correlation measures the degree to which two variables are related to one another.

Here are the definitions of the three possibilities:

• Positive correlations: In this type of correlation, both variables increase or decrease at the same time. A correlation coefficient close to +1.00 indicates a strong positive correlation.
• Negative correlations: This type of correlation indicates that as the amount of one variable increases, the other decreases (and vice versa). A correlation coefficient close to -1.00 indicates a strong negative correlation.
• No correlation: This indicates no relationship between the two variables. A correlation coefficient of 0 indicates no correlation.

Values range from -1 to 1. The closer to -1 or 1 the stronger the correlation. The closer to 0 the weaker it is. Correlation is a term that refers to the strength of a relationship between two variables where a strong, or high, correlation means that two or more variables have a strong relationship with each other while a weak or low correlation means that the variables are hardly related. Correlation analysis is the process of studying the strength of that relationship with available statistical data.

Example: A recent study of marriage and education found a strong negative correlation between the level of education and the divorce rate. Data from the National Survey of Family Growth show that as education level increases among women, the divorce rate for first marriages decreases.

I did a study asking community members how safe they felt in their neighborhood (on a scale of 1 to 5, with 1 = not at all safe to 5=extremely safe). I also asked the same community members how often they used their community park (on a scale of 1=never to 5=always). I ran the statistics and my correlation is .789. Is this a negative or positive correlation? And what does it show (write it out like in the example above about the direction of each variable and what that means)

You operate your own small building company and have decided to bid on a government contract to build a pedestrian walkway in a national park during the coming winter. The walkway is to be of standard government design and should involve no unexpected costs. Your present capacity utilization rate is moderate and allows sufficient scope to understand this contract, if you win it. You calculate your incremental costs to be $268,000 and your fully allocated costs to be $440,000. Your usual practice is to add between 60% and 80% to your incremental costs, depending on capacity utilization rate and other factors. You expect three other firms to also bid on this contract, and you have assembled the following competitor intelligence about those companies.

Show all of your calculations and processes. Describe your answers in three- to five-complete sentences.

A.) What price would you bid if you must win the project?

M.D. is 69 years old, visits her GP for a repeat prescription of perindopril arginine 2.5 mg. She was diagnosed with heart failure and heart disease 1 year ago (LVEF < 40%) after a myocardial infarction and was started on carvedilol 12.5 mg. M.D. moved into a retirement village 1 year ago after the death of her husband. She is an active member of the walking group, but over the last 3 weeks she has had increased shortness of breath and fatigue after a steady 20 minute walk at the park. Since then she has reduced her level of physical activity and has also noticed swelling in her ankles despite her usual fluid tablets. She tells you that she has been having packaged soups instead of regular meals, because she finds it convenient, and is drinking more water than previously recommended (< 1.5 L/day was recommended after her heart failure diagnosis). Her medical history includes dyslipidemia, osteoarthritis, stable ischemic heart disease, and hypertension. Her current medicines (all once daily) are carvedilol 12.5 mg, aspirin 81 mg, atorvastatin 20 mg, celecoxib 200 mg, controlled-release isosorbide mononitrate 60 mg and furosemide 20 mg. M.D. currently weighs 70 kg (up by 4 kg from last visit 6 months ago) and her blood pressure is 140/82 mmHg. Serum biochemistry (urea, creatinine and electrolytes) was normal when tested 6 weeks ago. LDL was 100 and HDL was 52. Her estimated creatinine clearance was 60 mL/min.

Discuss how the chronic care model can be used to assist M.D

M.D. is 69 years old, visits her GP for a repeat prescription of perindopril arginine 2.5 mg. She was diagnosed with heart failure and heart disease 1 year ago (LVEF < 40%) after a myocardial infarction and was started on carvedilol 12.5 mg. M.D. moved into a retirement village 1 year ago after the death of her husband. She is an active member of the walking group, but over the last 3 weeks she has had increased shortness of breath and fatigue after a steady 20 minute walk at the park. Since then she has reduced her level of physical activity and has also noticed swelling in her ankles despite her usual fluid tablets. She tells you that she has been having packaged soups instead of regular meals, because she finds it convenient, and is drinking more water than previously recommended (< 1.5 L/day was recommended after her heart failure diagnosis). Her medical history includes dyslipidemia, osteoarthritis, stable ischemic heart disease, and hypertension. Her current medicines (all once daily) are carvedilol 12.5 mg, aspirin 81 mg, atorvastatin 20 mg, celecoxib 200 mg, controlled-release isosorbide mononitrate 60 mg and furosemide 20 mg. M.D. currently weighs 70 kg (up by 4 kg from last visit 6 months ago) and her blood pressure is 140/82 mmHg. Serum biochemistry (urea, creatinine and electrolytes) was normal when tested 6 weeks ago. LDL was 100 and HDL was 52. Her estimated creatinine clearance was 60 mL/min.

