"There are different sections that make up a classified income statement. The first section is operating revenue, this is the revenue that is earned from normal business activities. The next section is the cost of goods sold, where the information pertaining to the cost of merchandise sold during that period; three entries are needed for this section: beginning inventory, net delivered cost of purchases, and ending inventory. The next section is gross profit, which is the difference in net sales and cost of goods sold. Operating expenses are the expenses that are accumulated during normal business activities. Net income and net loss from operations is separated for easier readability. Other expenses and incomes are entered into different sections along with net income and net losses. Sometimes a condensed income statement is provided with summarized information in fewer lines of information." Is this information substantially different from the income statement that you would normally consider? Why do we call it classified?

In the Chicago mayor's race, candidate A proposes a project that will cost $200,000 today (t=0), $100,000 next year (t=1) and $15,000 to destroy it after ten years of operation (t=12) when the project is discontinued. Once finished in three years (t=3), it will generate a flow of revenue of $40,000 per year until it is discontinued in (t=12) - ie in t=12 the project generates that flow of revenue too.

1. Set the discount rate as r and write the expected present value of the costs and benefits.

2. Calculate the present value of the project if the discount rate is r=.1

3. Candidate B considers that a discount rate r=.3 is more realistic. Calculate the present value of the project with this new discount rate proposed by Candidate B. Why do you think Candidate B has an interest in convincing the public that her discount rate is more realistic?

Question 3 Scranton Motors Ltd faced the following situations. Journalize the adjusting entry needed at year end for each situation. Each scenario should be considered independently. The business has interest expense of $9,000 early in January 2017. Interest revenue of $3,000 has been earned but not yet received. When the business collected $12,000 in advance three months ago, the accountant debited Cash and credited Unearned Revenue. The client was paying for two cars, one delivered in December, the other to be delivered in February 2017. Salary expense is $1,000 per day – Monday through Friday – and the business pays employees each Friday. For example purposes, assume that this year, December 31 falls on a Tuesday. The unadjusted balance of the Supplies account is $3,100. The total cost of supplies on hand is $800. Equipment was purchased at the beginning of this year at a cost of $60,000. The equipment’s useful life is five years. Record the depreciation for this year and then determine the equipment’s carrying amount.

Suppose you are working at Air Italy, a commercial airline company in the European Union, and you recently purchased an order of 5 new planes of the Boeing 737 Max 8 for a total of $622 million from Boeing, a United States airplane manufacturer. Due to the news of two recent accidents likely linked to the software on these planes, Air Italy no longer wants to risk using them. Thus, Air Italy decides to return the order to Boeing for the full price. In order to receive all the funds, you must return this plane in 3 months (the remaining length of the warrantee), at which time Boeing will then pay you. However, you will have to convert this entire dollar payment into Euros in order to cover wages, routine maintenance costs, and administrative costs. You anticipate the dollar will depreciate relative to the euro and consider hedging the foreign exchange risk by using a forward contract to sell dollars for Euros. Today’s spot and 3-month forward exchange rates are given below.

Spot Price: $1 = € 0.901 3-Month Forward Price: $1 = € 0.889

a) Assuming that there are no transactions costs, how many Euros will Air Italy receive in three months if it enters into the forward contract?

b) If Air Italy does not hedge its risk and the exchange rate remains constant, how many Euros will it receive in three months?

c) Now, suppose that the dollar does in fact depreciate and that its spot price three months from today equals €0.876. If Air Italy does not hedge, how much revenue does the company lose from the exchange rate fluctuation (compared to what they would have made without hedging if the exchange rate had remained constant)?

d) Assuming the spot rate equals €0.876 three months from today, would entering into the forward contract have been a good idea in this case? Explain your answer.

e) If after three months the dollar has appreciated by exactly 5.0% and Air Italy has a hedged position, what is the value of its forgone revenue (i.e. what are the company's lost profits)?

Can annual sports team revenues be used to predict franchise​ values?

Team   Revenue ($mil)   Value ($mil)
Team 1   554   2806
Team 2   676   3437
Team 3   371   1333
Team 4   628   3202
Team 5   559   1852
Team 6   312   691
Team 7   342   858
Team 8   355   851
Team 9   394   869
Team 10   219   482
Team 11   258   579
Team 12   224   513
Team 13   516   414
Team 14   203   347
Team 15   156   329
Team 16   177   326
Team 17   162   307
Team 18   332   599
Team 19   411   863
Team 20   157   296

A. At the 0.05 level of​ significance, is there evidence of a linear relationship between the annual revenues generated and the value of a soccer​ franchise?

- The null and alternative hypotheses ?

- The value is?

- the test statistic is ?

B. Construct a 95​% confidence interval estimate of the mean value of all soccer franchises that generate ​$300 million of annual revenue.

C. Construct a 95​% prediction interval of the value of an individual soccer franchise that generates ​$300 million of annual revenue.

Question 1

If you lower the price of a product by 5% and the volume sold increases by 10%, this is considered _____.

1. inelastic demand
2. elastic demand

Question 2

A negative aspect of selecting unit volume as a pricing objective is that..

1. if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits
2. production often cannot keep up with demand
3. there are increased carrying costs with extensive inventories
4. it always positively correlates with a sales revenue objective
5. it can create competition between divisions within the organization itself causing conflicts over the allocation of resources

Question 3

Netflix used to charge $14.99 per month for its movie rental service. However, when Blockbuster introduced the same service at $13.99, Netflix dropped its price to $13.99. Netflix most likely made this price reduction in an attempt to...

