Discussion 1 (finance 101 )
Apple's Jobs Takes Leave as Weight Loss Said to Continue; Cook Takes Over
Lead Story-Dateline: Satariano, Adam, Peter Burrows, and Joseph Galante,
"Apple's Jobs Takes Leave as Weight Loss Said to Continue; Cook Takes Over," Bloomberg.com,
Summary: Key Points in the Article
Apple Computer CEO Steve Jobs announced he was taking a leave of absence for health reasons. Jobs has been fighting cancer and also recently underwent a liver transplant. Even though the computer giant is in good hands with Chief Operating Officer Tom Cook taking over the stock price fell by US$6.40, or nearly two percent, on the news.
Jobs is widely known as a visionary and a micromanager. Under his leadership Apple has transformed the computing industry. While Jobs' health outlook is unknown many investors are betting on his recovery and return. Those who bought Apple stock when Jobs stepped down in 2004 for health reasons made a nice profit when he returned to the helm.
Question 2 Marks
“When a financial manager makes good or bad financial decisions the impact of these decisions will be reflected in the company's Stock price”.
Do you agree with the decision taken in the above case? What decisions you will take to improve the stock price of Apple Computers in this situation?
In: Finance
With double-digit annual percentage increases in the cost of health insurance, more and more workers are likely to lack health insurance coverage (USA Today, January 23, 2004). The following sample data provide a comparison of workers with and without health insurance coverage for small, medium, and large companies. For the purposes of this study, small companies are companies that have fewer than 100 employees. Medium companies have 100 to 999 employees, and large companies have 1000 or more employees. Sample data are reported for 50 employees of small companies, 75 employees of medium companies, and 100 employees of large companies. Health Insurance Size of Company Yes No Total Small 31 19 50 Medium 68 7 75 Large 90 10 100 Conduct a test of independence to determine whether employee health insurance coverage is independent of the size of the company. Use = .05. Use Table 12.4. Compute the value of the 2 test statistic (to 2 decimals). The p value is What is your conclusion? The USA Today article indicated employees of small companies are more likely to lack health insurance coverage. Calculate the percentages of employees without health insurance based on company size (to the nearest whole number). Small % Medium % Large % Based on the percentages calculated above, what can you conclude?
In: Statistics and Probability
With double-digit annual percentage increases in the cost of
health insurance, more and more workers are likely to lack health
insurance coverage (USA Today, January 23, 2004). The
following sample data provide a comparison of workers with and
without health insurance coverage for small, medium, and large
companies. For the purposes of this study, small companies are
companies that have fewer than 100 employees. Medium companies have
100 to 999 employees, and large companies have 1000 or more
employees. Sample data are reported for 50 employees of small
companies, 75 employees of medium companies, and 100 employees of
large companies.
| Size of Company | Health Insurance-Yes | Health Insurance-No | Total |
| Small | 39 | 11 | 50 |
| Medium | 62 | 13 | 75 |
| Large | 88 | 12 | 100 |
Conduct a test of independence to determine whether employee health insurance coverage is independent of the size of the company. Use a = .05.
Compute the value of the x2 test statistic (to 2 decimals).
Find the p-value
What is your conclusion?
The USA Today article indicated employees of small
companies are more likely to lack health insurance coverage.
Calculate the percentages of employees without health insurance
based on company size (to the nearest whole number).
Small:
Medium:
Large:
Based on the percentages calculated above, what can you
conclude?
In: Statistics and Probability
With double-digit annual percentage increases in the cost of health insurance, more and more workers are likely to lack health insurance coverage (USA Today, January 23, 2004). The following sample data provide a comparison of workers with and without health insurance coverage for small, medium, and large companies. For the purposes of this study, small companies are companies that have fewer than 100 employees. Medium companies have 100 to 999 employees, and large companies have 1000 or more employees. Sample data are reported for 50 employees of small companies, 75 employees of medium companies, and 100 employees of large companies
Health Insurance
Size of Company
Yes
No
Total
Small
38
12
50
Medium
61
14
75
Large
90
10
100
Conduct a test of independence to determine whether employee health insurance coverage is independent of the size of the company. Use
= .05. Use Table 12.4.
