Suppose that Caterpillar Incorporated is considering a new line of construction graders. To launch the new product, Caterpillar will have to invest $200.00 million. The target capital structure for Caterpillar is 45.00% debt and 55.00% equity (market values).

The CFO for the company believes that new debt can be issued with an 8.00% annual coupon rate. After reviewing the company’s beta, the CFO also believes that common stockholders require a 15.00% return for the new investment.

The company projects an annual after-tax cash flow of $65.00 million for the new project. The company has a marginal tax rate of 35.00%, and expects to run the project for 10.00 years.

What is the NPV for the project?(express in millions)

Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $320,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,700,000. The cost of the machine will decline by $106,000 per year until it reaches $1,170,000, where it will remain.

If your required return is 13 percent, calculate the NPV if you purchase the machine today. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV          $  

If your required return is 13 percent, calculate the NPV if you wait to purchase the machine until the indicated year. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
  

Should you purchase the machine?

• Yes

• No

If so, when should you purchase it?

• Today

• One year from now

• Two years from now

Option 1: Building a new refinery

The construction and installation of a new refinery will cost $22 million. In addition, a processing plant will also need to be constructed at a cost $6 million. This plant will need to be supplied with grinding machines, DMS flotation machines and other equipment at a total cost of $16 million. Kidman Resources’ current fleet of Haul trucks, water carts and dump trucks will meet the needs for this project, however until recently, the fleet has been earning a rental income of $120,000 per year.

Under the agreement with Tesla inc., the lithium mined is expected to generate a revenue of $15 million per year, which will increase by 2.8% per annum adjusted for rising costs. Due to the additional complexities involved with the construction and management of this new refinery, 5 new engineers (yearly salary per engineer $160,000) will replace 5 existing engineers (yearly salary per engineer $120,000). All other remaining labour force required is expected to cost $3 million per annum for the duration of the project.

For tax reasons you will expense the cost of the processing plant immediately. The cost for the construction and installation of the new refinery and associated machines and equipment will be depreciated over three years using the straight-line method. Due to the nature of the mining project, the machines and equipment will likely have a salvage value of $10 million at the end of three years. Finally, the required net working capital is $2 million.

Option 2: Outsourcing the supply of ore

Alternatively, Kidman Resources can contract BHP to supply the required ore to process into lithium hydroxide. Based on the required amount of lithium hydroxide, management has quoted a total cost of $28 million. BHP has however offered this rate on the condition that Kidman Resources pays 20% of the total cost in advance in the beginning of the year, with the remaining paid in equal instalments thereafter. Kidman Resources will process the ore into lithium hydroxide using existing facilities at an expected cost of $4.4 million per year.

Calculate NPV for option 1 and 2. Tax rate= 28%, discount rate= 10%

Tom Brady is the relatively new controller of the Body and Bath Division of New Scotland Drugs (NSD). He completed his CPA designation three years earlier (at a major auditing firm in Moncton) and has worked at the Body and Bath Division for the past six months). The move to Halifax was a major decision for Tom, but he is getting used to the climate and the new firm.

The Body and Bath Division (BPD) is located in Halifax, which is also the headquarters of NSD. This location gives NSD excellent access to distribution networks across North America while enjoying very low operating costs. (Wages and occupancy costs in Halifax are 40–60% lower than metropolitan centres like Vancouver or Toronto.)

At the request of the division’s long-time president, Belinda Belichick, Brady developed a proposal for a new product to be called Vital Hair. This product is a cream to be rubbed on the scalp to restore hair growth. The fixed costs associated with the development, production, and marketing of Vital Hair are $25,000,000. The majority of these costs are associated with the human trials needed to get federal health approval for this type of product. Due to the nature of the product, it has to be monitored by a doctor. Each customer will pay a doctor $98 per monthly treatment, of which $68 is paid to NSD. Brady estimates NSD’s variable costs per treatment to be $28.50. Included in this is $9.25 for potential product litigation costs. Brady did some research on this type of product, and while most of the data came from the United States, he noticed that there is an increasing trend in Canada for consumers to take companies to court for the slightest issue with a product.

