Qinetiq plc. makes full body scanners for airport security systems. The Transportation Security Administration​ (TSA) is considering ordering 100 such machines at a total cost of​ $20 million. To ramp up production for the order Qinetiq is considering building a new factory. To evaluate the new factory​ project, Qinetiq needs to estimate its cost of capital. Review the following information and answer the questions that follow to help Qinetiq with its analysis.

Debt Equity

Number of bonds outstanding​ = 150,00 Market price​ = $37

Face value​ = ​$1,000 Shares outstanding​ = 5 million

Maturity​ = 4 years Beta​ = 1.46

Coupons​ = 7​% paid annually ​Risk-free rate​ = 6​%

Market price​ = ​$1,027.47 Expected return on market​ = 12​%

Tax rate​ = 30​% ​

a.  What is the​ after-tax cost of debt for Qinetiq​ bonds?

b. According to the​ CAPM, what is the required return of Qinetiq​ shareholders?

c.  What is the weighted average cost of capital​ (WACC) for​ Qinetiq?

How much does a sleeping bag cost? Let's say you want a sleeping bag that should keep you warm in temperatures from 20°F to 45°F. A random sample of prices ($) for sleeping bags in this temperature range is given below. Assume that the population of x values has an approximately normal distribution.

(a) Use a calculator with mean and sample standard deviation keys to find the sample mean price x and sample standard deviation s. (Round your answers to two decimal places.)

(b) Using the given data as representative of the population of prices of all summer sleeping bags, find a 90% confidence interval for the mean price μ of all summer sleeping bags. (Round your answers to two decimal places.)

1.

How much does a sleeping bag cost? Let's say you want a sleeping bag that should keep you warm in temperatures from 20°F to 45°F. A random sample of prices ($) for sleeping bags in this temperature range is given below. Assume that the population of x values has an approximately normal distribution.

(a) Use a calculator with mean and sample standard deviation keys to find the sample mean price x and sample standard deviation s. (Round your answers to two decimal places.)

(b) Using the given data as representative of the population of prices of all summer sleeping bags, find a 90% confidence interval for the mean price μ of all summer sleeping bags. (Round your answers to two decimal places.)

A monopolist faces a market (inverse) demand curve P = 50 − Q . Its total cost is C = 100 + 10Q + Q2 .

a. (1 point) What is the competitive equilibrium benchmark in this market? What profit does the firm earn if it produces at this point?

b. (2 points) What is the monopoly equilibrium price and quantity? What profit does the firm earn if it produces at this point?

c. (2 points) What is the deadweight loss at the monopoly outcome?

d. (2 points) If we implement some form of regulation here (don’t worry about different forms of pricing and rate structure yet, just stick with the basic model), what would the welfare- maximizing regulated price and quantity be? What is deadweight loss at that point?

e. (1 point) Why is there still deadweight loss at the regulated outcome?

f. (2 points) Draw a graph illustrating your answers (hint: feel free to freehand-draw the AC curve, don’t spend too much effort calculating it).

It’s September 2015 and American Barrick (AB) wants to hedge sales of 300,000 ounces of gold projected to be produced by its Eldorado mine over the 6 months December 2015 – May 2016. They expect to produce 50,000 ounces per month. Gold futures contracts are available, and to avoid the contracts’ delivery requirements, it will hedge using January 2016 – June 2016 gold futures (January for December sales, etc.). One futures contract is for 100 ounces, and initial margin requirements are 5060 per contract. Spot price for gold today is 1098, while futures prices today for these 6 contracts are 1101, 1102, 1103, 1104, 1105, and 1106, respectively.

a) How many contracts are needed for each month? Long or short?

b) What is the total margin requirement?

c) Consider December gold sales. Assuming the January contracts are offset (closed) when the futures price is 1110, and gold spot is 1111, what will AB receive net per ounce for the December sales?

Problem​ - Elasticity of Demand​ (10 pts)

Individual consumers were observed for a month and the following table is the summary of their average purchasing patterns for bottles of​ water, slices of​ pizza, and gallons of gasoline. The prices of these goods increased during the last month and the consumers changed their consumption.

Provide your answers to all parts of the question in the space below. Be sure to label each part of your​ answer, a-d.

a. Calculate the price elasticity of demand for​ pizza, using the midpoint formula method.

b. Calculate the price elasticity of demand for​ gasoline, using the midpoint formula method.  

c. Based on your elasticity calculations in part a and​ b, what conclusions can you make about elasticity of demand for pizza relative to​ gasoline?

d. Provide an explanation to support your conclusions in part c.   

During 2020, Pearl Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Pearl for a lump sum of $29,925 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below.

During 2020, Pearl sells 100 lounge chairs, 50 armchairs, and 60 straight chairs.

What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.)

How much does a sleeping bag cost? Let's say you want a sleeping bag that should keep you warm in temperatures from 20°F to 45°F. A random sample of prices ($) for sleeping bags in this temperature range is given below. Assume that the population of x values has an approximately normal distribution.

(a) Use a calculator with mean and sample standard deviation keys to find the sample mean price x and sample standard deviation s. (Round your answers to two decimal places.)

(b) Using the given data as representative of the population of prices of all summer sleeping bags, find a 90% confidence interval for the mean price μ of all summer sleeping bags. (Round your answers to two decimal places.)

Throughout 2015, Smith had 200,000 shares of common stock outstanding. Smith's net income for the year ended December 31, 2015 was $800,000. Smith's income tax rate is 20%. During 2015, Smith declared and paid dividends on its 10,000 shares of 6% convertible preferred $100 par value stock. Each share of the convertible preferred stock can be converted, at the discretion of the stockholder, into 3 shares of Smith's common stock.

During the entire year ending 12-31-15, Smith had 15,000 outstanding employee stock options. Each option had an exercise price of $30 per share of Smith common stock. During the year ended 12-31-15, the average market price of Smith's common stock was $50 per share.

What will Smith report as its diluted earnings per share for the year ended 12-31-15?

Answer options:

A. $3.88

B. $3.70

C. $3.14

D. $3.59

E. $3.39

Consider the following information for a T-shirt manufacturing firm that can sell as many T-shirts as it wants for $10 per shirt.

a) Fill in the missing parts of the above table.

b) Verify that MRPl can be calculated in two ways: by change in TR and MPl times product price. If this firm must pay a rate of $285 per day, how many workers would be hired? Briefly explain.

c) Determine the highest wage rate necessary to hire 8 workers. Explain your answer.

d) Suppose the firm adopts a new technology that doubles output at each level of employment and that the price of shirts stays the same. Assume the wage rate is $285 per day. What would be the effect on the new technology on employment? Explain.