"As You Like It" is a movie rental club that rents movies at a cost of $10.00 for 10 days per movie rented.    Jill Thom was excited to use this facility since there was no internet in her area and the television options were limited. Besides it would be a good way to pass the time with the family over the weekends. She planned to make popcorn. Jill paid for the movies. At the bottom of the receipt it stated that if the movies were returned after 10 days there was an additional daily cost per movie of $7.00.  

The movies were so enjoyable that they were replayed several times over and was returned 2 weeks late. When Jill returned them she was told that she had to pay an additional amount of over $500.00 for the late return. She was furious and comes to you for advice.

Advise Jill.

What are the disadvantages to the cost of carry model for pricing futures contracts?

(Individual or component costs of capital) Compute the cost of capital for the firm for the following:

A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 10.8 percent. Interest payments are $54.00 and are paid semiannually. The bonds have a current market value of $1,130 and will mature in 15 years. The firm's marginal tax rate is 34 percent.

A new common stock issue that paid a $1.77 dividend last year. The firm's dividends are expected to continue to grow at 8.4 percent per year, forever. The price of the firm's common stock is now $27.61.

A preferred stock that sells for $141, pays a dividend of 8.5 percent, and has a $100 par value.

A bond selling to yield 10.4 percent where the firm's tax rate is 34 percent.

What are some advantages and disadvantages of using a standard cost system?

In today's economic environment, is the cost of capital for an MNE likely to be more or less expensive than the cost of capital for a domestic firm? Explain.

A storage tank acquired at the beginning of the fiscal year at a cost of $104,400 has an estimated residual value of $6,400 and an estimated useful life of four years.

a. Determine the amount of annual depreciation by the straight-line method.
$fill in the blank 1

b. Determine the amount of depreciation for the first and second years computed by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your answers to the nearest dollar.

A researcher wishes to test claim that that the average cost of a coke in Mexico is different than the average cost for a coke in Russia. The cost is measured in US Dollars. Sample data are provided below. Test the claim using α=0.10.

State the claim:

H 0 μ 1    

H 1 μ 1≠ μ 2 claim

Determine the direction of the tails: Left, Right, or Two:  tail/s.

Find the critical value:+/-

Compute Test Point (round to 2 place values) :

Do we Reject or Do Not Reject?  

Summarize: There is enough evidence to  the claim.

"To decrease the cost of operating a lock in a large river, a new system of operation is proposed. The system will cost $840,000 to design and build. It is estimated that it will have to be reworked every 7 years at a cost of $130,000. In addition, a one-time expenditure of $72,000 will have to be made at the end of the fifth year for a new type of gear that will not be available until then. Annual operating costs are expected to be $72,000 for the first 12 years and $102,000 thereafter. Compute the capitalized cost of perpetual service at i = 6.3%. Enter your answer as a POSITIVE number."