Discuss two (2) self-care management recommendations for M.D.

M.D. is 69 years old, visits her GP for a repeat prescription of perindopril arginine 2.5 mg. She was diagnosed with heart failure and heart disease 1 year ago (LVEF < 40%) after a myocardial infarction and was started on carvedilol 12.5 mg. M.D. moved into a retirement village 1 year ago after the death of her husband. She is an active member of the walking group, but over the last 3 weeks she has had increased shortness of breath and fatigue after a steady 20 minute walk at the park. Since then she has reduced her level of physical activity and has also noticed swelling in her ankles despite her usual fluid tablets. She tells you that she has been having packaged soups instead of regular meals, because she finds it convenient, and is drinking more water than previously recommended (< 1.5 L/day was recommended after her heart failure diagnosis). Her medical history includes dyslipidemia, osteoarthritis, stable ischemic heart disease, and hypertension. Her current medicines (all once daily) are carvedilol 12.5 mg, aspirin 81 mg, atorvastatin 20 mg, celecoxib 200 mg, controlled-release isosorbide mononitrate 60 mg and furosemide 20 mg. M.D. currently weighs 70 kg (up by 4 kg from last visit 6 months ago) and her blood pressure is 140/82 mmHg. Serum biochemistry (urea, creatinine and electrolytes) was normal when tested 6 weeks ago. LDL was 100 and HDL was 52. Her estimated creatinine clearance was 60 mL/min.

List two (2) factors that may have exacerbated M.D.’s heart failure and what suggestions you would provide for M.D.

M.D. is 69 years old, visits her GP for a repeat prescription of perindopril arginine 2.5 mg. She was diagnosed with heart failure and heart disease 1 year ago (LVEF < 40%) after a myocardial infarction and was started on carvedilol 12.5 mg. M.D. moved into a retirement village 1 year ago after the death of her husband. She is an active member of the walking group, but over the last 3 weeks she has had increased shortness of breath and fatigue after a steady 20 minute walk at the park. Since then she has reduced her level of physical activity and has also noticed swelling in her ankles despite her usual fluid tablets. She tells you that she has been having packaged soups instead of regular meals, because she finds it convenient, and is drinking more water than previously recommended (< 1.5 L/day was recommended after her heart failure diagnosis). Her medical history includes dyslipidemia, osteoarthritis, stable ischemic heart disease, and hypertension. Her current medicines (all once daily) are carvedilol 12.5 mg, aspirin 81 mg, atorvastatin 20 mg, celecoxib 200 mg, controlled-release isosorbide mononitrate 60 mg and furosemide 20 mg. M.D. currently weighs 70 kg (up by 4 kg from last visit 6 months ago) and her blood pressure is 140/82 mmHg. Serum biochemistry (urea, creatinine and electrolytes) was normal when tested 6 weeks ago. LDL was 100 and HDL was 52. Her estimated creatinine clearance was 60 mL/min.

evaluate legal and ethical concerns that should be considered when using this approach (Team -based)

Problem 12-26 Simple Rate of Return; Payback [LO12-1, LO12-6]

Sharkey’s Fun Center contains a number of electronic games as well as a miniature golf course and various rides located outside the building. Paul Sharkey, the owner, would like to construct a water slide on one portion of his property. Mr. Sharkey gathered the following information about the slide:

1. Water slide equipment could be purchased and installed at a cost of $360,000. According to the manufacturer, the slide would be usable for 12 years after which it would have no salvage value.
2. Mr. Sharkey would use straight-line depreciation on the slide equipment.
3. To make room for the water slide, several rides would be dismantled and sold. These rides are fully depreciated, but they could be sold for $97,500 to an amusement park in a nearby city.
4. Mr. Sharkey concluded that about 50,000 more people would use the water slide each year than have been using the rides. The admission price would be $3.90 per person (the same price the Fun Center has been charging for the old rides).
5. Based on experience at other water slides, Mr. Sharkey estimates that annual incremental operating expenses for the slide would be: salaries, $84,000; insurance, $4,700; utilities, $13,500; and maintenance, $10,300.

Required:

1. Prepare an income statement showing the expected net operating income each year from the water slide.

2-a. Compute the simple rate of return expected from the water slide.

2-b. Based on the above computation, would the water slide be constructed if Mr. Sharkey requires a simple rate of return of at least 13% on all investments?

