A friend of yours is working toward a master of business administration (MBA) degree. He e-mails you the following note:

"Hey! How are things going? I need your help! We are studying income taxes in my Financial Accounting class and just finished talking about deferred taxes. I think the professor said something about adjusting the value of deferred taxes when it's an asset but not when it's a liability. When I looked at my homework problem, the balance sheet shows both a deferred tax asset and a deferred tax liability. Shouldn't it be one or the other? And why would one need the value adjusted for one, but not the other? Help!"

You want to help your friend, but you remember having some questions yourself:

• Analyze why FASB requires companies to report both deferred tax assets and deferred tax liabilities instead of netting them.
• Examine why the FASB requires valuation adjustments for deferred tax assets but does not for deferred tax liabilities.

Consider the following marginal benefit (demand) curves of two individuals for a certain good: MB_A(q) = 100 – q and MB_B(q) = 300 – q.

Consider the Marginal Private Costs of providing Fireworks in The Park, MC(q) = 50 + q.

1. Find q^M, the amount of Fireworks in the Park provided by the Market, when individuals provide the good with no co-operation and act only in their self-interest.
2. What is the efficient level of Fireworks in the Park, q*?
3. Person B brings a friend to the park (person C), with the same MB curve as theirs (MB_C = 300 – q). Find the new quantity provided by the Market (q^M) and the new efficient level of Fireworks in the Park (q*).
4. Despite being visually appealing, fireworks are known to cause negative externalities such as noise pollution and increased deaths by heart attacks in dogs. We estimated the marginal external costs of Fireworks in the Park, MEC (q) = 70 + q. What is the new efficient level of Fireworks in the Park? Consider the MSB curve found in part f, which includes person C. How does this new efficient allocation compare to the Market equilibrium, q^M, found in f?

With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this causal surf concept to encompass a “surf lifestyle for the home.” With limited capital, they decided to focus on surf print table and floor lamps to accent people’s homes. They projected unit sales of these lamps to be 10,900 in the first year, with growth of 8 percent each year for the next five years. Production of these lamps will require $63,000 in net working capital to start. Total fixed costs are $152,000 per year, variable production costs are $20 per unit, and the units are priced at $63 each. The equipment needed to begin production will cost $620,000. The equipment will be depreciated using the straight-line method over a 5-year life and is not expected to have a salvage value. The tax rate is 24 percent and the required rate of return is 16 percent. What is the NPV of this project?

With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home.” With limited capital, they decided to focus on surf print table and floor lamps to accent people’s homes. They projected unit sales of these lamps to be 8,700 in the first year, with growth of 5 percent each year for the next five years. Production of these lamps will require $52,000 in net working capital to start. The net working capital will be recovered at the end of the project. Total fixed costs are $112,000 per year, variable production costs are $25 per unit, and the units are priced at $55 each. The equipment needed to begin production will cost $192,000. The equipment will be depreciated using the straight-line method over a five-year life and is not expected to have a salvage value. The effective tax rate is 34 percent and the required rate of return is 30 percent.

What is the NPV of this project?

With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home.” With limited capital, they decided to focus on surf print table and floor lamps to accent people’s homes. They projected unit sales of these lamps to be 8,400 in the first year, with growth of 5 percent each year for the next five years. Production of these lamps will require $49,000 in net working capital to start. The net working capital will be recovered at the end of the project. Total fixed costs are $109,000 per year, variable production costs are $20 per unit, and the units are priced at $48 each. The equipment needed to begin production will cost $189,000. The equipment will be depreciated using the straight-line method over a five-year life and is not expected to have a salvage value. The effective tax rate is 38 percent and the required rate of return is 20 percent. What is the NPV of this project?

With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home.” With limited capital, they decided to focus on surf print table and floor lamps to accent people’s homes. They projected unit sales of these lamps to be 8,300 in the first year, with growth of 4 percent each year for the next five years. Production of these lamps will require $48,000 in net working capital to start. The net working capital will be recovered at the end of the project. Total fixed costs are $108,000 per year, variable production costs are $16 per unit, and the units are priced at $44 each. The equipment needed to begin production will cost $188,000. The equipment will be depreciated using the straight-line method over a five-year life and is not expected to have a salvage value. The effective tax rate is 39 percent and the required rate of return is 25 percent.

What is the NPV of this project?

