You are advising the small town of Blackrock regarding future plans for 1,000 acres of forest located near the town. The owner of the forest has offered to sell the land to the town for $2,000,000. The forest provides many recreational benefits for local residents, as well as being the home of much wildlife including an endangered species. After conducting several studies you estimate that the annual recreational and environmental benefits will be $100,000 per year. (please use 6% as the discount rate )

a) Considering only the next 50 years, is buying the forest a good idea for the town? Why or why not?

b) What is the maximum amount the town would be willing to pay the landowner to lease the land for 50 years? Explain why.

c) How would your answers to parts a) and b) change if the recreational and environmental benefits increase by 3% per year, reflecting the fact that the town is growing, not only in population but also in income of the population? Explain.

d) Which methods of benefit estimation would you use to estimate i) the recreational benefits, and ii) the environmental benefits of the forest? Explain the reasons for your choice and describe how you would undertake each study (maximum 100 words).

You work on a traffic management team for the city. There has been a proposal to add a new lane to a road near a busy intersection. As part of the research into whether or not to build the new lane, the team would like to know how many cars, on average, pass through this intersection at peak hour each day (5 pm to 6 pm). Your colleague has developed the hypothesis that the population mean is 886. You intend to test this hypothesis. For the purposes of this research, the team is assuming that the standard deviation in the number of cars passing through each hour is 38.

You randomly select 49 days on which to monitor the traffic going through this intersection.

a)Complete the following statement by filling in the correct numbers. Give your answers to the nearest whole number of cars.

If the true population mean really is 886, then for 90% of all samples of size n = 49, the sample mean will be somewhere between  and  cars.

b)Over the 49 days, you find that an average of 891 cars pass through the intersection. Therefore with 90% confidence you

can rule out the possibility that your colleague's hypothesis was correct
cannot rule out the possibility that your colleague's hypothesis was correct

The COVID 19 Rapid Response fund was set up to alleviate the suffering of the people. “In March 2020, the Government of Canada announced $1 billion to support a whole-of-government COVID-19 Response Fund, which supports federal public health measures such as enhanced surveillance, increased testing and ongoing support for preparedness in First Nations and Inuit communities” Government of Canada (2020). The policy aims to reduce the suffering of people hit by COVID 19 that led to the loss of jobs and increment of unemployment in the country.

The objective of the response fund is to support researchers that will help develop measures to detect and reduce the transmission of COVID-19. The fund enabled the health care system to test patience suffering from the virus and help contain the spread of COVID 19 Government of Canada (2020). According to a research from the University of Calgary (2020), he objective is to support Alberta-based genomics projects designed to address specific, short-term needs of industry, not-for-profit, and public sector receptors through research conducted by academics in collaboration with these receptors, with near-term outcomes that address the COVID-19 crisis.

Question that needs to be answered

Why was the Response fund focused on one ethnic group and not others?

Company ABC has just announced earnings of $2 per share. Based on the last five years, earnings have grown at a rate of 20% per annum and the company expects this to continue for the next five years, after which it expects earnings to remain constant forever. The company has a policy of paying out 30% of its earnings as dividends. ABC stock has a beta of 1.2. The yield to maturity on 10-year government bonds is 2% and market risk premium is 10%.

(a) Calculate the current value per share.

(b) If the stock is currently trading in the market at $10 per share, comment on whether any profits can be made. What form of market efficiency prevails if this occurs? Examine the other two (2) forms of market efficiency and what the observation on the stock price here implies in terms of market efficiency.

(c) The company plans to issue a 7-year bond in the near future to finance expansion into neighbouring countries. It expects interest rates to fall in 3 years’ time. State and describe two (2) possible types of bonds the company could issue. Analyse how the company can determine the pricing for its bond issue?

The accuracy of a coin-counter machine is gauged to accept nickels with a mean diameter of millimeters 21.21 mm. A sample of 39 nickles was drawn from a reported defective coin counter machine located near a school. The sample had a sample mean of 21.21 mm and sample standard deviation 0.011 mm. Test the claim that the mean nickel diameter accepted by this coin-counter machine is greater than 21.21 mm. Test at the 0.01 significance level.