1. decrease revenue but increase profit

2. increase efficiency
3. increase profit by decreasing revenue
4. maintain market share
5. decrease market share

Question 4

Buyers are more price sensitive when _____.

1. they need the product right away
2. they are more aware of substitutes for the product
3. the product is significantly more distinctive than others on the market
4. the product is a status symbol
5. the expenditure is small relative to their total income

A consumer advocacy group published a study of labeling of seafood sold in three U.S. states. The study found that 15 of the 25 ​"red snapper" packages tested were a different kind of fish. Assume that the study used a simple random sample. Complete parts a through c below. ​

a) Are the conditions for creating a confidence interval​ satisfied? Explain.

A. ​Yes, because the sample is a simple random​ sample, the sample proportion is between​ 10% and​ 90%, and there are at least 20 expected​ "successes" and 20 expected​ "failures."

B. ​Yes, because the sample is a simple random​ sample, the sample is less than​ 10% of the​ population, and there are at least 10 expected​ "successes" and 10 expected​ "failures."

C. ​No, because the sample is a simple random​ sample, the sample is less than​ 10% of the​ population, and there are at least 10 expected​ "successes" and 10 expected​ "failures."

D. ​No, because the sample is a simple random​ sample, the sample proportion is between​ 10% and​ 90%, and there are at least 20 expected​ "successes" and 20 expected​ "failures." ​

b) Construct a 95​% confidence interval for the proportion of​ "red snapper" packages that were a different kind of fish. (___________ , _____________) ​(Round to three decimal places as​ needed.) ​

c) Explain what the confidence interval from part​ (b) says about​ "red snapper" sold in these three states. Select the correct choice below and fill in the answer boxes within your choice. ​(Round to one decimal place as​ needed.)

A) One is 95% confident that between ________% and ______________% of all red snapper sold in food stores and restaurants in these states is not actually re snapper.

B) 98% of the time, the true proportion of red snapper sold in these three states is falsely labeled is between__________% and ________%.

C) One is 95% confident that between ______% and ________% of all red snapper purchased for the study in these states was not actually red snapper.

D) No, because the sample is a simple random sample, the sample proportion is between 10% and 90% and there are at least 20 expected "successes" and 20 expected "failures".

Shrewsbury Herbal Products, located in central England close to the Welsh border, is an old-line producer of herbal teas, seasonings, and medicines. Its products are marketed all over the United Kingdom and in many parts of continental Europe as well. Shrewsbury Herbal generally invoices in British pound sterling when it sells to foreign customers in order to guard against adverse exchange rate changes. Nevertheless, it has just received an order from a large wholesaler in central France for £320,000 of its products, conditional upon delivery being made in three months’ time and the order invoiced in euros. Shrewsbury’s controller, Elton Peters, is concerned with whether the pound will appreciate versus the euro over the next three months, thus eliminating all or most of the profit when the euro receivable is paid. He thinks this an unlikely possibility, but he decides to contact the firm’s banker for suggestions about hedging the exchange rate exposure. Mr. Peters learns from the banker that the current spot exchange rate in €/£ is €1.4537; thus the invoice amount should be €465,184. Mr. Peters also learns that the three-month forward rates for the pound and the euro versus the U.S. dollar are $1.8990/£1.00 and $1.3154/ €1.00, respectively.

1) What is the inherent issue or problem in this case? Describe the issue or problem with no more than two sentences.

2) If you were Mr. Peters, what would you do? Answer the following 6 questions.

a. Action or no action?

b. If the decision is no action, describe the problem. What is the term in Finance for this kind of decision?

c. If there is an action, you will engage in a three-month forward contract. What is the term in Finance for this kind of decision.

d. What position would you take if you decide to engage in the forward contract in c).

e. Plot the profit (or loss) profile for your position in the 3-month forward contract. You have to show graphically the relationship between unanticipated changes in the spot exchange rate in 3 months and gains (or losses) of your position on the 3-month forward contract.

f. Draw the outcomes of b) and c) on a graph with the horizontal axis (possible future spot exchange rates in 3 months) and vertical axis (£ value of € receivables).

A researcher was curious about whether people’s attitudes are related to their behaviors. As a simple experiment, the researcher measured people’s attitudes and behaviors regarding housework.

On the attitude side, the researcher measured the level of agreement on the statement “It is much better for everyone involved in housework: strongly agree, agree, disagree, and strongly disagree” On the behavioral side, the respondents are asked to estimate how many hours of housework they do per week.

Based on your analysis of the data below, please come up with a conclusion whether people who respond differently to the attitudinal question actually behave differently?

Once you have arrived at an answer to each question, please write a sentence or two interpreting the result (100 pts).

1. State the null and alternative hypotheses. (15 pts)
2. Find the critical value from the F test distribution. (15 pts)
3. ANOVA computation (Mean and Variance of each sample groups were provided with the data.

c.1. Find the grand mean, the mean of all values in the samples. (10 pts)

c.2. Find the between-group variance. (15 pts)

c3. Find the within group variance.

c.4. Compute the F-value. (15 pts)

4. At α = 0.05, can it be concluded that there is a significant difference in the behavior among the groups with different attitudes toward housework? Why or why not? Make the decision and summarize the results. (15 pts)