While playing the role of Catherine Piper on Boston Legal, Betty White “killed” the character of Bernard Ferrion (played by Leslie Jordan). Catherine ended being found not guilty, but it led Betty to wonder: are men and women treated differently when convicted of murder? As a result, Betty took two random samples of convicted murderers, given below, and determined how long the sentences were. Men: 25, 30, 50, 25, 20, 30, 40, 25, 30, 25, 75, 25, 15 Women: 25, 15, 20, 15, 20, 25, 15, 30, 25, 40 You may assume the data comes from normal distributions. At the .05 level of significance, is there evidence to show that men get longer sentences for murder than women?

ABC’s the most recent free cash flow (FCF0) is $200 million. The free cash flow is expected to grow at a rate of 40 percent, and 20 percent in the second year. After two years, it is expected to grow forever at a constant rate of 5 percent. The cost of common stock (rs) is 12% and the weighted average cost of capital (WACC) is 9%. ABC balance sheet shows $20 million in short term investments that are unrelated to operations. The balance sheet also shows $100 million in debt, $50 million in preferred stocks, and $250 million in common stocks.If the company has 40 million shares of common stocks, what is your best estimate for the stock price per share today? Assume that company's book values of debt and preferred stocks are very close to the market vales.

A manufacturer is considering two investment programs to supply a new laptop. Market research anticipates rapid market growth: sales are expected to be 300, 000 the first year, 600,000 the second, and 900,000 the third. However, the company recognizes that actual sales may differ by plus or minus 50%.

The company has two plans to produce 900,000 units:

• Plan A: Build a single plant that could produce 900,000 units. Construction would cost $900 million and be finished in a year. The company would net $2,000 per computer sold, and the incremental manufacturing costs beyond the capital cost of the plant is expected to be $1,280 per computer.

• Plan B: Build three 300,000-unit plants, one each year, to match expected annual demand. The capital expenditure for each small plant is $300 million. The smaller plant has a unit manufacturing cost of $1,500. This plan gives the company the flexibility not to build successive plants if the demand falls short in the first or second year.

Note that both plans have drawbacks:

• Plan A involves a large amount of excess capacity in the first two years until market demand grows; and there is always a chance that demand falls short of expectations. Thus, the demand in year 3 might be as high as 1.35 million or as low as 450 thousand units.

• Plan B is less efficient. Also, if the demand grows faster than expected, it cannot take advantage of it.

The CFO asks you to prepare spreadsheets to analyze this decision. As the company will want to carry out extensive sensitivity analyses on the spreadsheet, all the input variables must be set in an input sheet, so that the rest of the spreadsheet will be an automated black-box that generates the required results.

Part 1: Based on the forecast demand expectation without variability, set up a spreadsheet to calculate the net present values (NPVs) for Plan A, and Plan B with an inflexible expansion plan (build one plant each year regardless of market demand). Based on this first analysis, which plan is better? See end of exercise for assumptions you should use for the NPV analysis.

Part 2: Now consider the effect of uncertainty in discount rate for small and big plant. Use “Data Table” in What-if Analysis to estimate profitability of plan A over plan B in a one-way (only change discount rate of one plant at a time) and two-way (change discount rate of both plants simultaneously). Draw a chart to illustrate the changes. Also use “Conditional Formatting” to color code when the sign of the difference of profitability of plans changes.

Part 3: Now consider the effect of uncertainty for variable costs of both plants and run another two-way sensitivity analysis using “Data Table” function. Draw a chart to illustrate the changes. Also use “Conditional Formatting” to color code when the sign of the difference of profitability of plans changes.

Part 4: Now consider the effect of uncertain market demand. Assuming that the market forecast is evenly distributed over the range, simulate the performance of Plan A, and Plan B without the flexibility. Use a two-way sensitivity analysis for 1^st year demand vs 2^nd years demand and another two-way sensitivity analysis for 2^nd year demand vs 3^rd year demand using “Data Table” function.

Note: In future assignments, I will ask you to conduct more sophisticated analysis on this same problem.

