it make a difference in this case if you use book value weights or market value weights?

You now have all the necessary information to calculate the weighted average cost of capital for TSLA. Calculate this using book value weights and market value weights, assuming TSLA has a 35 percent marginal tax rate. Which number is more relevant?

You used TSLA as a pure play company to estimate the cost of capital for LMI. Are there any potential problems with this approach in this situation?

The TED talk by Katherine Kuchenbecker was extremely controversial and brought about different aspects of robots and AI that I had previously never thought of. Throughout her video, she focuses on Haptics, which refers to touch technology. As we are aware, this is one of the things that differentiates us from robots, thus the controversial debate begins. Should we give robots the power to feel and touch, just like humans do? I believe that there are both positive and negative outcomes that can erupt from doing such a thing. On the one hand it can be beneficial in some medical fields such as dentistry in which people would become more experienced and knowledgeable before they actually begin their job as a dentist as they would be able to detect cavities based on their feel through this innovative technology. Another example that I enjoyed learning about and thought that was great was when it comes to exhibit museums. There are many instances in which we are not allowed to touch a work of art or sculpture and it is very hard to imagine how if would make us feel. If this were to be achieved through this new technology without actually having to touch the sculpture itself, it could really change and challenge the way we see and experience art. However, although there might be some positive aspects to this technology, there are also disadvantages that come with it. I really believe that feel and touch are senses that differentiate us from robots and it is a difference that makes us special and unique. I think that giving up this privilege could bring about negative consequences within society and provide people with fake and false confidence. I think that if this technology develops, we have to be careful with the way we manage it and we should consider not completely giving up all of the things that make us unique and special such as the fact that we can touch and feel.

The company operates a punch press to manufacture machine parts. It is a noisy operation. As a matter of fact, it is common knowledge in the plant that employees working in this location have to shout to be heard, even if you are right next to them. The employer decides to transfer a new employee to the department to monitor the punch press operation. The employee is deaf and the companies thinking was that since the employee had hearing loss it doesn't matter much if this individual worked in this location. Hearing protection was not provided and no personnel noise monitoring conducted.

You have been hired as the new EHS Manager for this company and have been asked for your opinion as to the best method to handle this situation. Please prepare a response that considers both the employer and employee perspective.

First and foremost, consider the following information when preparing your response.

1. From an employer perspective, how should this situation be managed? Here, think about issues such as ethical and moral responsibilities including compliance, worker rights and employer responsibilities.

2. From an employee perspective, how should the workers disability be managed? Do they have any rights in this situation?

How can these everyone's rights (employee and employer) be protected in this delicate situation?

Question3

public goods are things that:

A)can be enjoyed by more then one person without any reduction in the goods

B) people cannot be excluded from their consumption

C) are unlikely to be provided by individual rational actors

D) all of the above

After establishing their company’s fiscal year-end to be October 31, Natalie and Curtis began operating Cookie & Coffee Creations Inc. on November 1, 2021. The company had the following selected transactions during its first fiscal year of operations. The new corporation is authorized to issue 50,000 shares of $1 par common stock and 10,000 shares of no par, $6 cumulative preferred stock. Jan. 1 Issued an additional 800 preferred shares to Natalie’s brother for $4,000 cash. June 30 Repurchased 750 shares issued to the lawyer, for $500 cash. The lawyer had decided to retire and wanted to liquidate all of her assets. Oct. 15 The company had a very successful first year of operations and as a result declared dividends of $28,000, payable November 15, 2022. (Indicate the amounts payable to the preferred stockholders and to the common stockholders.) Oct. 31 The company earned revenues of $472,500 and incurred expenses of $416,500 (including the $750 legal expense from November 1 but excluding income tax). Record income tax expense, assuming the company has a 20% income tax rate.

Prepare the journal entries, Prepare closing entries, prepare retained earnings statement, prepare the stockholders equity section of the balance sheet.

After establishing their company’s fiscal year-end to be October 31, Natalie and Curtis began operating Cookie & Coffee Creations Inc. on November 1, 2018. The company had the following selected transactions during its first fiscal year of operations.

Jan.    1 Issued an additional 800 preferred shares to Natalie’s brother for $4,000 cash.

June. 30 Repurchased 750 shares issued to the lawyer, for $500 cash. The lawyer had decided to retire and wanted to liquidate all of her assets.

Oct.   15 The company had a very successful first year of operations and as a result declared dividends of $28,000, payable November 15, 2019. (Indicate the amounts payable to the preferred stockholders and to the common stockholders.)

Oct.   31 The company earned revenues of $472,500 and incurred expenses of $416,500 (including the $750 legal expense from November 1 but excluding income tax). Record income tax expense, assuming the company has a 20% income tax rate.

Instructions:

(a) Prepare the journal entries to record each of the above transactions.

(b) Prepare all of the closing entries required on October 31, 2019.

(c) Prepare the retained earnings statement for the year ended October 31, 2019.

(d) Prepare the stockholders’ equity section of the balance sheet as of October 31, 2019.

Question 6

In a recent sample of 84 used car sales costs, the sample mean was $6,425 with a sample standard deviation of $3,156.

Assume the underlying distribution is approximately normal.

Part I) Which distribution should you use for for determining a confidence interval for estimating the population mean for used car sales costs?

a   Normal Distribution

b     t Distribution

c     Uniform

d     Chi Sq distribution

Part II) What is the number of degrees of freedom (df) for this problem.

Par III) Define the random variable X by selecting the appropriate letter below.

a     An individual data item randomly selected from the population, some times referred to as the parent population.

b     The average of n individual data item randomly selected from the parent population. In this question n is 84.

Part IV) Define the random variable X ¯ (Xbar) by selecting the appropriate letter below.

c     An individual data item randomly selected from the population, sometimes referred to as the parent population.

d     The average of n individual data item randomly selected from the parent population. In this question n is 84.

Part V) Construct a 95% confidence interval for the population mean time wasted.

Enter your answers rounded to 0 decimal places (Enter answer as an integer).

In the two answer locations provided enter the lower bound of the confidence interval first followed by the upper bound.

Part VI)

What is meant by the term “95% confident” when constructing a confidence interval for a mean?

a.    If we took repeated samples, approximately 95% of the samples would produce the same confidence interval.

b     If we took repeated samples, approximately 95% of the confidence intervals calculated from those samples would contain the sample mean.

c     If we took repeated samples, the sample mean would equal the population mean in approximately 95% of the samples

d     If we took repeated samples, approximately 95% of the confidence intervals calculated from those samples would contain the true value of the population mean.

Find the compound amount for the deposit and the amount of interest earned.

$230 at 5.2% compounded semiannually for 17 years

The compounded amount after 17 years is $____?.

The amount of interest earned is $_____?