How do you use pre-trade relative prices or opportunity costs to determine patterns of trade?

Under trade, the equilibrium relative price of a traded good must stay within which interval in order for trade to be mutually beneficial?

How are gains from trade reflected in a graph that involves PPF and indifference curves?

6. Company X is going to issue 2,000 stock option (200,000 shares) on its common stock to the top executives today.  The exercise price on the stock options is $30 per share.    If past experience dictates that the executives will exercise their option by the 11th year on average and that the variance of stock returns is .15 (annual), calculate the value of these stock options assuming a dividend yield of 1% and a risk free rate of 4%.  The stock is trading at $27 per share. The company finds that 90% of options are exercised.

b.  What is the minimum value of the options that must be amortized on the company's financial statements according to FASB 123R?

Comcast is the largest cable provider in the United States. This activity is important because despite its impressive power, influence, and politics, Comcast failed to effectively influence stakeholders including customers, employees, regulators, networks, and other content providers.

The goal of this activity is to apply the knowledge of OB in order to understand why Comcast failed in its bid to acquire Time Warner, and allow you to provide realistic solutions for future acquisition attempts.

Read the case about Comcast’s failure to influence key stakeholders. Then, using the 3-step problem-solving approach, answer the questions that follow.

Like many companies in the telecom industry, Comcast has chosen to grow by buying competitors. After acquiring AT&T’s Internet business in 2001, the company has remained on the acquisition train ever since. Its largest purchase to date was NBC Universal in 2011 for $18 billion, but its most notable was its thwarted 2015 attempt to buy Time Warner for $45 billion. Despite its impressive power, influence, and politics, Comcast failed to effectively influence stakeholders including customers, employees, regulators, networks, and other content providers. More than 300,000 comments were filed with the Federal Communication Commission (FCC) by customers who opposed the merger. For perspective, the merger between AT&T and T-Mobile drew just over 40,000 comments.¹

Why Bother in the First Place?

Comcast is the largest cable provider in the United States despite having the worst customer satisfaction ratings in its industry. It has twice earned the dubious distinction of being the “Worst Company in America,” according to Consumer Reports’ customer satisfaction arm. Comcast’s customer service was so poor as to be considered legendary. And its reputation with various networks and cable channels such as Discovery, Disney, 20th Century Fox, and the NFL Network had been declining for years.² These partners are in effect customers, and Comcast has pressured them to pay higher fees to distribute their content through its cables.³

Industry trends were affecting Comcast’s current performance and its future prospects. Consumers have been cutting the cable and instead accessing their content via streaming alternatives such as Netflix and Amazon Prime. Netflix alone accounts for one-third of all Internet traffic. But apparently believing that being No. 1 was not enough, Comcast’s leaders decided that acquiring Time Warner would enable them to better serve existing and new customers, as well as to defend against increasingly diverse competition from Google, Dish Network, and others.⁴

Attempts to Influence the Players

Comcast was determined and resourceful in its attempt to make things go its way. A major part of its efforts focused on Washington, D.C., since no merger of that size goes through without regulatory approval. Comcast employs a force of more than 100 lobbyists, and its $17 million annual lobbying budget is second only to Google’s.⁵ Lobbying efforts were largely intended to influence officials in the FCC and Department of Justice (DOJ), the regulators who would ultimately decide how the merger would affect competition and consumer choice, and who would either block it or allow it to proceed. Members of these government departments were buried in data, wined and dined, and presented with dazzling arguments highlighting the potential benefits of the merger. But Comcast did not stop there. CEO Brian Roberts courted President Obama, golfing with him on Martha’s Vineyard. And Comcast Executive Vice President David Cohen hosted three fund-raisers for the president at his home, raising more than $10 million for the Democratic party.⁶ Roberts and Cohen presumably thought that associating with key players in the government would win them favor with regulators and members of Congress who might influence the merger and other policies favorable to Comcast.

For its part, the company argued that a merger of the two largest players wouldn’t stifle competition but instead allow them to provide more services to more customers. For instance, it currently provides Internet services to low-income and rural residents. Combining with Time Warner, the company claimed, would enable it to serve even more of these customers.⁷

The Other Side and Ultimate Outcome

Ultimately, the money, the relationships, the lobbyists’ arguments, and the pressure failed to work. Its opponents used many of the same bases of power, influence, and political tactics to argue against the merger that Comcast used to promote it, and the company withdrew its bid for Time Warner. It didn’t help that Comcast already had such a poor reputation with many of the parties from whom it needed support. It is noteworthy that in mid-2016 Charter Communications successfully acquired Time Warner in a merger worth $79 billion.⁸

Assume you are CEO Roberts, and you want to successfully acquire a large competitor in the future. Drawing on what you learned from the Time Warner experience, what would you do now to improve your chances?

