1. Suppose B&E Press paid dividends at the end of each year according to the schedule below. It also reduced its share count by repurchasing 5 million shares at the end of each year at the ex-dividend stock prices shown. (Assume perfect capital markets.)

a.   What is total market value of B&E’s equity, and what is the total amount paid out to share­holders, at the end of each year?

b.   If B&E had made the same total payouts using dividends only (and so kept its share count constant), what dividend would it have paid and what would its ex-dividend share price have been each year?

c.   If B&E had made the same total payouts using repurchases only (and so paid no dividends), what share count would it have had and what would its share price have been each year?

d.   Consider a shareholder who owns 10 shares of B&E initially, does not sell any shares, and reinvests all dividends at the ex-dividend share price. Would this shareholder have preferred the payout policy in (b), (c), or the original policy?

Use the table below to answer the questions below.

The following prices are for call and put options on a stock priced at $50.25. The March options have 90 days remaining and the June options have 180 days remaining. In your profit answers below, assume that each transaction is scaled by 100, reflecting the size of option contracts.

a) (10 pts) You think the stock price will end up in the $49 to $51 range around mid March. Selecting from the March call options only, which option strategy from Chapter 7 would you recommend to provide a profit from this low-volatility forecast? What would be your option transactions be to set up this spread? What would be your maximum possible profit from this strategy?

2. (10 pts) Different Scenario:   You think the stock price will fall modestly and end up around $$44-$45 by mid-June.   Selecting from the June put options only, what option strategy would you recommend from Chapter 7 and what would your option transactions be to set it up?

-What would be your profit, in dollars, if the stock price turned out to be $44 at option expiration?

-What is the breakeven terminal stock price for this strategy?

1) Please find the partially completed multiple regression analysis below, which explores the relationship between the sales (in hundreds) and the independent variables price(in dollars), promotional expenditure(in hundreds of dollars) and the quality score ( 0-100) for a very popular Christmas season toy.

The regression equation is

Sales = 343.2 - 0.23* Price + 2.7* Promotional exp + 0.22* Quality

Predictor Coef Standard Error/ SE Coef    VIF

Constant 343.20 / 62.59 / 0

Price -0.23358 / 0.0373 / 2.415

Promotional exp 2.704 / 1.4 / 1.047

Quality 0.2204 / 0.1429 / 10.387

R-Sq =

Analysis of Variance

Source DF SS   

Regression 0 / 2847.78

Residual Error   

Total 15 / 3933.40

Answer questions A - F based on the above analysis

A) Is the factor Promotional Exp significant at α=0.05 ? Perform the test of hypothesis and show all the relevant calculations.

B) Construct a 95% confidence interval estimate of the population slope of sales with Quality showing all the relevant calculations and also state whether 'Quality' is a significant factor in predicting sales.

C) What is the value of the partial F test statistic (F_STAT) for the independent variable 'Price' (show all the relevant calculations)?

D) Is there a problem with multi-collinearity  among independent variables in this analysis? Explain.

E) What is the adjusted R² value?(show all the relevant calculations)

F) Based on the ANOVA presented, perform the overall F- test showing all the relevant calculations and also state if the regression is significant? (α=0.05)

The market for apple pies is competitive and has the following demand schedule:

a. When P = $11, how many pies does each producer make? [Hint: Find MR. Use the profit maximization rule: MR = MC. Firms never choose the quantity such that MR < MC. Or, you can directly compute profit for each quantity.]

b. How many producers are there? How much profit does each producer earn? [Hint: To get the number of producers in the market, use the relationship between market quantity and the quantity produced by each firm. Because we assume all firms are identical, firms are producing the same quantity.]

Long-run equilibrium

c. In the long-run, there is free entry and exit process. How much profit does each producer earn in the long-run equilibrium? Why?

d. What are the market price and the number of pies each producer makes? How many pies are sold? [Hint: Use the condition for the market price in the long-run. Next, note that once the market price is determined, each seller’s quantity is determined by the above table.]

e. How many producers are operating in the long-run? Is the number of sellers larger than that in the short-run? Why?

The following relates to the Lerner Index.

Which of the following statements is (are) true?

The inverse demand curve for a monopolist changes from

A) P = 75– 5 Q to
B) P = 50 – 5 Q

while the marginal cost of production remains unchanged at a constant $20. After the change in the demand curve, the price changes from _____ to _____ and the output changes from _____ to _____.

