China's Galanz built a new complex at the expected cost of 2 billion yuan in order to produce 12 million air-conditioning units annually. The site was completed in 2004.
1 Make the following assumptions:

•The actual investment cost is either 1.9, 2.0, or 2.1 billion yuan, with respective probabilities of 0.25,0.50, and 0.25.
•The plant operates for 15 years, with the salvage value being either 50 million, 0, or-100 million(remediation costs) yuan at that time, with probabilities of 0.20,0.50, and 0.30, respectively.
•Finally, the net cash flow resulting from operations and sales is 60 yuan per unit. The number of units sold in each year is either 9 (0.1), 10 (0.2), 11 (0.3), or 12 (0.4) million. The figures in
parentheses represent the probabilities of the given level of production.

Assume that these are the only relevant cash flows and the interest rate is 18% per year.

a) Find an expression for the present worth (PW).

b) Find the expected value of the PW(if possible).

c) Find the standard deviation of the PW(if possible).

d)Find Pr(PW >0) (if possible).

e)Perform 200 simulations, and find the sample mean, standard deviation, as well as the probability that the investment will have a positive PW (point & interval estimates). Finally, summarize your process (which will naturally include all the appropriate steps) and results

Suppose the production function is written as follows: 0.5 0.5 ?=? ?

Suppose that saving rate (s) is 0.3, population growth rate (n) is 0.05, and capital depreciation rate (d) is 0.05. (note: when you write your equations, be careful to distinguish capitalized characters and non- capitalized characters!) 3-1.

(5%) Derive the per-capita production function (i.e. ? = ? and ? = ?). ?? 3-2.

(5%) Write down the key equation of the Solow model on capital accumulation per capita. Then, impute key parameter values. (you do not have to derive the key equation)

(15%) Draw a key graph for the Solow model. (hint: ? on y-axis and ? for x-axis. Then draw per- capita production function. You also need to draw two additional curves derived from the capital accumulation equation) 3-4.

(5%) What is the steady-state level of per-capita capital? Solve the model and obtain the number. What is the economic growth rate when the economy is under the steady-state? 3-5. (10%) Suppose at the first period of the economy, ? = 4. What happens to the economy? Use a graph to show your answer.

(10%) Suppose the economy now has higher population growth rate. What happens to the steady state? What happens to the economic growth rate? Discuss with a graph

1. Selected activities and other information are provided for Patterson Company for its most recent year of operations.

   						Expected Consumption Ratios
   Activity		Driver		Quantity		Wafer A		Wafer B
   7.   Inserting dies		Number of dies		2,500,000		0.7		0.3
   8.  Purchasing materials		Number of purchase    orders		2,400		0.2		0.8
   1.  Developing test programs		Engineering hours		12,000		0.25		0.75
   3.  Testing products		Test hours		20,000		0.6		0.4
   ABC assignments						$150,000		$150,000
   Total overhead cost								$300,000

   Required:

   1. Form reduced system cost pools for activities 7 and 8. Do not round interim calculations. Round your final answers to the nearest dollar.

   Inserting dies cost pool	$
   Purchasing cost pool	$

   2. Assign the costs of the reduced system cost pools to Wafer A and Wafer B. Do not round interim calculations. Round your final answers to the nearest dollar.

   Wafer A	$
   Wafer B	$

   3. What if the two activities were 1 and 3? Repeat Requirements 1 and 2.

   Form reduced system cost pools for activities 1 and 3.

   Do not round interim calculations. Round your final answers to the nearest dollar.

   Developing test programs cost pool	$
   Testing products cost pool	$

   Assign the costs of the reduced system cost pools to Wafer A and Wafer B.

   Wafer A	$
   Wafer B	$

You are a banker and are confronted with a pool of loan applicants, each of whom can be either low risk or high risk. There are 600 low-risk applicants and 400 highrisk applicants and each applicant is applying for a $100 loan. A low-risk borrower will invest the $100 loan in a project that will yield $150 with probability 0.8 and nothing with probability 0.2 one period hence. A high-risk borrower will invest the $100 loan in a project that will yield $155 with probability 0.7 and nothing with probability 0.3 one period hence. You know that 60% of the applicant pool is low risk and 40% is high risk, but you cannot tell whether a specific borrower is low risk or high risk. You are a monopolist banker and have $50,000 available to lend. Everybody is risk neutral. The current riskless rate is 8%. Each borrower must be allowed to retain a profit of at least $5 in the successful state in order to be induced to apply for a bank loan. You have just learned that 1,000 loan applications have been received after you announced a 45% loan interest rate. You can satisfy only 500. What should be your optimal (profit-maximizing) loan interest rate? Should it be 45% (at which you must ration half the loan applicants) or a higher interest rate at which there is no rationing?

You are a banker and are confronted with a pool of loan applicants, each of whom can be either low risk or high risk. There are 600 low-risk applicants and 400 highrisk applicants and each applicant is applying for a $100 loan. A low-risk borrower will invest the $100 loan in a project that will yield $150 with probability 0.8 and nothing with probability 0.2 one period hence. A high-risk borrower will invest the $100 loan in a project that will yield $155 with probability 0.7 and nothing with probability 0.3 one period hence. You know that 60% of the applicant pool is low risk and 40% is high risk, but you cannot tell whether a specific borrower is low risk or high risk. You are a monopolist banker and have $50,000 available to lend. Everybody is risk neutral. The current riskless rate is 8%. Each borrower must be allowed to retain a profit of at least $5 in the successful state in order to be induced to apply for a bank loan. You have just learned that 1,000 loan applications have been received after you announced a 45% loan interest rate. You can satisfy only 500. What should be your optimal (profit-maximizing) loan interest rate? Should it be 45% (at which you must ration half the loan applicants) or a higher interest rate at which there is no rationing?

