Wingler Communications Corporation (WCC) produces premium stereo headphones that sell for $28.60 per set, and this year's sales are expected to be 440,000 units. Variable production costs for the expected sales under present production methods are estimated at $10,400,000, and fixed production (operating) costs at present are $1,560,000. WCC has $4,800,000 of debt outstanding at an interest rate of 9%. There are 240,000 shares of common stock outstanding, and there is no preferred stock. The dividend payout ratio is 70%, and WCC is in the 25% federal-plus-state tax bracket. WCC is a small company with average sales of $25 million or less during the past 3 years, so it is exempt from the interest deduction limitation.

The company is considering investing $7,200,000 in new equipment. Sales would not increase, but variable costs per unit would decline by 20%. Also, fixed operating costs would increase from $1,560,000 to $1,800,000. WCC could raise the required capital by borrowing $7,200,000 at 10% or by selling 240,000 additional shares of common stock at $30 per share.

1. What would be WCC's EPS (1) under the old production process, (2) under the new process if it uses debt, and (3) under the new process if it uses common stock? Do not round intermediate calculations. Round your answers to the nearest cent.
   1.  $  
   2.  $  
   3.  $  
2. 
   
3. At what unit sales level would WCC have the same EPS assuming it undertakes the investment and finances it with debt or with stock? {Hint: V = variable cost per unit = $8,320,000/440,000, and EPS = [(PQ - VQ - F - I)(1 - T)]/N. Set EPS_Stock = EPS_Debt and solve for Q.} Do not round intermediate calculations. Round your answer to the nearest whole number.
     units
4. 
   
5. At what unit sales level would EPS = 0 under the three production/financing setups - that is, under the old plan, the new plan with debt financing, and the new plan with stock financing? (Hint: Note that V_Old = $10,400,000/440,000, and use the hints for part b, setting the EPS equation equal to zero.) Do not round intermediate calculations. Round your answers to the nearest whole number.
   Old plan:   units
   New plan with debt financing:   units
   New plan with stock financing:   units
6. 
   
7. On the basis of the analysis in parts a through c, and given that operating leverage is lower under the new setup, which plan is the riskiest, which has the highest expected EPS, and which would you recommend? Assume that there is a fairly high probability of sales falling as low as 250,000 units, and determine EPS_Debt and EPS_Stock at that sales level to help assess the riskiness of the two financing plans. Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.
   EPS_Debt: $  
   EPS_Stock: $  

Walthman Industries Inc. employs seven salespersons to sell and distribute its product throughout the state. Data taken from reports received from the salespersons during the year ended December 31 are as follows:

Required:

1. Prepare a table indicating contribution margin, variable cost of goods sold as a percent of sales, variable selling expenses as a percent of sales, and contribution margin ratio by salesperson. Round percents to the nearest whole number. Enter all amounts as positive numbers.

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Calculate:

Column 1: Contribution margin = Total sales – (Variable cost of goods sold + Variable selling expenses)

Column 2: Variable cost of goods sold as a percent of sales = Variable cost of goods sold/Total sales

Column 3: Variable selling expenses as a percent of sales = Variable selling expenses/Total sales

Column 4: Contribution margin ratio = Contribution margin/Total sales

2. Which salesperson generated the highest contribution margin ratio for the year?

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2. The salesperson who generated the highest contribution margin ratio for the year, probably sells a favorable mix of product that has high manufacturing margins as a percent of sales.

3. Identify the factors other than contribution margin that should be considered in evaluating the performance of salespersons.

1. Rate of growth in sales for the current year compared with past years
2. Years of experience for salespersons
3. Size of sales territory
4. Actual sales compared with budgeted sales
5. All of the above

The distribution of the number of viewers for the American Idol television show follows a normal distribution with a mean of 26 million with a standard deviation of 8 million. What is the probability next week's show will: a. Have between 30 and 37 million viewers? (Round z-score computation to 2 decimal places and your final answer to 4 decimal places.) b. Have at least 21 million viewers? (Round z-score computation to 2 decimal places and your final answer to 4 decimal places.) c. Exceed 49 million viewers? (Round z-score computation to 2 decimal places and your final answer to 4 decimal places.)

1. Say you pick integers from the set {1,2,...,20} eight times with replacement (i.e. you can pick the same number multiple times). What is the probability that exactly half your choices are prime numbers?

2. Suppose you roll three fair, six-sided dice. Let X denote the sum of the three dice.

-Find P(X = 5), P(X >= 16), and P(X is even).

-Compute E[X].

-Let A be the event that X >= E[X], B the event that X is a multiple of 3, and C the event that the first die is a 6. Are A and B independent? What about B and C?

Please explain !

Urn problem One jar contains 8 white marbles and 12 black marbles. We offer you the following three games. For each game, identify the probability law(distribution) that will follow the number of points you will earn, the expected value and its Standard deviation.

A) You draw ten marbles and earn one point for each white ball drawn. (with replacement)

B)You draw ten marbles and earn one point for each white ball drawn. (Without replacement)

C) You draw marbles (with replacement) until you draw a black one and earn ten points for each white marble drawn.

The manufacturer of a new line of ink-jet printers would like to include as part of its advertising the number of pages a user can expect from a print cartridge. The results from a sample of 14 cartridges can be found in the Excel test data file. Numbers are

1. What are the point estimates for the population mean and population standard deviation?
2. Develop a 95% interval for the population mean.
3. If the point estimate of the population mean and standard deviations are accurate, what is the probability that another sample of 14 cartridges will last an average of more than 1750 pages?

22. The manufacturer of a new line of ink-jet printers would like to include as part of its advertising the number of pages a user can expect from a print cartridge. The results from a sample of 14 cartridges can be found in the Excel test data file.

1. What are the point estimates for the population mean and population standard deviation?

____________________________________________________________

2. Develop a 95% interval for the population mean.

____________________________________________________________

3. If the point estimate of the population mean and standard deviations are accurate, what is the probability that another sample of 14 cartridges will last an average of more than 1750 pages?

You read an article saying that the average person believes you should wait two years before

marrying a significant other. You want to test the theory that the average college student believes

it should be longer than 2 years. Assume that

σ

= 16

months.

(a.) From the data collected in class, we found that from 77 people who answered the question, the

average number of months people gave was 26.6234. Test your hypothesis at the 5% significance

level.

(b.) If the true average among college students is 30 months, what is the probability you’ll make a

type II error given a sample size of 77?

The distribution of the number of viewers for the American Idol television show follows a normal distribution with a mean of 32 million with a standard deviation of 6 million.

What is the probability next week's show will:

Have between 38 and 44 million viewers? (Round your z-score computation to 2 decimal places and final answer to 4 decimal places.)

Have at least 23 million viewers? (Round your z-score computation to 2 decimal places and final answer to 4 decimal places.)

Exceed 47 million viewers? (Round your z-score computation to 2 decimal places and final answer to 4 decimal places.)