I need some guidance on question 1c.
(1) (A) Between 2001 and 2011, the real (2018 US $) price of a barrel of oil rose at a rate of about 13% per year in real terms to around $124 per barrel in 2011, but the real price fell to $46 per barrel in 2016, before rebounding in 2018 to $71 per barrel. If prices continue increasing from their 2018 price of $71 per barrel through 2028 at a more modest rate of 7% year in real terms, what will be the price of oil in 2028? Assume these prices are for December 31 of each year.
(B) Suppose the price of gasoline in 2018 was $2.75 per gallon, and every $1 per barrel increase in the price of oil causes the price of gasoline to increase by $0.025 per gallon. If SouthWestern Ohio gasoline distribution company bought a forward contract for delivery of gasoline from Exxon in 2019 for $2.80 per gallon and in 2020 for $2.80 per gallon, based on your oil price projection in (A), will these contracts save them money? Be sure to show how you arrived at your answer.
(C) Suppose you are the operator of the East Lima International Refinery LLC, and you buy a call option for crude oil to refine in 2020. Your call option has a strike price of $59, with no option premium, and it expires on December 31, 2019. If prices rise as predicted above, will you make money on the call option? If so, how much? If not, what do you do on December 31, 2019 when the option expires?
In: Finance
The financial statements of Lowz Company appear below:
| LOWZ COMPANY Comparative Balance Sheet December 31 |
|||||||||
| 2020 | 2019 | ||||||||
| Assets | |||||||||
| Cash | $36,000 | $23,000 | |||||||
| Accounts receivable | 25,000 | 34,000 | |||||||
| Merchandise Inventory | 32,000 | 15,000 | |||||||
| Property, plant, and equipment | 50,000 | 78,000 | |||||||
| Accumulated depreciation | (21,000 | ) | (24,000 | ) | |||||
| Total | $122,000 | $126,000 | |||||||
| Liabilities and Stockholder's Equity | |||||||||
| Accounts payable | $18,000 | $23,000 | |||||||
| Income taxes payable | 9,000 | 8,000 | |||||||
| Bonds payable | 8,000 | 33,000 | |||||||
| Common stock | 28,000 | 24,000 | |||||||
| Retained earnings | 59,000 | 38,000 | |||||||
| Total | $122,000 | $126,000 | |||||||
| LOWZ COMPANY Income Statement For the Year Ended December 31, 2020 |
|||||
| Sales | $400,000 | ||||
| Cost of goods sold | 270,000 | ||||
| Gross profit | 130,000 | ||||
| Operating expenses | 45,000 | ||||
| Income from operations | 85,000 | ||||
| Interest expense | 5,000 | ||||
| Income before income taxes | 80,000 | ||||
| Income tax expense | 24,000 | ||||
| Net income | $56,000 | ||||
| The following additional data were provided: | ||
| 1. | Dividends declared and paid were $35,000. | |
| 2. | During the year, equipment was sold for $17,000 cash. This equipment cost $28,000 originally and had a book value of $17,000 at the time of sale. | |
| 3. | All depreciation expense is in the operating expenses. | |
| 4. | All sales and purchases are on account. | |
| 5. | Accounts payable pertain to merchandise suppliers. | |
| 6. | All operating expenses except for depreciation were paid in cash. | |
Prepare a statement of cash flows for Lowz Company using the direct
method. (Show amounts that decrease cash flow with
either a - sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
In: Accounting
1. A 100.0 mL sample of 0.10 M NH3 is titrated with 0.10 M HNO3. Kb, NH3 = 1.8 × 10−5. Determine the pH of the solution at each of the following points in the titration:
(a) before addition of any HNO3
(b) after the addition of 50.0 mL HNO3
(c) after the addition of 75.0 mL HNO3
(d) at the equivalence point
(e) after the addition of 150.0 mL HNO3
2. (12 points) Consider the titration of 37.0 mL of 0.200 M ammonia, NH3 (Kb = 1.8 × 10−5) with 0.130 M HCl
(a) Calculate the volume (mL) of HCl required to reach the equivalence point.
(b) Calculate the Ka of the conjugate acid, NH3+
(c) Calculate the pH at each of the following points:
i. initial pH
ii. halfway to the equivalence point
iii. at the equivalence point
iv. after the addition of 20.0 mL excess HCl
Plot the points from part (c) on a graph. Please label each point with volume and pH. Then sketch the shape of the titration curve.
In: Chemistry
A paddlewheel is made by attaching 4 thin uniform blades of length L and massmo to the exterior of a solid wooden disk of mass M and radius R. The paddlewheel isfree to spin about an axis through its center, on frictionless bearings. A particle pf mass m, moving horizontally at speed vo impinges on the outer edge of the vertically-alignedbottom blade of the stationary paddlewheel. Uniform gravity g is present.a) Determine the moment of inertia for the paddlewheel with blades, before being hit by m,.b) Assume m, is made of clay and sticks to the'blade. What is vo such that thepaddlewheel almost rotates by 180 degrees (i.e. the blade with clay attached nearlyreaches the top) after the collision?c) For part b), determine the kinetic energy of the paddlewheel immediately after thecollision (do not include the kinetic energy of the attached clay).d) Now assume that m, is made of steel and thus bounces (fully elastically) straightback after hitting the blade, with velocity -vo. What is the kinetic energy of thepaddlewheel after the collision?