You are considering two investments. Let X represent the proportional rate of return on the first investment, and let Y represent the proportional rate of return on the second investment. These are annual rates of return.

X is approximately normally distributed with mean 0.35 and standard deviation 0.3. Y is approximately normally distributed with mean 0.40 and standard deviation 0.5.

These six questions are about the rates of return, X and Y.

1. What is the probability of a negative rate of return on the first investment?  3 decimals.

2. What is the probability of a negative rate of return on the second investment?  3 decimals.

3. If the rates of return on these investments are independent, what is the probability that the rates of return on both investments will be negative?  3 decimals.

4. What is the expected amount by which Y exceeds X? HINT: The amount by which the rate of return on the second investment is higher than the rate of return on the first investment is Y - X.   2 decimals.

5. If the rates of return on these investments are independent, what is the probability that the second investment will have a higher rate of return than the first? HINT: Restate the question in terms of the rate of return on the second investment minus the rate of return on the first investment.  3 decimals.

6. If instead X and Y have a correlation of – 0.5 (a negative correlation), what is the probability that the second investment will have a higher rate of return than the first? HINT: Be careful! You’re given the correlation, not the covariance!  3 decimals.

Suppose the price of one typical stock could only increase by 2 or decrease by 1 in one day. From the historical data, we somehow know that this stock goes up with probability 0.7, goes down with probability 0.3. Suppose the initial price is 100. Suppose we want to study the price behavior for that stock for one week(5-weekdays). (Round your answer in 3 decimal Places) This question is just for setting up the model.

what is the probability of the stock price close up at 102 at the end of Monday?

what is the probability of the stock price close up at 99 at the end of Monday?

Which of the following distribution bear the most resemblance to the distribution of stock price on Monday?

what is the probability of the stock price close up at 107 at the end of Friday?

Which of the following distribution bear the most resemblance to the distribution of stock price at the end of Friday?

what is the probability of the stock price close up at 108 at the end of Friday?

what is the probability of the stock price close up at most as 107 (include 107 itself) at the end of Friday?

what is the probability of the stock price close up at least as 108 (include 108 itself) at the end of Friday?

what is the probability of the stock price close up at least as 107 (include 107 itself) at the end of Friday?

what is the probability of the stock price close up at most as 100 (include 100 itself) at the end of Friday?

Question 3
The sales and finance team of a car company is evaluating a new proposed luxury model of its
brand that will require an investment of $1Billion in a new machine for car interior decoration.
Demand for the company’s car is expected to begin at 100,000 units in year 1, with 10% annual
growth thereafter. Production cost will be $35,000 per unit in the first year, and increase by a rate
of either 3% or 5% per year as a result of wage increase. Selling price will start at $37,000 and
increase by 4% of the production cost. The model will be phased out at the end of year 10. In
addition, 0.3%, 2% and 1.5% of before tax profit per year will be spent on social corporate
responsibility, commercial (including promotions) and recalls respectively. Assume taxes will be
30% of yearly profit and that inflation will remain at 0% per year throughout the 10 year of
production. Also assume interest rate is expected to be 3% per year in the first 5 years and 5% in
the last 5 years.
a. Based on present worth analysis, is the proposed investment profitable if production cost
increases by a rate of 3% per year as a result of wage increase? Justify your answer.
b. Based on present worth analysis, is the proposed investment profitable if production cost
increases by a rate of 5% per year as a result of wage increase? Justify your answer. (

Consider the following information regarding the performance of a money manager in a recent month. The table represents the actual return of each sector of the manager’s portfolio in column 1, the fraction of the portfolio allocated to each sector in column 2, the benchmark or neutral sector allocations in column 3, and the returns of sector indices in column 4.

a-1. What was the manager’s return in the month? (Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)

a-2. What was her overperformance or underperformance? (Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)

b. What was the contribution of security selection to relative performance? (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.)

c. What was the contribution of asset allocation to relative performance? (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.)

Lafarge is a French industrial company specializing in three major products: cement, construction aggregates, and concrete. Lafarge Zambia operates 2 integrated cement plants (situated in Ndola and Lusaka) with a total production capacity of 1.4 million tonnes per annum. Lafarge Zambia is considering to develop a new plant in the central province of Zambia. The following three options available. These are to open a small plant, a medium-sized plant, or no plant at all. The marketing department has advised that the market for a plant in central province can be good, average, or bad. The probabilities for these three possibilities are 0.2 for a good market, 0.5 for an average market, and 0.3 for a bad market. The net profit or loss figures for the medium-sized and small plant for the various market conditions are given in the following table. Building no plant at all yields no loss and gain.

The above information has been given to you as management accountant of Lafarge.

Required

1. Which of the three options would you recommend and why?

Basing on the minimax regret criterion and the minimum Expected Opportunity loss criterion, which would you recommend? (10 mar