A monopolist that produces a computer software program packages has an inverse demand curve of P=150-5 Q and a marginal cost of 5 Q where P is the price per program package and Q is the number of software program package.

The firm earns a producer surplus that is ____ dollars higher as a monopolist versus if it were in a perfectly competitive market.

In this question, we will explore the irrelevance of dividend policy.

Suppose XYZ Inc currently has 1 million shares outstanding, and XYZ expects to make $1 million per year in perpetuity, all of which is paid out in dividends. Assume the relevant discount rate is 10%. (Ignore taxes and transaction costs, and assume the markets are efficient.Use the DDM to value the shares)

a.What is the value of one share of XYZ Inc? (Assume the next dividend payment is one year from today.)

b.Now assume XYZ Inc plans to change its dividend policy as follows: the company will skip the next dividend payment and instead it will repurchase $1 million worth of shares. In year 2, and in all subsequent years, the dividends will resume and all the income will be paid out as dividends. What is the current share price under this policy? Provide an explicit calculation of the share price given the new dividend payment stream.(Hint: Let P1 be the share price at time 1, immediately before the share repurchase. Calculate the number of shares repurchased, and then find the dividends per share for years 2 and beyond. Discount all this back in order to find the current share price.) Do not assume the M&M proposition that the dividend policy is irrelevant. Essentially, this question is meant to prove that fact.

c.Suppose you purchase 100 shares today, and sell them 2 years from now, immediately after the year 2 dividend is paid. What is your total profit under each dividend policy? Does this difference in profit violate the indifference of dividend policy? Expla

A farmer owns 450 acres of land. He is going to plant each acre with wheat or corn. Each acre planted with wheat yields 2,000 pounds of wheat, requires three workers, and two tons of fertilizer. Each acre planted with corn yields 3,000 pounds of corn, requires two workers, and four tons of fertilizer. The wheat can be sold at the selling price of $2.5 per pound, whereas the corn at the price of $3.4 per pound. To pay for the workers and the fertilizers it is estimated that the farmer will have to incur a cost of $0.5 per pound of wheat and of $0.4 per pound of corn. There are currently 1,000 workers and 1,200 tons of fertilizer available.

Using excel:

Create a model in Excel and use Solver to help the farmer maximize the profit from his land. (show the decision variables, objective function, & constraints)

Generate the sensitivity report from Solver. Imagine you can change the selling price for a pound of wheat\t, while all the other parameters remain the same. What is the minimum selling price per pound of wheat that would make it optimal to produce wheat? Explain your reasoning.

What amount of extra profits will the company make if it has extra 100 tons of fertilizers available? Explain your reasoning.

Suppose the farmer has the possibility to acquire additional 50 acres of land to increase the production. What amount of extra profits will the farmer attain with this extra land?

(Please attach excel file solution if possible)

(See the eText on p. 81). What effect would the following actions have on Philippe Corporation’s current ratio? Provide your reasoning. Hand-write your responses (no copying, please). a. Starting 2015 Current Ratio = _________________ b. $100 Inventory is purchased with cash. c. A supplier is paid $100 with cash. d. A short-term bank loan of $100 is repaid with cash. e. Long-term debt of $100 is paid off early. f. A customer pays off a credit account of $100. g. Inventory is sold for $100 at cost. h. Inventory is sold for $200 - a profit of $100.

I posted this question before and the person who answered it answered wrong.........please have someone else try again

The following information applies to the questions displayed below.]

O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:

During its first year of operations, O’Brien produced 94,000 units and sold 76,000 units. During its second year of operations, it produced 80,000 units and sold 93,000 units. In its third year, O’Brien produced 82,000 units and sold 77,000 units. The selling price of the company’s product is $73 per unit.

Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first):

a. Compute the unit product cost for Year 1, Year 2, and Year 3. (Round your intermediate calculations and final answers to 2 decimal places.)

b. Prepare an income statement for Year 1, Year 2, and Year 3. (Round your intermediate calculations to 2 decimal places.)

4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first):

a. Compute the unit product cost for Year 1, Year 2, and Year 3. (Round your intermediate calculations and final answers to 2 decimal places.)

b. Prepare an income statement for Year 1, Year 2, and Year 3. (Round your intermediate calculations to 2 decimal places.)