In: Physics
Consider formic acid, HCHO2 (Ka = 1.9x10-4) and its conjugate base, CHO2-.
a) A buffer is prepared by dissolving 25.0 grams of sodium formate in 1.30 L of a solution of 0.660 M formic acid. Assume the volume remains constant after dissolving the sodium formate.
i) Calculate the pH of this buffer.
ii) Calculate the pH after 0.100 mole of nitric acid is added to this buffer.
iii) Calculate the pH after 10.0 grams of potassium hydroxide is added to this buffer.
iv) What is the buffer capacity of this buffer?
b) 35.0 mL of 0.739 M formic acid is titrated with 0.431 M potassium hydroxide.
i) What is the pH of the formic acid solution before titration begins?
ii) How many milliliters of KOH is required for this titration to reach its equivalence point?
iii) What is the pH of the solution after 10.0 mL of KOH has been added?
iv) What is the pH of the solution halfway to equivalence?
v) What is the pH of the solution at the equivalence point?
In: Chemistry
A firm with no debt-financed financial leverage has 600,000 common shares trading at $30 per share. With its investment plan fixed, it is expected to generate a perpetual EBIT stream of $3 million per year. The corporate tax rate is 40%. The firm is contemplating issuing a $9 million face value perpetual bond carrying 5% coupon interest per year and using the proceeds to retire some of its stock outstanding. Ignoring personal taxes:
a. What will be the value of the firm’s equity after the change in its capital structure?
b. Suppose you hold 100 shares of the company before it was levered, what will be the capital gain on your shares after the company is levered?
c. What financial risk premium will be included in the firm’s cost of equity after the change in its capital structure?
d. What will be the firm’s WACC after the change in its capital structure?
e. What will be the firm’s value if the debt issued was half of the firm’s levered value?
In: Finance
The Guo Chemical Corporation is considering the purchase of a chemical analysis machine. The purchase of this machine will result in an increase in earnings before interest and taxes of $65,000 per year. The machine has a purchase price of $350,000 and it would cost an additional $9,000 after tax to install this machine correctly. In addition, to operate this machine properly, inventory must be increased by $18,000.This machine has an expected life of 10 years, after which time it will have no salvage value. Also, assume simplified straight-line depreciation, that this machine is being depreciated down to zero,32 percent marginal tax rate, and a required rate of return of 13 percent.
a. What is the initial outlay associated with this project?
b. What are the annual after-tax cash flows associated with this project for years 1 through 99?
c. What is the terminal cash flow in year 10 (that is, the annual after-tax cash flow in year 10 plus any additional cash flow associated with termination of the project)?
d. Should this machine be purchased?
In: Finance
The Guo Chemical Corporation is considering the purchase of a chemical analysis machine. The purchase of this machine will result in an increase in earnings before interest and taxes of $75,000 per year. The machine has a purchase price of $300,000, and it would cost an additional $5,000 after tax to install this machine correctly. In addition, to operate this machine properly, inventory must be increased by $12,000. This machine has an expected life of 10 years, after which time it will have no salvage value. Also, assume simplified straight-line depreciation, that this machine is being depreciated down to zero, a 30 percent marginal tax rate, and a required rate of return of 99 percent.
a. What is the initial outlay associated with this project?
b. What are the annual after-tax cash flows associated with this project for years 1 through 99?
c. What is the terminal cash flow in year 10 (that is, the annual after-tax cash flow in year 10 plus any additional cash flow associated with termination of the project)?
d. Should this machine be purchased?
In: Finance
On January 1, 2020, Sandhill Corp. granted stock options to its chief executive officer. This is the only stock option plan that Sandhill offers and the details are as follows:
| Option to purchase: | 2,400 common shares | |
| Option price per share: | $37.00 | |
| Fair value per common share on date of grant: | $29.30 | |
| Stock option expiration: | The earlier of eight years after issuance or the employee’s
cessation of employment with Sandhill for any reason other than retirement |
|
| Date when options are first exercisable: | The earlier of four years after issuance or the date on
which the employee reaches the retirement age of 65 |
|
| Fair value of options on date of grant: | $7.00 |
On January 1, 2025, 1,920 of the options were exercised when the
fair value of the common shares was $40. The remaining stock
options were allowed to expire. The CEO remained with the company
throughout the period.
Assume that the entity follows ASPE and has decided not to include an estimate of forfeitures upon initial recognition of the compensation expense. Record the journal entry on January 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
January 1, 2020 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
Assume that the entity follows ASPE and has decided not to include an estimate of forfeitures upon initial recognition of the compensation expense. Record the journal entry on December 31, 2020, the fiscal year end of Sandhill Corp. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
December 31, 2020 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
Assume that the entity follows ASPE and has decided not to include an estimate of forfeitures upon initial recognition of the compensation expense. Record the journal entry on January 1, 2025, the exercise date. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
January 1, 2025 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
Assume that the entity follows ASPE and has decided not to include an estimate of forfeitures upon initial recognition of the compensation expense. Record the journal entry on December 31, 2027, the expiry date of the options. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
December 31, 2027 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
In: Accounting
Soccer regulations are that the ball be an air-filled sphere with a circumference of 68-70 cm, and a mass of 410-450 g. The 2010 FIFA world cup “Jabulani” ball had a circumference of 69 cm and a mass of 440 g. This ball is also specified to have 0% water absorption. The ball is kicked into a deep puddle; what fraction of the volume of this ball floats above the surface of the water?
In: Physics