(a) Identify the correct alternative hypothesis :

μ < 21.21

μ = 21.21

μ > 21.21

Give all answers correct to 4 decimal places.

(b) The test statistic value is:

(c) Using the Traditional method, the critical value is:

(d) Based on your answers above, do you:

(i) Reject Ho

(ii) Fail to reject Ho.

Explain your choice in the box below.

e) Based on your work above, choose one of the following conclusions of your test:

(i) the sample data supports the claim,

(ii) there is not sufficient evidence to support the claim,

(iii) there is sufficient evidence to warrant rejection of the claim

(iv) there is not sufficient evidence to warrant rejection of the claim.

Explain your choice in the box below.

Company ABC has just announced earnings of $2 per share. Based on the last five years, earnings have grown at a rate of 20% per annum and the company expects this to continue for the next five years, after which it expects earnings to remain constant forever. The company has a policy of paying out 30% of its earnings as dividends. ABC stock has a beta of 1.2. The yield to maturity on 10-year government bonds is 2% and market risk premium is 10%. (a) Calculate the current value per share. (b) If the stock is currently trading in the market at $10 per share, comment on whether any profits can be made. What form of market efficiency prevails if this occurs? Examine the other two (2) forms of market efficiency and what the observation on the stock price here implies in terms of market efficiency. (c) The company plans to issue a 7-year bond in the near future to finance expansion into neighbouring countries. It expects interest rates to fall in 3 years’ time. State and describe two (2) possible types of bonds the company could issue. Analyse how the company can determine the pricing for its bond issue?

Company ABC has just announced earnings of $2 per share. Based on the last five years, earnings have grown at a rate of 20% per annum and the company expects this to continue for the next five years, after which it expects earnings to remain constant forever. The company has a policy of paying out 30% of its earnings as dividends. ABC stock has a beta of 1.2. The yield to maturity on 10-year government bonds is 2% and market risk premium is 10%.

(a) Calculate the current value per share.

(b) If the stock is currently trading in the market at $10 per share, comment on whether any profits can be made. What form of market efficiency prevails if this occurs? Examine the other two (2) forms of market efficiency and what the observation on the stock price here implies in terms of market efficiency.

(c) The company plans to issue a 7-year bond in the near future to finance expansion into neighbouring countries. It expects interest rates to fall in 3 years’ time. State and describe two (2) possible types of bonds the company could issue. Analyse how the company can determine the pricing for its bond issue?

QUESTION TWO
Investment Environment & Management Process
Floro is a young energetic lady aged 23, she is in excellent health, she lives a simple but active lifestyle, and currently childless. Through her boyfriend’s advice who is a Finance guru, she has developed interest in investment related activities and has interest in investing K70, 000 resources given to her upon her graduation from Mulungushi University as a present from her boyfriend. She doesn’t want her boyfriend to know about these plans and decides to seek for advice from you as an investment scholar. She is currently unemployed but is actively looking for full-time employment which is promising to come by any moment. She is also looking forward to starting a family in the near future. Currently, the following assets are available for use in building an appropriate portfolio:
a. What comprehensive Investment policy statement would you formulate for Floro? It should be inclusive of important Objectives and constraints.
b. Given the information, what long term asset allocation (Minimum Three Assets) would you provide for the investment Policy statement and what assumptions are you putting in place to justify its usage.

QUESTION TWO Investment Environment & Management Process Floro is a young energetic lady aged 23, she is in excellent health, she lives a simple but active lifestyle, and currently childless. Through her boyfriend’s advice who is a Finance guru, she has developed interest in investment related activities and has interest in investing K70, 000 resources given to her upon her graduation from Mulungushi University as a present from her boyfriend. She doesn’t want her boyfriend to know about these plans and decides to seek for advice from you as an investment scholar. She is currently unemployed but is actively looking for full-time employment which is promising to come by any moment. She is also looking forward to starting a family in the near future. Currently, the following assets are available for use in building an appropriate portfolio: a. What comprehensive Investment policy statement would you formulate for Floro? It should be inclusive of important Objectives and constraints. b. Given the information, what long term asset allocation (Minimum Three Assets) would you provide for the investment Policy statement and what assumptions are you putting in place to justify its usage.