Assumptions for NPV analysis:

• Use a discount rate of 9% for Plan A, and 8% for Plan B.
• No salvage value for Plan A at year 3. Salvage value for Plan B is $300 million at year 3.
• No corporate overhead or selling costs allocated to the projects.
• For simplicity, assume that a new laptop line will replace the product in the 4^th year so that there will be no sales in year 4 and beyond.

USE EXCEL TO SOLVE THE QUESTION

uppose the following is the part of the WSJ listed options quotations on 12/1/2018; on that day IBN stock price was $53.

Which one of the following is out of the money?

What is the exercise value, or the intrinsic (=parity) value of a Jan 50 call option?

How much time value is in Jan 50 call option?

Suppose today you buy a IBN Jan 50 call for the price listed. At expiration, IBN stock sells for $60. What is the profit per contract?

Suppose you buy a IBN Apr 50 put for the price listed. At expiration, IBN stock sells for $45. What is your profit per contract?

Assume the call premium of $5 for IBN Jan 50 call option is right. Then the underlined price of $3.50 for Apr 50 call cannot be true. Which one of the following is a reasonable price for the option?

Assume the call premium of $5 for IBM Jan 50 call option is right. Then the underlined price of $6 for Jan 55 call cannot be true. Which one of the following is a reasonable price for the option?

ABD stock is selling for $145 and call option on ABD stock with striking price of $140 is selling for $12.5. The option expires 5 months from today. The risk-free interest rate is 8%. Based on the put-call parity for European options, calculate the value of put option with striking price of $140 and time to expiration of 5 months.

The current level of the S&P 500 is 1500. The dividend yield on the S&P 500 is 2%. The risk-free interest rate is 4%. The futures price for a contract on the S&P 500 due to expire 6 months from now should be __________.

A tire distribution centre supplies various mechanic shops around the province and sells on average 40 sets (4 tires to a set) of one specific tire each week. These tires are supplied by an overseas manufacturer. The following information is known about the tire sets:

The company currently uses a periodic review inventory control system with a period (P) of 8 weeks.

(1) Given that the distribution centre wants a 99.5% service level, what is the required safety stock?

(2) What is the required target inventory level (T)?

(3) Calculate the annual inventory cost of this periodic review system.

(4) The company is committed to a periodic review system, but thinks it may be incurring unnecessary costs. Suggest a better period (P) that will decrease the annual inventory cost. What is the expected cost of your proposed P?

Match one-on-one as is most appropriate.

FOR BOTH QUESTIONS PLEASE USE THE FOLLOWING TABLE. This data pertains to a pure competition firm where the market price is $30 per unit.

QUESTION ONE. PLEASE ANSWER THE FOLLOWING QUESTION. [FOR FULL CREDIT YOU MUST SHOW ALL COMPUTATIONS].

QUESTION TWO. PLEASE ANSWER THE FOLLOWING QUESTION. [FOR FULL CREDIT YOU MUST FULLY AND CLEARLY EXPLAIN YOUR ANSWER].

1. What color are endospores following the spore stain? What is the purpose of using safranin?

2. What is meant by "vegetative cell" when performing the endospore stain?

3. Why is it important to use older cultures when performing the endospore stain?

4. What is the color of the capsule following the capsule stain?

5. What are the potential medical implications if the medical micro lab identifies a spore-forming bacterium from a patient specimen?

6. What is the purpose of inoculating two organisms when testing for motility?

7. How do you determine if the organism that has been cultured is motile?

8. Name one other method that could be used to determine motility.

2) Budgetary control is the use of budgets in controlling operations. What are the steps in budgetary control?

3) What is a static budget? Whys is a static budget is an appropriate basis for evaluating a manager’s effectiveness in controlling costs?

4) List the steps in preparing a flexible budget?

5)Responsibility reports differ from budget reports in two respects? State and explain each one.

6) There are three types of responsibility centers. Please list and define what each center does?

7) What costs are included in a performance report for a cost center?

8) What is a Controllable margin? What is the purpose of controllable margin?

9) What is the primary basis for evaluating the performance of the manager of an investment center? How is it calculated?