PA 4-8 (Algo) Atlas Inc. is a toy bicycle manufacturing... Atlas Inc. is a toy bicycle manufacturing company producing a five-inch small version of the bike that Lance Armstrong rode to win his first Tour de France. The assembly line at Atlas Inc. consists of seven work stations, each performing a single step. Stations and processing times are summarized here:

Step 1 (35 sec.): The plastic tube for the frame is cut to size.

Step 2 (20 sec.): The tube is put together.

Step 3 (40 sec.): The frame is glued together

Step 4 (25 sec.): The frame is cleaned.

Step 5 (35 sec.): Paint is sprayed onto the frame.

Step 6 (45 sec.): Wheels are assembled.

Step 7 (45 sec.): All other parts are assembled to the frame. Under the current process layout, workers are allocated to the stations as shown here:

Worker 1: Steps 1 and 2

Worker 2: Steps 3 and 4

Worker 3: Step 5

Worker 4: Step 6

Worker 5: Step 7 Assume the workers are paid $20 per hour. Each bicycle is sold for $5 and includes parts that are sourced for $1. The company has fixed costs of $100 per hour. Despite Lance Armstrong’s doping confession, there exists substantially more demand for the bicycle than Atlas can supply.

a. what is the cost of direct labor for the bicycle? _____ per unit

b. how much profit does the company make per hour? _______ per hour

c. what would be the profits per hour if Atlas would be able to source the parts 8 percent cheaper ($.92 for the parts one of unit?) ______ per hour

d. what would be the profits per hour if Atlas were able to reduce fixed costs by 12 percent (to $88 per hour) ______ per hour

e. what would be the profit per hour if Atlas were able to reduce the processing time at the bottleneck by 6 seconds per unit (assume unlimited demand)? ____ per hour

Question 36

The market value of a firm’s equity is frequently called:

Select one:

a. Market capitalization.

b. Total financing.

c. Debt-equity reconciliation.

d. Debt-equity consolidation.

e. Total assets.

Question 37

Etling Inc.'s dividend is expected to grow at 7% for the next two years and then at 3% forever. If the current dividend is $3 and the required return is 15%, what is the price of the stock?

Select one:

a. $25.54

b. $26.15

c. $29.45

d. $25.10

e. $27.68

Question 38

An operating lease is usually a shorter-term lease in which the lessor is responsible for insurance, taxes, and upkeep.

Select one:

True

False

Question 39

A typical car loan is an example of an amortized loan.

Select one:

True

False

Question 40

You are considering a project that costs $150 and has expected cash flows of $55, $60.50, and $66.55 over the next three years. If the appropriate discount rate for the project's cash flows is 10%, what is the net present value of this project?

Select one:

a. $0.00

b. $0.71

c. $64.10

d. The NPV is negative

e. $19.79

5. In a duopoly market with two identical firms, the market demand curve is: P=50-2Q And the marginal cost and average cost of each firm is constant: AC=MC=2 a. Solve for firm 1’s reaction curve and graph b. Solve for firm 2’s reaction curve and graph c. Solve for each firm’s Q and P in a cournot equilibrium and show on your graph i. What is the profit for each firm?

6. Now assume the same market demand curve as question 5 , but the firms are now colluding. a. What is the collusion P, Q? b. Add the collusion curve to your graph above. c. What are profits?

7. What if question 5 demand curve was in a competitive equilibrium. a. What would the P, Q be? b. What would profits be?

8. Go back to your question 5 demand curve. Now assume firm 1 makes their decision about output first (Stackelberg Model). a. How much will they choose to produce? b. How much will firm 2 choose to produce? c. Calculate profit for firm 1 and firm 2. What does this tell you about being first mover?

QUESTION 1

For the past two years, Adam and his family have operated a part-time business from their home. The business, received a lot of attentions from the public, quickly building its reputation as an environmentally-conscious delivery service provider. The business has grown enormously and Adam decided to expand his family business, thinking about possibilities of running the business on a full-time basis.

On 1st Dec 2019, Adam decided to rent a shop and to operate the business known as Adam Delivery and Transportation Services. The following is the Trial Balance of the business as at 1st Dec, 2019:

Adam Delivery and Transportation Services

Trial Balance as at 1st Dec 2019

The following transactions occurred during the month of Dec:

Required:

1. Journalize the entries in the appropriate books of account.
2. Post the journal entries to the T-accounts and calculate the account balances.
3. Prepare a trial balance.
4. Prepare a Profit and Loss Statement for the month.
5. Prepare a Statement of Financial Position for the month.

Cornelius and Daisy are two independently operating bootleggers. Cornelius can produce 50 cases of moonshine or 200 bushels of cotton per year. Daisy can produce 20 cases of moonshine or 400 bushels of cotton per year. Assume that each have a straight line production possibility frontier or curve. In order to avoid suspicion from the law, each of them must spend at least half of their time gathering cotton, but because moonshine is much more profitable they pick the minimum possible quantity of cotton in order to avoid the law. Assume they both operate on their own PPF (i.e., they are each productively efficient). One day they meet and decide to work together.

1) What is Cornelius’ output operating independently ? Cotton: ________: Moonshine: ________

2) What is Daisy’s output operating independently? Cotton: ________ ; Moonshine: ________

3) Once they join forces, they must produce the same combined amount of cotton as before in order to avoid suspicion from the law, but by joining forces they can now produce more moonshine. Determine their combined production and who produces what. After combining forces, Cornelius produces ________ cotton and ________ moonshine; Daisy produces ________ cotton and ________ moonshine.

Hints: if you use graphs, note that the combined production possibility curve is not a straight line; use opportunity costs to determine who produces what when they combine forces.
(Enter whole numbers, no command and no decimal places.)

A stock priced at 50 can go up or down by 10 percent over two periods. The risk-free rate is 4 percent. Which of the following is the correct price of an American put with an exercise price of 50? (10 points)

1. Consider two firms facing the demand curve P = 50 ? 5Q, where Q = Q1 + Q2. The
firms cost functions are C1(Q1) = 20 + 10Q1 and C2(Q2) = 20 + 10Q2.
a. Suppose both firms have entered the industry. What is the joint profit-maximizing level
of output? How much will each firm produce? How would your answer change if the firms
have not yet entered the industry?
b. How much should Firm 1 be willing to pay to purchase Firm 2 if collusion is illegal but
a takeover is not?
c. Calculate the price, profit and quantity if the market is under Bertrand competition.
2. We have two firms with the same constant average and marginal cost, AC = MC = 5,
facing the market demand curve Q1 + Q2 = 53 ? P. Now we will use the Stackelberg model
to analyze what will happen if one of the firms makes its output decision before the other.
a. Suppose Firm 1 is the Stackelberg leader (i.e., makes its output decisions before Firm 2).
Find the reaction curves that tell each firm how much to produce in terms of the output of
its competitor.
b. How much will each firm produce, and what will its profit be?

1. Two liquids (water, 50% sodium hydroxide) must be continuously pumped into a tank and mixed together to ensure a constant (and consistent) product flow. As an engineer you must design this system.

1. Use a diagram to describe how your design
2. Describe the control structure/s within your circuit (1 mark)
3. Describe the safety features of your circuit (1 mark)