Belinda Belichick and Brady are scheduled to make a presentation to the NSD executive committee on the expected profitability of Vital Hair. After reading Brady’s report, Belichick called him to her office. Belichick was livid at Brady for including the $9.25 estimate. She argued that it is imperative to get the R&D funds approved (and quickly) and that any number that increases the breakeven point reduces the likelihood of the Vital Hair project being approved. She notes that NSD has had few successful lawsuits against it, in contrast to some recent “horrendous” experiences of competitors with breast implant products. Moreover, she was furious that Brady put the $9.25 amount in writing. “How do we know there will be any litigation problem?” She suggested that Brady redo the report excluding the $9.25 litigation risk cost estimate. “Put it on the whiteboard in the executive committee room, if you insist, but don’t put it in the report sent to the committee before the meeting. You can personally raise the issue at the executive committee meeting and have a full and frank discussion.”

Brady took Belichick’s “advice.” He changed the report’s variable cost to $19.25 per treatment. Although he felt uneasy about the changes, he was comforted by the fact that he would flag the $9.25 amount to the executive committee in his forthcoming oral presentation.

One month later, Belichick walks into Brady’s office. She is in a buoyant mood and announces she has just come back from an executive committee meeting that approved the Vital Hair proposal. Brady asks why he was not invited to the meeting. Belichick says the meeting was held in Toronto, and she decided to save the division money by going alone. She then says to Brady, “It is now time to get behind the new venture and help make it the success the committee and the team members believe it will be.”

Required

1.            What is the breakeven point (in units of monthly treatments) when NSD’s variable costs (a) include the $9.25 estimate and (b) exclude the $9.25 estimate for potential product litigation costs?

2.            Should Brady have excluded the $9.25 estimate in his report to the executive committee of NSD? Explain your answer.

3.            What should Brady do in response to Belichick’s decision to make the presentation on her own? What options does he have? As a CPA what are his responsibilities?

The Food and Drug Administration (FDA) is asked to approve a new drug. The new drug should contain less than 25mg of the active ingredient “toxin”, which is assumed to have dangerous side effects. The FDA would like to restrict the error of “approving the drug despite its too high content of toxin” to a maximum risk of 5% (α ≤ 0.05). Let Xi : “ The content of toxin in the i-th pill [in mg].” ∼ N(µ, σ2 ) ∼ N(µ, 4). A simple random sample of n = 50 pills ( Xi ∼ i.i.d.) will be used for the test.

7. Given a significance level of α = 5% what is the highest probability of making a type II error?

8. In the sample, x¯ = 24.6. Compute the p-value. What do you conclude? [Write down the probability that you computed.]

9. Has a type I error occurred? Explain your answer.

10. Has a type II error occurred? Explain your answer.

Write a bash script that...

• create new user
  • ./finalProject user
  • if a new user is to be created ask for the new users information and use it when creating the new user
• add a new printer
  • ./finalProject printer
  • ask anything you need in order to create the new printer (I.e. name)
• permissions
  • ./finalProject permissions
  • ask what document and permissions the user wants
• restarting the computer
  • ./finalProject restart

We are creating a new card game with a new deck. Unlike the normal deck that has 13 ranks (Ace through King) and 4 Suits (hearts, diamonds, spades, and clubs), our deck will be made up of the following.

Each card will have:
i) One rank from 1 to 16.
ii) One of 5 different suits.

Hence, there are 80 cards in the deck with 16 ranks for each of the 5 different suits, and none of the cards will be face cards! So, a card rank 11 would just have an 11 on it. Hence, there is no discussion of "royal" anything since there won't be any cards that are "royalty" like King or Queen, and no face cards!

