Consider a 2-year Treasury bond with a face value of $100 and that pays coupons at a rate of 6% semiannually. What is the bonds par yield given the following Treasury zero rates?
Maturity (years) Zero rates
0.5          3.0%
1.0          3.3%
1.5          3.6%
2.0          3.9%

A forklift will last for only 3 more years. It costs $6,000 a year to maintain. For $17,000 you can buy a new lift that can last for 8 years and should require maintenance costs of only $3,000 a year.

a-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 5% per year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

a-2. Should you replace the forklift?

b-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 12% per year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b-2. Should you replace the forklift?

1. A city has calculated the probability of having a significant rupture in a year: p = 0.02. This probability remains fixed from year to year, independent of whether there was a rupture in a preceding year. The city has asked you to determine the following (for each question be sure to specify what probability model you are using and justify the choice.)

a. The probability that the rupture will occur in the 4th year.

b. The expected number of years until the first rupture.

c. The probability of exactly 4 ruptures in the next 14 years.

d. The standard deviation, of the number of ruptures in the next 14 years.

e. The probability that the first rupture occurs in one of the first 4 years.

3. The Wolf Company uses a standard cost accounting system and estimates production for the year to be 60,000 units. At this volume, the company's variable overhead costs are $0.50 per direct labor hour.
   The company's single product has a standard cost of $30.00 per unit. Included in the $30.00 is $13.20 for direct materials (3 yards) and $12.00 of direct labor (2 hours) and $4.80 for overhead. The company's variable overhead costs are $0.50 per direct labor hour.
   Production information for the month of March follows:
   

Variances

Required:
In the chart above, the fixed overhead variances are given. Provide the calculations to prove those numbers.

Fixed OH price variance:

Fixed OH volume variance:

Record journal entries for the following production transactions (see descriptions in the journal). Note-the variances are computed for you in the chart above.

1.Record direct materials variances, 2.Record direct labor variances, 3.Record the actual variable and fixed overhead incurred. (this is not in your demonstration notes) 4. Record the variable and fixed overhead applied to production. (this is not in your demonstration notes) 5. Record manufacturing overhead variances, 6. Transfer finished goods to CGS, 7. Record Cost of Goods Sold-assume all production was sold for $235,000., 8.Record the closing entry for the variance accounts

Given the following Hypothetical Example and the base year is 2017, answer the questions that follow

1. Calculate the nominal GDP in the three years
   
   
2. Calculate the real GDP in the three years.
   
   
3. Calculate the GDP deflator in the three years
   
   
4. Calculate the real GDP growth between 2018 and 2019
   
   
5. Calculate the rate of inflation in 2019

June 30th: The company issues a 5-year bond with a face value of $100,000 and a stated annual rate of 8%. Interest is due on June 30th each year. The market rate is 6% on the date of issuance. Prepare the Journal Entry for June 1st, and the journal entry to acrrue interest at year end. The effective interest method is used to amorize bond premiums and discounts.

You are valuing an investment that will pay you $23,000 per year for the first 8 years, $27,000 per year for the next 12 years, and $53,000 per year the following 12 years (all payments are at the end of each year). If the appropriate annual discount rate is 10.00%, what is the value of the investment to you today?

The mean number of sick days an employee takes per year is believed to be about 10. Members of a personnel department do not believe this figure. They randomly survey 8 employees. The number of sick days they took for the past year are as follows: 11; 6; 13; 5; 9; 9; 6; 8. Let X = the number of sick days they took for the past year. Should the personnel team believe that the mean number is about 10? Conduct a hypothesis test at the 5% level.

Note: If you are using a Student's t-distribution for the problem, you may assume that the underlying population is normally distributed. (In general, you must first prove that assumption, though.)

1. What is the test statistic? (If using the z distribution round your answers to two decimal places, and if using the t distribution round your answers to three decimal places.)

2. What is the p-value? (Round your answer to four decimal places.)

3. Construct a 95% confidence interval for the true mean. Sketch the graph of the situation. Label the point estimate and the lower and upper bounds of the confidence interval. (Round your answers to three decimal places.)

Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process.

Waterways likes to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2019, totaled $181,800.

Direct Materials

Direct materials cost 80 cents per pound. Two pounds of direct materials are required to produce each unit.

Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2019, totaled 11,220 pounds. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2019, totaled $102,605.

Other Information

The Cash balance on December 31, 2019, totaled $100,000, but management has decided it would like to maintain a cash balance of at least $700,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.50 per share for 4,720 shares outstanding. The company has an open line of credit with Romney’s Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 9% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $540,000 equipment purchase is planned for February.

1. Maxie Company is creating their budget for the following year. Here is their relevant information:

Expected Sales 1,000 units per month

Sales Price $15 per unit

Variable Labor costs $3 per unit

Variable Material costs $2 per unit

Fixed Costs $6,000 per month

In the first month of the new year, Maxie Company's operating income was $2,000. What is their static budget operating income variance?

A. $4,000 Favorable

B. $4,000 Unfavorable

C. $2,000 Unfavorable

D. $2,000 Favorable

2. Burton Company produces top hats. They are trying to maximize profits. Here is their relevant information:

Selling price per hat: $50 each

Labor costs per hat: $15

Material costs per hat: $10

Fixed Costs per month: $160,000

Burton Company wants to increase operating income to $100,000 per month. How many hats would they need to sell?

A. 6,400 hats

B. 2,000 hats

C. 10,400 hats

D. 4,000 hats

3. Burton Company produces top hats. They are comparing budgeted to actual results. Burton Company budgeted producing 10,000 hats each month. Here is the rest of their relevant information:

Selling price per hat: $50 each

Labor costs per hat: $15

Material costs per hat: $10

Fixed Costs per month: $160,000

Burton Company produces 8,000 hats in January. Their actual labor costs in January are $125,000. What is the flexible budget variance for labor costs?

A. $25,000 Favorable

B. $5,000 Favorable

C. $5,000 Unfavorable

D. $25,000 Unfavorable