Gadgets&Co sells refrigerators. Any refrigerator that malfunctions within 3 years
of purchase is replaced with a new one for free. Of all refrigerators, 3% fail during
their first year of operation; 5% of the one-year-old refrigerators fail within their
second year of operation, and 7% of the two-year-old refrigerators fail within their
3
rd year of operation.
a) Estimate analytically the fraction of all refrigerators that will have to be
replaced under the 3-year warranty scheme.
b) Construct and execute a simulation model (with 120 pseudo-realities) to
estimate the fraction of all refrigerators that will have to be replaced under
the 3-year warranty scheme. Explain and motivate your approach.

a. Assuming that the expectations hypothesis is valid, compute the price of the four-year bond shown below at the end of (i) the first year; (ii) the second year; (iii) the third year; (iv) the fourth year. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b. What is the rate of return of the bond in years 1, 2, 3, and 4? Conclude that the expected return equals the forward rate for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places.) in percentages

The date today is July 31st, 2019. Mary has $5000 and wants to invest for 3 years.

Option 1: Invest in a four-year security maturing on July 1st, 2023 has an interest rate of 8% per year

Option 2: Invest in a three year security maturing on July 31, 2022 has an interest rate of 6%, then on July 31, 2022, invest another two-year security maturing on July 31, 2023.

Based on the unbiased expectations theory, what should be the return of the one-year security beginning July 31, 2022 (at the end of the three year security) and maturing on July 2023 (at the start of the two-year security)?

You deposit $5,000 into an account at the end of year 0. You deposit $5,000 every three
(3) months beginning at the end of year 1 and continuing through the end of year 3.
You also deposit into the account an amount X starting at the end of year 6 and repeat it
every three (3) months for a total of four (4) deposits. You withdraw $112,160 at the
end of year 7. After the withdrawal at the end of year 7, there is no more money in the
account. The account pays 4% compounded quarterly. What is the amount you must
every three (3) months deposit starting at the end of year 6 (value of X)?

A person deposits​ $1,000 in an account every year for four years​ (Years 1 through​ 4), and withdraws half of the balance of the account at the end of Year 4. They put nothing in the account for two years​ (Years 5 and​ 6), then deposit​ $1,500 in the account every year for four more years​ (Years 7 through​ 10). They withdraw the entire balance of the account at the end of Year 10. The account earns​ 6% interest per year for the entire 10 years.

a. Choose the correct cash flow diagram from the​ person's point of view.

b. How much is withdrawn at the end of Year​ 4?

c. How much is withdrawn at the end of Year​ 10?

a. Assuming that the expectations hypothesis is valid, compute the price of the four-year bond shown below at the end of (i) the first year; (ii) the second year; (iii) the third year; (iv) the fourth year. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Beginning of Year Price of Bond Expected Price

1 $973.40

2 $913.47

3 $862.62

4 $778.66

b. What is the rate of return of the bond in years 1, 2, 3, and 4? Conclude that the expected return equals the forward rate for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

A machine costing $209,000 with a four-year life and an estimated $17,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 480,000 units of product during its life. It actually produces the following units: 122,500 in Year 1, 124,300 in Year 2, 121,600 in Year 3, 121,600 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate—this difference was not predicted. (The machine cannot be depreciated below its estimated salvage value.)

Required:

Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method.

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Straight-line depreciation.

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Straight-line depreciation.

b/

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Units of production.

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Double-declining-balance.

. In the past year, a total of 300 deaths due to pregnancy conditions were reported as well as 3,500,000 live births. Calculate the maternal mortality rate for the year.

2. The state population in the past year was 20 million. Live births in the same year totaled 400,000. Infant deaths in that year were 5,000. Calculate the infant mortality rate for the year.

3. The state population for the year was 20 million. Live births in the same year totaled 324,600. Deaths were as follows: fetal deaths (3,244); neonatal deaths (2,200); postneonatal deaths (2,700); and infant deaths (4,900). Calculate the postneonatal mortality rate for the year.

4. The state population for the year was 20 million. Live births in the same year totaled 350,000. Deaths were as follows: fetal deaths (3,000); neonatal deaths (2,500); postneonatal deaths (2,500); and infant deaths (5,000). Calculate the perinatal mortality rate for the year.

5. In a given setting, live births totaled 350,000. Deaths were as follows: fetal (intermediate and late were 3,000); neonatal deaths (1,800); postneonatal deaths (1,600); and infant deaths (3,400). Calculate the fetal death rate.

6. A state has a midyear population of 25 million. A total of 135,000 new cases of gonorrhea were reported during that year. Calculate the incidence of gonorrhea in the state that year.

7. Read chapter 12 and define the following terms:

Distinguish clearly between:

• Ungrouped vs. grouped distribution

• Frequency vs. cumulative frequency

• Percentile rank vs. percentile score

8. Complete the following problems and show your calculation work:

• Self-Test 11-1 (p.223) - 11-10 (p.213)

HuaWei Ltd manufactures a variety of electrical equipment. Project P30 is a new product that HuaWei is considering introducing to the market. The company’s finance team has collected a lot of information about the project below: (Note: You may or may not need to use all this informati • The company paid a consulting firm $600,000 last year for a test marketing analysis, as part of the evaluation. • The HuaWei will have to purchase a new machine to produce the electrical products. The machine has an upfront cost of $5,000,000 at Year 0. • The machine will be depreciated on a straight-line basis over 4 years to a zero balance. The company expects that the machine will be sold for $60,000 when the project is completed at Year 4. • At Year 0, the net working capital will increase by $150,000. In the final year of the project (Year 4), net working capital will be fully recovered. • Forecasted sales quantity, selling price and production costs of Project ABC are presented below. Year 1 Year 2 Year 3 Year 4 Sales quantity 3,000,000 units 3,000,000 units 3,000,000 units 3,000,000 units Selling price $3 per unit $3 per unit $3 per unit $3 per unit Fixed cost of production $2,000,000 per year $2,000,000 per year $2,000,000 per year $2,000,000 per year Variable cost of production $2 per unit $2 per unit $2 per unit $2 per unit • The company’s tax rate is 35 percent. • The project’s cost of capital is estimated to be 25 percent per annum. a. Calculate the net present value of the proposed project (see overpage for a template) b. Should the project be accepted or rejected?