With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home.” With limited capital, they decided to focus on surf print table and floor lamps to accent people’s homes. They projected unit sales of these lamps to be 8,100 in the first year, with growth of 5 percent each year for the following four years (Years 2 through 5). Production of these lamps will require $46,000 in networking capital to start. Total fixed costs are $106,000 per year, variable production costs are $12 per unit, and the units are priced at $40 each. The equipment needed to begin production will cost $186,000. The equipment will be depreciated using the straight-line method over a five-year life and is not expected to have a salvage value. The effective tax rate is 40 percent, and the required rate of return is 20 percent. What is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Suppose that a safety group surveyed

1,300

drivers. Among those​ surveyed,

67%

said that careless or aggressive driving was the biggest threat on the​ road, and

37

said that cell phone usage by other drivers was the driving behavior that annoyed them the most. Based on these data and assuming that the sample was a simple random​ sample, construct and interpret a

99​%

confidence interval estimate for the true proportion in the population of all drivers who are annoyed by cell phone users.

The confidence interval estimate is ​(Round to three decimal places as needed. Use ascending​ order.)

Interpret the confidence interval estimate.

A.There is a

0.99

probability that the sample proportion of drivers who are annoyed by cell phone users is in the interval.

B.There is

99​%

confidence that the population proportion of drivers who are annoyed by cell phone users is in the interval.

C.There is a

0.99

probability that the population proportion of drivers who are annoyed by cell phone users is in the interval.

D.There is

99​%

confidence that the population proportion of drivers who are annoyed by cell phone users is equal to one of the bounds of the interval

A pharmaceutical company operates retail pharmacies in 10 eastern states.​ Recently, the​ company's internal audit department selected a random sample of

300 prescriptions issued throughout the system. The objective of the sampling was to estimate the average dollar value of all prescriptions issued by the company. The data collected were

x overbarxequals=​$14.45 and sequals=5.00 Complete parts a and b below.

a. Determine the​ 90% confidence interval estimate for the true average sales value for prescriptions issued by the company. Interpret the interval estimate.

The​ 90% confidence interval is ​(Round to the nearest cent as needed. Use ascending​ order.)

Interpret the interval. Choose the correct answer below.

A.

The company believes that the true mean prescription amount falls between these two values​ 90% of the time.

B.

There is a 0.90 probability that the true mean prescription amount is between these two values.

C.

The company believes with​ 90% confidence that the true mean prescription amount is between these two amounts.

D.

The company believes with​ 90% confidence that the sample mean prescription amount is between these two amounts.

b. One of its retail outlets recently reported that it had monthly revenue of

​$7 485 from 531

prescriptions. Are such results to be​ expected? Should that retail outlet be​ audited?Assuming the population mean is at the upper limit of the​ 90% confidence interval computed in part​ a, the upper limit of the​ 90% confidence interval for the expected total monthly revenue for

531

prescriptions would be

​$nothing.

Assuming the population mean is at the lower limit of the​ 90% confidence interval computed in part​ a, the lower limit of the​ 90% confidence interval for the expected total monthly revenue for

531

prescriptions would be

Given that this outlet reported sales of

​$7, 485 from 531

​prescriptions, there is good or no

reason to believe that this is out of line. The retail outlet

should not or should be audited.

​(Round to the nearest cent as​ needed.)

1. Since 1900, life expectancy in the US has increased by approximately how many years?

   	a.	10
   	b.	30
   	c.	50
   	d.	80

Question 2

1. Which conditions that affect health develop, persist or recur over long periods of time in persons' lives?

   	a.	Infectious diseases
   	b.	Intentional injuries
   	c.	Unintentional injuries
   	d.	Chronic diseases

Question 3

1. Which factor seems to be critical in a person's decision to seek health care and attention?

   	a.	The presence of symptoms
   	b.	The perceived severity of symptoms
   	c.	The denial of symptoms

Question 4

1. In the presence of symptoms of illness or disease, who is less likely to seek health care?

   	a.	Someone who has adequate resources to cope with the symptoms and feels that the quality of his/her life is not too impaired
   	b.	Someone who is currently experiencing a great deal of stress and his/her symptoms are ambiguous in nature
   	c.	Someone who has a strong and often negative emotional reaction to the symptoms
   	d.	All of the above persons are equally likely to seek health care and attention

Question 5

1. Chronic disease cases are more likely due to

   	a.	pathogens.
   	b.	ethnicity and race.
   	c.	increasing health care costs.
   	d.	unhealthy lifestyle and behaviors.