Question 1
(1) An item of stock costing $60,000 was written down to its realizable value of $35,000.
(2) School fees paid to the proprietor's son was debited to the Drawings account.
(3) $2,500 paid for a printer was written off as expense(instead of being capitalized).
(4) Assets like inventory are valued in dollars, not units, for the financial statements.
(5) Company reports revenue when it is earned instead of when the cash is collected.
(6) Assets will normally be recorded at their historical cost in balance sheet.

Required:

Identify the name of the concept or principle for the above events.

How can a company utilize tools like NPV and IRR to optimize decisions about which projects to invest in? Why is this particularly important when cash flows are earned over many years, and especially when the cash flows are uneven? How can different degrees of risk among projects be factored into the decision? How so we optimize the value of our proposed capital investments if (a) there is a set maximum amount of capital dollars to be invested vs. (b) there is no theoretical maximum and potentially all projects which “make financial sense” could be funded?

f you are from Christian background, can you answer the question, "What does it mean to be Christian?", without excluding numerous groups of people who fervently view themselves as "Christian," but who live, practice and believe in ways that may differ significantly from you? They, too, appeal to the same Bible that you do -- often emphasizing things there that you either ignore, minimize or interpret differently. Is this situation any different for Christians than it is for people of any of the other traditions we are studying this quarter? Can people of ANY religious tradition describe their religious tradition without excluding others who view themselves as part of that same tradition, but who live, practice and believe in ways that may differ significantly from others who claim the same tradition?

University professors are always interested in whether students are actually meeting the learning objective in a course. One of the learning objectives for this statistics class is that students will gain skills in statistical literacy. In other words, students should develop the ability to better understand the statistics that they read or hear about in the news. After teaching the course for several years, Dr. Gentzler wonders, “Are students meeting this learning objective? Do students who have taken SSI217 have greater statistical literacy than the entire student body?”. To find out, she develops a “statistical literacy scale” which runs from 0-20 with higher scores indicating greater statistical literacy. She administers a survey to the entire student body and a random sample of 100 former SSI217 students. Here are the results: The student body averaged 17 .3 on the statistical literacy scale. The population variance was never calculated. The SSI217 student sample averaged 19.4 on the statistical literacy scale, with a standard deviation of 5.2 points. Run the appropriate one-sample hypothesis test (with alpha = .05) to answer Dr. Gentzler’s research question.

Your work shown must include i. verifying that the assumptions are met.

ii. listing the null hypothesis and the research hypothesis.

iii. computing the appropriate test statistic.

iv. identifying the degrees of freedom (if necessary) and p-value v. writing a complete interpretation of the test and results.

show all work no outside sources

In an effort to get a better understanding of the factors affecting a high school student choice of college selection, 600 students were reported to apply for college admission from Sacramento county and they were asked to provide information on SAT scores and parent’s income. Portion of that data is reported in the table below. Use Chi-square test to examine how the categorical variable parent’s income affects the choice of professional degree among those who have applied for admission. Run the Chi square test and answer the three parts.

1. Write the null and alternative hypothesis
2. Determine the P value and provide its interpretation
3. What is your conclusion after running the Chi square test?

The PACE project at the University of Wisconsin in Madison deals with problems associated with high-risk drinking on college campuses. Based on random samples, the study states that the percentage of UW students who reported bingeing at least three times within the past two weeks was 42.2% in 1999 (n = 334) and 21.2% in 2009 (n = 843). Test that the proportion of students reporting bingeing in 1999 is different from the proportion of students reporting bingeing in 2009 at the 10% significance level.

(A.1) Construct a 90% confidence interval around the difference-in-proportions estimate. Enter the lower bound of the interval you calculated in the box below. (In this case, be sure to use the standard error you calculated when determining the test statistic that uses information about the population proportion.)

(A.2) Construct a 90% confidence interval around the difference-in-proportions estimate. Enter the upper bound of the interval you calculated in the box below. (In this case, be sure to use the standard error you calculated when determining the test statistic that uses information about the population proportion.)

(B.1) How would you interpret the confidence interval?

(B.2) What connections can you draw between the confidence interval and the hypothesis test?(Because zero falls outside/inside the confidence interval, we reject/fail to reject the null hypothesis.)

Chemists-R-Us Ltd., a large pharmaceutical chain, had sales per share of $122 in 2019, on which it reported earnings per share of $2.45 and paid a dividend per share of $1.12. The company is expected to grow 6% in the long term and has a beta of 0.9. The current risk-free rate is 7% and the market return is 12.5%.

Required:

(a) Estimate the appropriate price/sales multiple for Chemists-R-Us Ltd. and calculate the share price based upon this multiple.

(b) You observe the shares are currently trading for $34 per share. Assuming the growth rate is estimated correctly, what would the profit margin need to be to justify this price per share?

(c) Given your answer to part b, do you think the market’s valuation of $34 is reasonable? Explain your answer.

You are the manager of a U.S. company situated in Los Angeles and manages the import/export division of the company. The company distributes (resells) a variety of consumer products imported to the U.S.A from Europe and also exports goods manufactured in the U.S.A. to Canada.

The first transaction is for the import of good quality wines from France, since a retail liquor trading chain customer in the United States, for who you have been doing imports over the past five years has a very large order this time. The producer in France informed you that the current cost of the wine that you want to import is and €2,500,000. The producer in France will only ship goods in three months’ time due to seasonal differences but payment will have to be conducted six months from now.

The second transaction is for the export of 3d printers manufactured in the U.S.A. The country where it will be exported to is Canada. The payment of CAD 2,500,000 for the export to Canada will be received twelve months from now.

You consider different transaction hedges, namely forwards, options and money market hedges.

You are provided with the following quotes from your bank, which is an international bank with branches in all the countries:

Forward rates:

Bank applies 360 day-count convention to all currencies (for this assignment apply 360 days in all calculations).

Annual borrowing and investment rates for your company:

Bank applies 360 day-count convention to all currencies. Explanation – e.g. 3 month borrowing rate on $ = 2.687%. This is the annual borrowing rate for 3 months. If you only borrow for 3 months the interest rate is actually 2.687%/4 = 0.67175% (always round to 5 decimals when you do calculations). Furthermore, note that these are the rates at which your company borrows and invests. The rates are not borrowing and investment rates from a bank perspective.

Option prices:

Bank applies 360 day-count convention to all currencies. (Students also have to apply 360 days in all calculations). Option premium calculations should include time value calculations based on US $ annual borrowing interest rates for applicable time periods e.g. 3 month $ option premium is subject to 2.687%/4 interest rate.)

1. Compare the forward quotes and money market hedges with each other to determine the best exchange rate hedges for Canada

Table 7: Canada exchange rate hedges compared:

Which hedging technique should be applied? ____________________________________