You are given the following market supply and demand curves in the Widget industry:

Q_D = 250 – 5p

Q_S = 10p – 100

Next, assume that the government has granted a monopoly to ABC Company to produce widgets. Answer the following questions based on this information:

(a) What is the marginal cost curve for ABC Company?

(b) What is the equation for the marginal revenue curve for ABC Company?

(c) Given your answers to parts (a) & (b), what quantity should ABC Company produce to maximize profits?

(d) What price would ABC Company be charging at the profit maximizing level of output?

The following are the transactions for the month of July.

Units Unit Cost Unit
Selling Price
  July 1 Beginning Inventory 59 $ 10
  July 13 Purchase 295 13
  July 25 Sold ( 100 ) $ 15
  

  July 31 Ending Inventory 254

Calculate cost of goods available for sale and ending inventory, then sales, cost of goods sold, and gross profit, under (a) FIFO, (b) LIFO, and (c) weighted average cost. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places and your final answers to nearest whole dollar amount.)

There is a town with 100 identical residents with initial wealth of $1000 and a utility function u = √ (wealth). Every person owns a car and there is a probability p = .2 that a person’s car will need a costly repair in a given year. If a person needs a repair, they must pay $500 to fix it.

1. What is the maximum amount that a person would be willing to pay to insure their self against the cost of repairing their car?

2. Suppose a single company exists to offer these insurance policies. What price do they charge? What are their expected profits?

3. What is the probability that the insurance company incurs a loss in a given year?

Advance Auto Parts (AAP) is currently trading at $94.28. I buy a June call option on AAP at $100 with premium $3.30. I write two June AAP calls at strike price $105 and premium $1.50 each.

a. What type of strategy is this?

b. Prepare a profit and loss matrix with long call, short call and combination for prices of $98, $103, and $111.

c. What would the break-even prices be?

d. Draw a general payoff profile showing long call, short calls and what you think the combination would look like.   

4. On January 2, 2016, Prebish Corporation issued $1,500,000 of 10% bonds to yield 11% due December 31, 2025. Interest on the bonds is payable annually, each December 31. The bonds are callable at 101 (i.e., at 101% of the face amount) and on January 2, 2019, Prebish called $1,500,000 face amount of the bonds and retired them. (100 POINTS)

Instructions

1. Determine the price of the Prebish bonds, when issued on January 2, 2016.
2. Prepare an Amortization Schedule for 2016-2020 for the bonds.
3. Prepare the journal entry to record the retirement of $1,500,000 by Prebish on January 2, 2019.

At 2020 fye Poppers Corp. Net Income was $4.830 m and the company had an issue of 24,000
options with a strike price of $50.00. There were 2.8 m shares of common stock outstanding. The company’s market
cap was $127 m and its balance sheet showed $3.6m of $100 par, 4.3% convertible preferred stock. Poppers uses the
treasury method for calculating diluted eps. The preferred stock may be converted at the ratio of four common shares
per one share of preferred.

What is the basic and fully diluted eps?

Please explain how you got the answer

Coopers Company reported the following information:

Units Unit Cost Units Sold

Jan 1 Beginning inventory 190 $50

Mar 8 Sale 100

Apr 10 Purchase 320 55

Jun 20 Sale 240

Oct 10 Purchase 570 60

Nov 30 Sale 450

Total

Selling price per unit

during the year: $75    790

Required Complete the following table.

Cost Total Periodic Perpetual Date Purchased per Unit Cost Sold FIFO Weighted Average Units $ $ Units Units $ $ Units $ $

ABC Enterprise has never paid a dividend. Free cash flow is projected to be $20 million and $30 million for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 7%. The company’s weighted average cost of capital is 12%. ABC has short-term investments of $100 million, the total debt of $80 million, and preferred stock of $20 million. ABC has 10 million shares of common stock. What is the intrinsic price per share? (Do not use the dollar sign ($) and round your answer to 2 decimal points)

1.) Assume you purchased 100 shares of Zoomer Corp's stock on margin at the beginning of the year for $40 per share. You use $2500 of your own funds and borrow $1500 from the broker. Maintenance Margin requirement is 25%.

a) At what price would you receive a margin call (ignore interest)?

b) Annual interest cost is 4% on the margin account loan. What is your rate of return on your investment if Zoomer's stock is $44.50 per share after one year?

c) What is the margin perfect (equity/assets) in your account at the end of the year?