Consider the data in the table above for a 1-good economy (the only good produced and consumed)

Given that the CPI for 2016 is 100,

• Compute the CPI inflation rates for the years 2017 and 2018.
• Determine the percentage change in GDP deflator for 2016-2017 and 2017-2018. Compare your results with your answers in (a) and justify.
• Explain three problems associated with using CPI to measure cost of living.
• The government in 2018 announced and implemented a 10 percent increase in the nominal salary of an average public servant from $500 in 2017. Does the salary of an average public servant have more purchasing power in 2017 or 2018?
• Briefly describe the concept of ‘rebasing’. Explain how rebasing affects the income and cost of living estimates of a country.

Pro forma income statement. Given the income statement in the popup​ window, for California Cement Company for 2013 and an expected sales growth rate of 6.61 % for​ 2014, prepare a pro forma income statement for 2014.

First, find the percentage of each income statement line from 2013 as a percent of sales. ​(Round to three decimal​ places.)

Sales Revenue $22,811,000 ____ %

Cost of goods sold $-11,638,000 ___%

Selling, general, and administrative expenses $-3,973,000 ____%

Depreciation expenses $ -1,369,000 ____%

EBIT $5,831,000 ____%

Interest expense $-173,000 ____%

Taxable income $5,658,000 ____%

Taxes $-2,479,594 ____%

Net Income $3,178,406 ___ %

What is the sales forecast for 2014?

$___ (Round to the nearest dollar.)

Sales Revenue $ ____ 100.00%

Cost of goods sold $ ____ 51.019%

Selling, general, and administrative expenses $____ 17.417%

Depreciation expenses $ ____ 6.001%

EBIT $ ____ 25.562%

Interest expense $ ____ 0.758%

Taxable income $ ____ 24.804%

Taxes $ ____ 10.870%

Net Income $ ____ 13.934%

2. Suppose an industry consists of two firms that compete in prices. Each firm produces one product. The demand for each product is as follows:

q1 = 25 − 5p1 + 2p2

q2 = 25 − 5p2 + 2p1

The cost functions are C(qi) = 2 + qi for i = 1, 2.

The Nash equilibrium price is 3.75

(e) What is the percentage markup of price over marginal cost here (this is called the Lerner index)? Do the firms have market power? Why does the Bertrand paradox of zero variable duopoly profits apply here?

(f) Suppose the firms merged. What is the new price of products 1 and 2?

(g) Explain intuitively why the price is higher under monopoly than under Bertrand duopoly?

(h) Are total monopoly profits higher or lower than the sum of Bertrand duopoly profits? Why or why not?

You are recently hired as a staff accountant for a small finished goods manufacturing company. Part of your duties include doing the month end inventory of finished goods. After a few months you do not look forward to this as the amount of inventory seems to be increasing. In order to satisfy your thoughts on this increase of inventory you decide to review the financial information for the last few months.

Looking over the Income Statement you see the profits have been steady, but the gross profit percentage has increased, and the cost of goods sold have decreased. This does not seem possible as the company has increased the amount of inventories.

Identify why this situation could exist, providing an explanation which can be given to the CFO.

In order to assist in controlling the costs and providing a lower inventory carrying cost, select a costing system and explain why it should be utilized.

Malibu, Inc., which has fixed costs of $2,978,000, sells three products whose sales price, variable cost per unit, and percentage of sales units are presented in the table below.

a. What is the weighted average unit contribution margin? (Round your answer to 2 decimal places.)

  

b. At the break-even point, how many units of Product A must be sold? (Round intermediate calculations to 2 decimal places. Round your answer to the nearest whole number.)

c. To make a profit of $1,115,000, how many units of Product B must be sold? (Round intermediate calculations to 2 decimal places. Round your answer to the nearest whole number.)

Suppose that, at age 30, you might wish to leave your job and pursue a master’s degree. If you choose to remain at your job, your employer would pay you $76k per year until retirement, at age 55. If you go back to the university, you would have to sacrifice 2 years of income, but once you graduate, you would receive $115k per year until you retire at age 65. The master’s program you are interested in costs $22 per year.

Note: The term “k” is used to represent thousands (× $1,000).

Required: At an opportunity cost of 8%, determine the percentage difference between your most and least profitable alternatives, with the least profitable option as the basis for your calculation.

interest is $22k

correction *** the cost is $22k ($22,000) per year

You are given the following information for Magrath Power Co. Assume the company’s tax rate is 35%. Debt: 12,000 5% coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 98% of par; the bonds make semiannual payments. Common stock: 525,000 shares outstanding, selling for $58 per share; the beta is 0.98 Preferred stock: 35,000 shares of 3.5% preferred stock outstanding, currently selling for $69 per share. Market:8% market risk premium and 3.5% risk-free rate. Use the approximate formula to calculate the cost of debt (do not use financial calculator to calculate the cost of debt). What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.) Clearly state the yield to maturity

Ardoin Enterprises has to determine its cost of capital using the following information:

The firm has $40,000,000 in corporate bonds currently selling at 97.5. (Bonds sell at a percentage of par value) The bonds mature in 12 years and have an annual coupon rate of 6.9% paid semiannually. The firm faces a 32% tax rate and has 1,500,000 shares of preferred stock that pays a dividend of $0.80 per year and currently sells for $9.10 per share.

Common stock selling for $3.58 per share has just paid a dividend of $0.32 and is expected to grow by 4% forever. The firm has a beta of 1.42 and the risk-free rate on treasury securities is 2.25%. The average return on the S&P500 is 10.54%.

Calculate the cost of capital for the firm. Ardoin Enterprises has 25 million common shares outstanding.

You are recently hired as a staff accountant for a small finished goods manufacturing company. Part of your duties include doing the month end inventory of finished goods. After a few months you do not look forward to this as the amount of inventory seems to be increasing. In order to satisfy your thoughts on this increase of inventory you decide to review the financial information for the last few months.

Looking over the Income Statement you see the profits have been steady, but the gross profit percentage has increased, and the cost of goods sold have decreased. This does not seem possible as the company has increased the amount of inventories.

Identify why this situation could exist, providing an explanation which can be given to the CFO.

In order to assist in controlling the costs and providing a lower inventory carrying cost, select a costing system and explain why it should be utilized.