Apply the 3-Step Problem-Solving Approach to OB

Step 1: Define the problem.Step 2: Identify causes of the problem by using material from this chapter, which has been summarized in the Organizing Framework for Chapter 12 and is shown in Figure 12.9. Causes will tend to show up in either the Inputs box or the Processes box.Step 3: Make your recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5). Which recommendation is desirable and feasible?

Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,050,000. The project began in 2018 and was completed in 2019. Data relating to the contract are summarized below:

20182019

Costs incurred during the year$304,000 $1,595,000

Estimated costs to complete as of 12/31 1,216,000  0

Billings during the year 385,000  1,630,000

Cash collections during the year 252,000  1,755,000

Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion.
2. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time.
3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion.
4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming this project does not qualify for revenue recognition over time.

• Required 1
• Required 2
• Required 3
• Required 4

Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion. (Loss amounts should be indicated with a minus sign. Use percentages as calculated and rounded in the table below to arrive at your final answer.)

Notes Receivable Discounting

Marienau Suppliers had the following transactions:

Required:

Record the transactions in a general journal. Assume 360 days in a year.

Since the SUTA rates changes are made at the end of each year and there is much discussion about changes to the FUTA rate, the available 2017 rates were used for FUTA and SUTA. Note: For this textbook edition the rate 0.6% was used for the FUTA tax rate for employers. Example 5-10 Applebaum Security Company is located in State H, which enables employers to reduce their contribution rates under the experience-rating system. From 2004 to 2013, inclusive, the company's total contributions to state unemployment compensation amounted to $18,135. For the calendar years 2014 to 2017, inclusive, the contribution rate for Applebaum was 3.7%. The contributions of each employer are credited to an account maintained by the State Unemployment Compensation Commission. This account is credited with contributions paid into the account by the employer and is charged with unemployment benefits that are paid from the account. Starting January 1, 2018, the contributions rate for all employers in State H will be based on the following tax-rate schedule:

Issue 4: Design a Guarantee Policy

A company developed a new product – Toner Cartridge. In order to attract more customers to purchase the new product, the manager of the company designs a guarantee policy. If a customer purchases a toner cartridge that does not reach the guaranteed pages, the customer can get 50% of the money back. The manager does not want to lose money. However, if the guaranteed pages were set too low, the guarantee policy will not be attractive to customers at all. From actual tests with the toner cartridges, the company estimated that the mean of printing pages is 30,000 pages and the standard deviation is 1500 pages. To determine guaranteed pages, the manager just simply sets 28,500 pages as guaranteed pages. In your opinion, does the way the manager determines the guaranteed pages make any sense? If you think that it does, explain your reason why. If not, explain your reason why not, and describe what you would do if you were the manager. Discuss and explain your reasons. You must provide your statistical analysis and reasons.

