Demand estimation Early in 1993, the Southeastern Transportation Authority (STA), a public agency responsible for serving the commuter rail transportation needs of a large Eastern city, was faced with rising operating deficits on its system. Also, because of a fiscal austerity program at both the federal and state levels, the hope of receiving additional subsidy support was slim. The board of directors of STA asked the system manager to explore alternatives to alleviate the financial plight of the system. The first suggestion made by the manager was to institute a major cutback in service. This cutback would result in no service after 7:00 pm, no service on weekends, and a reduced schedule of service during the midday period Monday through Friday. The board of STA indicated that this alternative was not likely to be politically acceptable and could only be considered as a last resort. The board suggested that because it had been over five years since the last basic fare increase, a fare increase from the current level of $1 to a new level of $1.50 should be considered. Accordingly, the board ordered the manager to conduct a study of the likely impact of this proposed fare hike. The system manager has collected data on important variables thought to have a significant impact on the demand for rides on STA. These data have been collected over the past 24 years and include the following variables. Price per ride (in cents) - This variable is designated P in Table 1. Price is expected to have a negative impact on the demand for rides on the system. Population in the metropolitan area serviced by STA - It is expected that this variable has a positive impact on the demand for rides on the System. This variable is designated T in Table 1. Disposable per capita income - This variable was initially thought to have a positive impact on the demand for rides on STA This variable is designated I in Table 1. Parking rate per hour in the downtown area (in cents) this variable is expected to have a positive impact on demand for rides on the STA. It is designated H in Table Below

9. If the fare is increased to $1.50, what is the expected impact on weekly revenues to the transit system if all other variables remain at their 1992 levels?

How would you calculate this on a TI BA II Plus:

ACE Co. is considering the purchase of two machines. Machine A costs $100,000 with annual cost of $20,000. It will last for 5 years, and have a salvage value of $5,000 at the end of 5 years. Machine B costs $145,000 with annual costs of $17,500, and has a useful life of 8 years. The discount rate is 10%. Which machine should the company buy?

After thorough research you can clued that Gore Inc.’s Dividend will grow edit present rate of 10% for two more years. After the payment payment in year 2, The growth rate in dividends will drop to 3% permanently the last dividend which you just paid was $1.50. If the required rate of return is 8% what is the current value of the stock

1. $36.64
2. $34.15
3. $37.95
4. $35.14
5. None of the above are correct

The shareholders meeting of the ABC Personal Computer Company is coming up in three weeks and one of the items on the agenda is executive compensation. A group of minority shareholders has managed to put the subject on the agenda and has submitted a proposal which, if adopted, will place severe limits on how and how much ABC executives can be paid. The proposal includes the following specifics:

Total compensation for an executive (defined as an officer of the company) must not exceed 50 times the average pay in ABC. Total compensation is defined as base pay plus short term and long-term bonuses plus the value of equity based compensation (stock options to be valued after the Black-Scholes method) plus perquisites.

Stock options, if granted, must be priced 30 % above the market price of ABC’s stock and will expire after 6 years rather than 10 years as is the case with plain vanilla options.

When exercising their options, executives are not allowed to sell their shares immediately but must hold their shares for a minimum of 4 years (“exercise and hold” rather than “exercise and sell”).

Executives can no longer receive outright stock grants.

It is known that the proposal has quite a bit of support among shareholders and just as many opponents. However, the big mutual funds and pension funds which own the majority of shares have not yet take a position. On the one hand, cases of excessive executive compensation combined with abuses such as backdating of options are a widely known fact and fund managers believe that those excesses must be curbed. Also, the proposal looks eminently reasonable, at least on the surface. On the other hand, they are worried that tying the hands of the board when deciding on executive compensation may lead to the departure of the best executives. They are thus undecided and have adopted a wait and see attitude. They will decide in the meeting whether they will vote for or against the proposal, based on the power of the arguments presented.

Observers believe the shareholders meeting will see a sharp debate and even a shouting match between the spokesperson for the minority and the CEO of the ABC Company who will argue that the minority shareholder proposal will damage the business and should be defeated.

Your paper should have two parts:

1. In part one, take the role of the spokesperson of the minority shareholders and come up with all the arguments in favor of the proposal. When doing so, discuss the four proposals one by one.