The game is played by dealing each player 5 cards from the deck. Our goal is to determine which hands would beat other hands using probability. Obviously the hands that are harder to get (i.e. are more rare) should beat hands that are easier to get.

e) How many different ways are there to get exactly 3 of a kind (i.e. 3 cards with the same rank)?
The number of ways of getting exactly 3 of a kind is
DO NOT USE ANY COMMAS

What is the probability of being dealt exactly 3 of a kind?
Round your answer to 7 decimal places.

f) How many different ways are there to get exactly 4 of a kind (i.e. 4 cards with the same rank)?
The number of ways of getting exactly 4 of a kind is
DO NOT USE ANY COMMAS

What is the probability of being dealt exactly 4 of a kind?
Round your answer to 7 decimal places.

g) How many different ways are there to get a full house (i.e. 3 of a kind and a pair, but not all 5 cards the same rank)?
The number of ways of getting a full house is
DO NOT USE ANY COMMAS

What is the probability of being dealt a full house?
Round your answer to 7 decimal places.


h) How many different ways are there to get a straight flush (cards go in consecutive order like 4, 5, 6, 7, 8 and all have the same suit. Also, we are assuming there is no wrapping, so you cannot have the ranks be 14, 15, 16, 1, 2)?
The number of ways of getting a straight flush is
DO NOT USE ANY COMMAS

What is the probability of being dealt a straight flush?
Round your answer to 7 decimal places.


i) How many different ways are there to get a flush (all cards have the same suit, but they don't form a straight)?
Hint: Find all flush hands and then just subtract the number of straight flushes from your calculation above.
The number of ways of getting a flush that is not a straight flush is
DO NOT USE ANY COMMAS

What is the probability of being dealt a flush that is not a straight flush?
Round your answer to 7 decimal places.


j) How many different ways are there to get a straight that is not a straight flush (again, a straight flush has cards that go in consecutive order like 4, 5, 6, 7, 8 and all have the same suit. Also, we are assuming there is no wrapping, so you cannot have the ranks be 14, 15, 16, 1, 2)?
Hint: Find all possible straights and then just subtract the number of straight flushes from your calculation above.
The number of ways of getting a straight that is not a straight flush is
DO NOT USE ANY COMMAS

What is the probability of being dealt a straight that is not a straight flush?
Round your answer to 7 decimal places.

Create a new project in BlueJ. Create two new classes in the project, with the following specifications:

Class name: Part

Fields:

• id (int)
• description (String)
• price (double)
• onSale (boolean)

1 Constructor: takes parameters partId, partDescrip, and partPrice to initialize fields id, description, and price; sets onSale field to false.

Methods: Write get-methods (getters) for all four fields. The getters should be named getId, getDescription, getPrice, and isOnSale.

Look for a company that has launched a new, creative product, a new process for making, selling, or distributing products and services, a new way of marketing products or services to customers. Describe the creativity and how management of this company supported or encouraged the change. Include a URL to the company website

Question:

Building a new refinery

The construction and installation of a new refinery will cost $22 million. In addition, a processing plant will also need to be constructed at a cost $6 million. This plant will need to be supplied with grinding machines, DMS flotation machines and other equipment at a total cost of $16 million. Kidman Resources' current fleet of Haul trucks, water carts and dump trucks will meet the needs for this project, however until recently, the fleet has been earning a rental income of $120,000 per year.

Under the agreement with Tesla inc., the lithium mined is expected to generate a revenue of $15 million per year, which will increase by 2.8% per annum adjusted for rising costs. Due to the additional complexities involved with the construction and management of this new refinery, 5 new engineers (yearly salary per engineer $160,000) will replace 5 existing engineers (yearly salary per engineer $120,000). All other remaining labour force required is expected to cost $3 million per annum for the duration of the project.

For tax reasons you will expense the cost of the processing plant immediately. The cost for the construction and installation of the new refinery and associated machines and equipment will be depreciated over three years using the straight-line method. Due to the nature of the mining project, the machines and equipment will likely have a salvage value of $10 million at the end of three years. Finally, the required net working capital is $2 million.

Calculate Net Present Value given rate of return = 10% and tax rate= 30%