Country ,Infant deaths/1000 ,health $ per capita ,Obesity %,Average Income,Suicides/ 100,000,Life expectancy,Universal Health Care?, % Diabetes, Leading Cause of Death, Hospital beds/ 100,000
Algeria   21.9 362   23.6   4270   3.1   75   no   7.5   Stroke   17
Argentina   11.1   605   26.5   11960   14.2   76   no   6   Heart Disease   50
Australia   3   6031   29.9   54420   11.8   83   yes   5.1   Heart Disease   38
Austria   2.9   5581   20.1   45230   16.4   82   yes   6.9   Heart Disease   76
Belgium   3.3   4884   22.1   41860   20.5   81   yes   5.1   Heart Disease   62
Brazil   14.6   947   20.1   8840   6.3   75   no   10.4   Heart Disease   22
Burkina Faso   60.9   35   5.2   640   9.2   59   no   2.2   Influenza   4
Canada   4.3   5292   30.1   43660   12.3   82   yes   7.4   Heart Disease   27
China   9.2   420   7.3   8260   10   76   no   9.8   Stroke   42
Colombia   13.6   569   20.7   6320   6.1   74   no   10   Heart Disease   15
Denmark   2.9   6463   21   56730   12.2   81   yes   7.2   Heart Disease   31
Ecuador   18.4   579   18   5820   7.5   76   no   9.2   Heart Disease   15
Ethiopia   41.4   27   3.3   660   8.4   65   no   3.4   Influenza   2
Finland   1.9   4612   22.8   44730   16.2   81   no   6   Heart Disease   49
France   3.5   4959   25.7   38950   16.9   83   yes   5.3   Lung Cancer   65
Germany   3.1   5411   22.7   43660   13.4   81   yes   7.4   Heart Disease   83
Ghana   42.8   58   10.9   1380   6.9   62   yes   2.3   Stroke   9
Greece   3.6   1743   25.1   18960   4.3   82   yes   5.2   Heart Disease   48
Guatemala   24.3   233   16.4   3790   2.5   72   no   11.1   Influenza   6
Iceland   1.6   4662   23.9   56990   13.1   83   yes   6.1   Heart Disease   32
India   37.9   75   4.7   1680   15.7   68   no   9.3   Heart Disease   7
Ireland   3   4239   27   52560   11.7   82   yes   4.4   Heart Disease   28
Israel   3.2   2910   25.8   36190   5.5   82   yes   7.5   Heart Disease   31
Italy   2.9   3258   23.7   31590   7.9   84   yes   5.1   Heart Disease   34
Japan   2   3703   3.5   38000   19.6   84   yes   5.7   Stroke   134
Kenya   36.6   78   5.9   1380   6.5   62   no   2.4   Influenza   14
Lebanon   7.3   569   30.8   7680   3.1   80   no   13   Heart Disease   29
Luxembourg   1.6   8138   24.8   76660   11.1   82   yes   4.7   Heart Disease   49
Malta   5.2   2471   28.7   24140   6   82   yes   9.9   Heart Disease   47
Mexico   11.9   677   27.6   9040   5   77   no   15.8   Diabetes   16
Myanmar   40.7   20   2.9   1190   4.3   66   no   6.8   Stroke   9
Netherlands   4.8   5694   21.9   46310   12.6   82   yes   5.5   Lung Cancer   47
New Zealand   3.3   4896   30.6   39070   11.9   82   yes   7.3   Heart Disease   28
Nicaragua   19.4   178   15.5   2050   9.5   75   no   9.2   Heart Disease   9
Norway   2.2   9522   24.8   82330   10.9   82   yes   6   Heart Disease   39
Peru   13.6   359   20.4   5950   5.8   75   no   6.9   Influenza   16
Portugal   3   2097   22.1   19850   13.6   82   yes   9.9   Stroke   34
Spain   3.6   2658   26.5   27520   8.5   83   yes   7.7   Heart Disease   30
Sweden   2.4   6808   22   54630   15.4   83   yes   4.7   Heart Disease   26
Switzerland   3.5   9674   21   81240   15.1   83   yes   6.1   Heart Disease   47
Tunisia   12.1   785   27.1   3690   5.5   75   no   9.6   Heart Disease   22
Turkey   11.6   1037   29.4   11180   8.7   75   yes   12.8   Heart Disease   27
United Arab Emirates   5.9   2405   34.5   40480   2.9   78   yes   19.3   Heart Disease   12
United Kingdom   3.5   3377   29.8   42390   8.5   82   yes   4.7   Heart Disease   28
United States   5.6   9403   35   56180   14.3   79   no   10.8   Heart Disease   29
Venezuela, RB   12.9   923   24.3   12500   3   74   no   12   Heart Disease   8

Task 7: Best Way to Measure the Center (11 points)

The center of a data set is a value that represents a “typical” data point. There are three ways to measure the center of a data set: mean, median, or mode. In a perfect data set, the mean, median, and mode would all be equal and would accurately represent the center of data set. Unfortunately, most real-world data sets are not perfect. Depending on the characteristics of the variable, we may need to choose the best way represent the center, or “typical” value. For each variable in the Global Health Summary data set, you will need to investigate and decide what measure of center (mean, median, or mode) should be used to best represent a “typical” value.   For each variable, briefly explain how you came to your conclusion.

Hint: You may want to consider the type of variable (qualitative or quantitative), shape of the distribution, and/or if there are any outliers.

The manager of a department store believes that the mean annual income of the store's credit card customers is at least $21,000. For a sample of 90 customers the mean and standard deviation of income were found to be $20700 and $1450 respectively.

(1) Use the tables in the textbook to determine the critical value for the test statistic at the 5% level of significance. State your answer correct to three decimal places.

(2) Determine the calculated test statistic correct to 3 decimal places