3-a. Compute the payback period for the water slide.

3-b. If Mr. Sharkey accepts any project with a payback period of five years or less, would the water slide be constructed?

*I am seeking an answer to Question 1 B.*

ABC company is considering producing a new range of smartphones that will require it to build a

new factory. Feasibility studies have been done on the factory which cost $5 million. The studies

have found the following:

1. The factory will cost $25 million and will have a useful life of 20 years.

2. The land where the factory will go is currently used as a carpark for workers and it is assumed that the company will have to pay $200000 per year for their workers to park in a nearby carpark.

3. The factory will be depreciated on a straight line basis and will have a salvage value of $0 but it is believed that most of it can be sold for scrap after 20 years for $50000.

4. Due to the nature of the business they are in, they will have to perform some environmental tests to make sure that some of the chemicals they are using are not entering the ground water around the factory. These tests will be performed every 5 years and cost $625000.

5. Through the building of this factory and the selling of the phones it produces, it’s revenue will increase by $5 million in year 1 and remain at this level for the operational life of the factory.

6. The extra costs that the company accrues per year due to the project are $435000 for labour, $50000 for overhead like power and water bills and marketing costs for the new line of phones will be $500000 per year but will decrease by $15000 per year as the phone gains greater penetration.

7. The company’s current cost of capital is 8% per year.

8. The tax rate is 30%.

9. The project requires an initial investment in working capital of $1000000 that is returned

   in year 20.

Use the above information to answer the following (IN EXCEL):

A. Calculate the free cash flows that come from this project for the 20 years it is operational. ​

B. Calculate the NPV, IRR and payback period of the project. Should they go ahead with the project?

1. Alicia is the owner-operator of Cool Beans, a local coffee shop. For the past year, Cool Beans sold 215,000 drinks at an average price of $2.95 per serving. Her average variable cost per serving was $1.15. Currently, she has been using local TV and newspapers to generate interest and awareness at a cost of $171,000 per year. She recently contacted Brushfire Social Media and they estimated they could reach the same number of people in her community with a social media budget at half the cost, though it would require an additional one-time investment of $14,000 in their website and social platforms. As an additional option, Brushfire suggested a separate promotional campaign that would offer a $1 discount to any person who likes their social media page. Brushfire estimates that Cool Beans would sell an additional 5,900 cups with this discount and this new campaign would cost $2,500.

1. What is the Marketing ROI for the Brushfire website and social media plan compared to their current approach? ___ %

2. SleepItOff Properties is a West Coast company that owns and operates several hotel chains. Here is their partially completed income statement for the most recent fiscal year. Matt Tress, a summer intern for the finance team was asked to calculate some basic performance metrics as part of his training. He also was told that the company had $15 million in cash and $206 million of other assets. For Year Ending Dec 31, 2013 $Mill Total Revenue $88 Cost of Revenue $31 Gross Profit ? General, Selling and Admin $20 Depreciation $10 Operating Income or Loss ? Interest Expense $15 Pre-Tax Income ? Income Taxes ? Net Income ? If SleepItOff's Tax Rate is 30%

2. What is SleepItOff's Net Income?

Sharkey’s Fun Center contains a number of electronic games as well as a miniature golf course and various rides located outside the building. Paul Sharkey, the owner, would like to construct a water slide on one portion of his property. Mr. Sharkey gathered the following information about the slide:

1. Water slide equipment could be purchased and installed at a cost of $330,000. According to the manufacturer, the slide would be usable for 12 years after which it would have no salvage value.
2. Mr. Sharkey would use straight-line depreciation on the slide equipment.
3. To make room for the water slide, several rides would be dismantled and sold. These rides are fully depreciated, but they could be sold for $92,000 to an amusement park in a nearby city.
4. Mr. Sharkey concluded that about 50,000 more people would use the water slide each year than have been using the rides. The admission price would be $3.70 per person (the same price the Fun Center has been charging for the old rides).
5. Based on experience at other water slides, Mr. Sharkey estimates that annual incremental operating expenses for the slide would be: salaries, $82,000; insurance, $4,500; utilities, $13,300; and maintenance, $10,100.

Required:

1. Prepare an income statement showing the expected net operating income each year from the water slide.

2-a. Compute the simple rate of return expected from the water slide.

2-b. Based on the above computation, would the water slide be constructed if Mr. Sharkey requires a simple rate of return of at least 14% on all investments?

3-a. Compute the payback period for the water slide.

3-b. If Mr. Sharkey accepts any project with a payback period of five years or less, would the water slide be constructed?