2. In part two, your role is that of the CEO’s executive assistant. You help your boss prepare for the shareholders meeting and you provide him/her with all the arguments why the proposal is detrimental to the business and should thus be defeated. Again, discuss the proposal one by one.

Submission Rules

1. No more than two pages, double spaced, are allowed.

Problem 4-21 Schedule of cash payments [LO4-2] The Denver Corporation has forecast the following sales for the first seven months of the year: January $ 30,000 May $ 30,000 February 32,000 June 36,000 March 34,000 July 38,000 April 40,000 Monthly material purchases are set equal to 40 percent of forecast sales for the next month. Of the total material costs, 50 percent are paid in the month of purchase and 50 percent in the following month. Labor costs will run $6,000 per month, and fixed overhead is $12,000 per month. Interest payments on the debt will be $5,000 for both March and June. Finally, the Denver salesforce will receive a 3.00 percent commission on total sales for the first six months of the year, to be paid on June 30. Prepare a monthly summary of cash payments for the six-month period from January through June. (Note: Compute prior December purchases to help get total material payments for January.)

Problem 12-11 (Algorithmic)

Over a five-year period, the quarterly change in the price per share of common stock for a major oil company ranged from -7% to 10%. A financial analyst wants to learn what can be expected for price appreciation of this stock over the next two years. Using the five-year history as a basis, the analyst is willing to assume that the change in price for each quarter is uniformly distributed between -7% and 10%. Use simulation to provide information about the price per share for the stock over the coming two-year period (eight quarters).

1. Use the random numbers 0.46, 0.91, 0.15, 0.17, 0.50, 0.74, 0.40 and 0.51 to simulate the quarterly price change for each of the eight quarters. If required, round your answers to two decimal places. For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)
   

   Quarter	r	Return %
   1	0.46	%
   2	0.91	%
   3	0.15	%
   4	0.17	%
   5	0.50	%
   6	0.74	%
   7	0.40	%
   8	0.51	%

2. If the current price per share is $80, what is the simulated price per share at the end of the two-year period? If required, round your answer to two decimal places.
   
   $   
   
3. Discuss how risk analysis would be helpful in identifying the risk associated with a two-year investment in this stock.
   
   Risk analysis requires multiple simulations  of the eight-quarter, two-year period, which would then provide a distribution of the ending price per share.

Over a five-year period, the quarterly change in the price per share of common stock for a major oil company ranged from -7% to 14%. A financial analyst wants to learn what can be expected for price appreciation of this stock over the next two years. Using the five-year history as a basis, the analyst is willing to assume that the change in price for each quarter is uniformly distributed between -7% and 14%. Use simulation to provide information about the price per share for the stock over the coming two-year period (eight quarters).

1. Use the random numbers 0.50, 0.95, 0.11, 0.15, 0.56, 0.75, 0.39 and 0.52 to simulate the quarterly price change for each of the eight quarters. If required, round your answers to two decimal places. For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)
   

   Quarter	r	Return %
   1	0.50	%
   2	0.95	%
   3	0.11	%
   4	0.15	%
   5	0.56	%
   6	0.75	%
   7	0.39	%
   8	0.52	%

2. If the current price per share is $80, what is the simulated price per share at the end of the two-year period? If required, round your answer to two decimal places.
   
   $   
   
3. Discuss how risk analysis would be helpful in identifying the risk associated with a two-year investment in this stock.
   
   Risk analysis requires   of the eight-quarter, two-year period, which would then provide a distribution of the ending price per share.

My commute to university, follows a NORMAL distribution with a 35.5 minutes as mean and a standard deviation of 2.5 min. If my commute starts at 8:20 am and ideally I must be at university by 9am.

Define two random variables and formulate two questions, one involving binomial distribution and the other involving geometric distribution.

Suppose a professor splits their class into two groups: students whose last names begin with A-K and students whose last names begin with L-Z. If p1 and p2 represent the proportion of students who have an iPhone by last name, would you be surprised if p1 did not exactly equal p2? If we conclude that the first initial of a student's last name is NOT related to whether the person owns an iPhone, what assumption are we making about the relationship between these two variables?