US Auto Company would like to offer rebates to its customers in order to increase sales. If it lowers prices sales will increase.    This will depend on the price elasticity of demand. Assume that the price elasticity of demand is 1.5. This firm is considering a $400 rebate on its cars. Also assume the following information on prices and costs before the rebates:

          Average price per car                                   $9,000 per car

          Expected sales volume at $9,000) per car     1,000,000 cars

          Average total costs per car                           $8,200 per car

          Total variable cost                                         $6,400,000,000

• Calculate the present total fixed costs, average variable costs and average fixed costs.
• What is the present breakeven point?
• What is the change in revenue resulting from the $400 price reduction?
• What is the effect on the cost per car after the change? In other words what is the average cost per car after the change?
• Should the change be made?

Please show the calculation. Thank you.

In the US, people die because they do not have private health insurance or their insurance does not cover the treatments they need. A 2009 Harvard study published in the American Journal of Public Health found more than 44,800 excess deaths annually in the United States due to Americans lacking health insurance, equivalent to one excess death every 12 minutes. More broadly, the total number of people in the United States, whether insured or uninsured, who die because of lack of medical care was estimated in a 1997 analysis to be nearly 100,000 per year.

Prepare your thoughtful and informed response to this statement.

GOODNESS OF FIT WORKSHEET

The following is a quote from the Mars Company, maker of M&M candies:

We can assure you that the colors are blended mechanically according to the formula. Our present means of color dispensing should place a fairly uniform blend of colors in every package; however, occasionally an unusual assortment of colors may appear.

The theoretical percentages of each color (as given by the M&M company) are:

1. Each student will need to buy a package of regular colors, Milk Chocolate M&M’s (plain or peanut) that is at least 4 oz. (colors of red, yellow, green orange, blue, brown) to be used for this project. All students will complete this test for your individual bag of M&Ms to receive credit   You will then report your test results (reject or fail to reject Ho) and numbers to your group leader.

2. The group leader will total the group values and will sum the colors. After working as a group to complete this test using the group totals, the leader will post the group results and the decision results of each individual in the group (reject or fail to reject Ho). Only the names of individuals that submit their test results to the group leader will be included on the group posting for credit.

You will conduct a goodness of fit test to determine whether your and the group frequency numbers for each color “fit” the expected values. Remember to complete your individual test first then send your results and numbers to the group leader. Be sure and work with the group leader to complete the group test. Use a significance level of 0.05.

1. Determine the expected values for all colors of the M&Ms. Use the number of M&Ms from the whole group (when doing the group test). Be sure you use the correct type of M&M given percentages (plain or peanut).

2. Write the null and alternate hypotheses. Remember these two statements must include all possible outcomes.

Ho:                                    

H₁:

3. Find the Chi-square critical value.

4. Compute the test statistic value.

5. What is the statistical decision about null hypothesis?

6. Write a conclusion about the Mars Company’s claim regarding the colors of the M&Ms by interpreting your decision in Question 6.

1. NewCo grants 10,000 options to its CFO, with a grant date of January 15, 2018.  The options grant the CFO the right to purchase shares (one-for-one) of company stock at a price of $.50 per share.  
   1. When NewCo grants the options, what will change on its balance sheet?

2. When the CFO exercises the options
   1. where will the 10,000 shares come from? (Who is selling the shares to the CFO?)

2. What will change on NewCo’s balance sheet?

XYZ plans to re-structure its capital due to the demand of some shareholders who would with draw their shares from company’s equities. To maintain a level of total assets, the company should either increase long-term debts or issue common shares to other shareholders (could be through private placement or initial public offering).Explain how does XYZ re-structure its capital ( Using 2 theories of capital structure)

In 2007, Consumer Report published a report of bacterial contamination of chicken sold in the US. They purchased 523 broiler chickens from various kinds of food stores, and tested them for bacteria that causes food-borne illnesses. Results indicated that 83% of chickens were infected with Campylobacter.

1. Construct a 95% confidence interval.

2. Explain what your confidence interval says about chicken sold in the US.

3. A spokesperson for the US Department of Agriculture dismissed the report, saying, “That’s 500 samples out of 9 billion chickens slaughtered a year…With the small numbers they tested, I don’t know that one would want to change one’s buying habits.” Is this criticism valid? Explain.

b. Find one aspect of this week’s material that is relevant to college, career, or everyday life. Provide some detail on how it could be important.

Your firm has a $10,000 par value U.S. Treasury bond with 30 years to maturity, annual coupon rate of 3.00% with semiannual coupon payments. Assume that the market annual yield to maturity on 30-year “T” bonds, found in the US Treasury Yield curve, is 3.04%.

What should the asked price (price you would pay) be for the bond?

Assume: YTM from US Treasury Yield Curve = 3.04% or semiannual rate = 1.52%

         Hint:

V_B =

If the 30 US Treasury Bond rate jumps immediately to 4.5%, what is the new price for the 30-year “T” bond? How much, in percent, would you lose or gain if you had purchased the bond in part A.

V_B = 150 (32.748953) + 10,000(0.263149)

      =$4,912.34 + 2,631.49= $7,543.83

Gain/Loss%=(price@ r= 4.5%) - (price@ r= 3.14%)/(p

The United States claims that Canada subsidizes the production of softwood lumber and that imports of lumber damage the interests of US producers.  The United States has imposed a high tariff on Canadian imports to counter the subsidy.  Canada is thinking of retaliating by refusing to export water to California.  The following table shows the payoff matrix for the simultaneous game that Canada and the US are playing

a.       What is the US’ optimal strategy? Why?

b.       What is Canada’s optimal strategy? Why?

c.       What is the outcome of the game? Explain.

d.       Is this game like a Prisoner’s Dilemma game or different in some crucial way? Explain.

e.       Which country would benefit more from a free trade agreement (where only the strategy of “no tariff” is allowed)?