Compute the value of the
2 test statistic (to 2 decimals).
The p value is
What is your conclusion?
The USA Today article indicated employees of small companies are more likely to lack health insurance coverage. Calculate the percentages of employees without health insurance based on company size (to the nearest whole number).
Small
%
Medium
%
Large
%
Based on the percentages calculated above, what can you conclude?
In: Statistics and Probability
Sachs Brands' defined benefit pension plan specifies annual retirement benefits equal to: 1.3% × service years × final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2004 and is expected to retire at the end of 2038 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $91,000 at the end of 2018 and the company's actuary projects her salary to be $285,000 at retirement. The actuary's discount rate is 9%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) At the beginning of 2019, the pension formula was amended to: 1.40% × Service years × Final year's salary The amendment was made retroactive to apply the increased benefits to prior service years. Required: 1. What is the company's prior service cost at the beginning of 2019 with respect to Davenport after the amendment described above? 2. Since the amendment occurred at the beginning of 2019, amortization of the prior service cost begins in 2019. What is the prior service cost amortization that would be included in pension expense? 3. What is the service cost for 2019 with respect to Davenport? 4. What is the interest cost for 2019 with respect to Davenport? 5. Calculate pension expense for 2019 with respect to Davenport, assuming plan assets attributable to her of $110,000 and a rate of return (actual and expected) of 10%.
In: Accounting
China's Galanz built a new complex at the expected cost of 2
billion yuan in order to produce 12 million air-conditioning units
annually. The site was completed in 2004.
1 Make the following assumptions:
•The actual investment cost is either 1.9, 2.0, or 2.1 billion
yuan, with respective probabilities of 0.25,0.50, and 0.25.
•The plant operates for 15 years, with the salvage value being
either 50 million, 0, or-100 million(remediation costs) yuan at
that time, with probabilities of 0.20,0.50, and 0.30,
respectively.
•Finally, the net cash flow resulting from operations and sales is
60 yuan per unit. The number of units sold in each year is either 9
(0.1), 10 (0.2), 11 (0.3), or 12 (0.4) million. The figures
in
parentheses represent the probabilities of the given level of
production.
Assume that these are the only relevant cash flows and the interest rate is 18% per year.
a) Find an expression for the present worth (PW).
b) Find the expected value of the PW(if possible).
c) Find the standard deviation of the PW(if possible).
d)Find Pr(PW >0) (if possible).
e)Perform 200 simulations, and find the sample mean, standard deviation, as well as the probability that the investment will have a positive PW (point & interval estimates). Finally, summarize your process (which will naturally include all the appropriate steps) and results
In: Finance
Use the information below for ABC Co. to answer the following questions.
Balance Sheet December 31
2005 2004
Assets
Cash $ 20,000 $ 10,000
Accounts receivable 160,000 110,000
Inventories 80,000 50,000
Prepaid Rent 15,000 10,000
Investments 100,000 75,000
Plant assets 210,000 250,000
Accumulated depreciation (65,000) (60,000)
Total $520,000 $445,000
Liabilities and Stockholders' Equity
Accounts payable $ 50,000 $ 40,000
Interest payable 20,000 5,000
Income tax payable 5,000 10,000
Note payable 130,000 140,000
Common stock 155,000 100,000
Retained earnings 160,000 150,000
Total $520,000 $445,000
Income Statement
For the Year Ended December 31, 2005
Sales $800,000
Cost of goods sold 480,000
Gross Profit 320,000
Operating expenses (including Depreciation Expense) 120,000
Interest expense 20,000
Income tax expense 25,000
Total 165,000
Income before Gains and Losses 155,000
Gain on sale of plant assets 5,000
Net income $ 160,000
Additional information:
Accounts payable pertain to the purchase of inventory.
Plant assets were sold for $40,000. The cost of the plant assets was $40,000.
All dividends are cash.
For the year 2005:
1. Cash received/collected from customers is:
2. Purchases for the year is:
3. Cash paid to suppliers is:
4. Depreciation expense is:
5. Cash paid for operating expenses is:
6, Cash paid for interest is:
In: Accounting
PBO Calculations, Service Costs & Gains/Losses on PBO
(Adapted from Chapter 17, P2-P5)
Sachs Brands defined benefit pension plan specifies annual
retirement benefits equal to:
1.5% * Service Years * Final Year’s Salary
Payable at the end of each year. Trom Specht was hired by Sachs at
the beginning of 2004 and
is expected to retire at the end of 2038, after 35 years’ of
service. Her retirement is expected to
span 18 years. Specht’s salary is $120,000 at the end of 2020 and
the company’s actuary
projects her salary to be $210,000 at retirement. The actuary’s
discount rate is 8%.
Instructions:
5. What is the 2020 PBO for with respect to Specht?
At the beginning of 2021, the pension formula was amended to:
1.75% * Service Years * Final Year’s Salary
6. What is the company’s prior service cost at the beginning of
2021, with respect to
Specht?
7. How much of the prior service cost should be amortized during
2021 (remember that
the change was at the beginning of 2021)?
8. What is the service cost for 2021 with respect to Specht?
9. What is the interest cost for 2021 with respect to Specht?
10. What is the 2021 PBO for with respect to Specht?
At the end of 2021 (beginning of 2022), changing economic
conditions caused the actuary to
reassess the applicable discount rate. It was decided that 7% is
the appropriate rate.
11. What is the effect of this change in the discount rate?
In: Accounting
The number of hours worked per year per adult in a state is normally distributed with a standard deviation of 37. A sample of 115 adults is selected at random, and the number of hours worked per year per adult is given below. Use Excel to calculate the 98% confidence interval for the mean hours worked per year for adults in this state. Round your answers to two decimal places and use ascending order.
Number of hours
2250
1987
2029
2018
1938
2197
2099
2228
2245
1913
1903
2298
2231
2200
1902
2161
2211
2124
2082
2257
2087
2123
1929
1948
2124
2013
1973
2000
2030
1932
1993
2014
2118
1900
2195
2222
2035
2088
2010
1962
2166
1918
2070
2277
2114
1975
2045
2050
1921
2103
1954
2017
2235
1993
2156
1984
2057
2200
2133
2144
2145
2219
2222
2210
2143
2163
2168
2246
2186
1907
2072
2142
2187
2036
2207
2270
2262
2159
1914
1926
2261
2006
1948
2028
2256
2182
1955
1969
1941
1924
2176
2256
2051
2111
2221
2222
2190
2068
1942
2024
2258
2201
2085
2061
2004
2260
2136
2244
1989
1941
2297
2159
2260
2093
2293
In: Statistics and Probability
Sachs Brands' defined benefit pension plan specifies annual
retirement benefits equal to: 1.4% × service years × final year's
salary, payable at the end of each year. Angela Davenport was hired
by Sachs at the beginning of 2004 and is expected to retire at the
end of 2038 after 35 years' service. Her retirement is expected to
span 18 years. Davenport's salary is $86,000 at the end of 2018 and
the company’s actuary projects her salary to be $260,000 at
retirement. The actuary's discount rate is 8%. (FV of $1, PV of $1,
FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use
appropriate factor(s) from the tables provided.)
Required:
2. Estimate by the accumulated benefits approach the
amount of Davenport’s annual retirement payments earned as of the
end of 2018.
3. What is the company’s accumulated benefit
obligation at the end of 2018 with respect to Davenport?
(Do not round intermediate calculations. Round your final
answer to nearest whole dollar.)
4. If no estimates are changed in the meantime,
what will be the accumulated benefit obligation at the end of 2021
(three years later) when Davenport’s salary is $95,000? (Do
not round intermediate calculations. Round your final answer to
nearest whole dollar.)
2.Annual retirement payments
3.Accumulated benefit obligation 2018
4.Accumulated benefit obligation 2021
In: Accounting