Consider the following hypothesis test. H0: μ = 100 Ha: μ ≠ 100 A sample of 65 is used. Identify the p-value and state your conclusion for each of the following sample results. Use α = 0.05. (a) x = 104 and s = 11.5 Find the value of the test statistic. (Round your answer to three decimal places.)

Find the p-value. (Round your answer to four decimal places.)

State your conclusion.

Do not reject H0. There is sufficient evidence to conclude that μ ≠ 100.

Do not reject H0. There is insufficient evidence to conclude that μ ≠ 100.

Reject H0. There is sufficient evidence to conclude that μ ≠ 100.

Reject H0. There is insufficient evidence to conclude that μ ≠ 100.

(b) x = 96.5 and s = 11.0 Find the value of the test statistic. (Round your answer to three decimal places.)

Find the p-value. (Round your answer to four decimal places.) p-value =

State your conclusion.

Do not reject H0. There is sufficient evidence to conclude that μ ≠ 100.

Do not reject H0. There is insufficient evidence to conclude that μ ≠ 100.

Reject H0. There is sufficient evidence to conclude that μ ≠ 100.

Reject H0. There is insufficient evidence to conclude that μ ≠ 100.

(c) x = 102 and s = 10.5 Find the value of the test statistic. (Round your answer to three decimal places.)

Find the p-value. (Round your answer to four decimal places.) p-value =

State your conclusion.

Do not reject H0. There is sufficient evidence to conclude that μ ≠ 100.

Do not reject H0. There is insufficient evidence to conclude that μ ≠ 100.

Reject H0. There is sufficient evidence to conclude that μ ≠ 100.

Reject H0. There is insufficient evidence to conclude that μ ≠ 100.

Question 3

Warwick is a suburb in the Southern Downs Region of Queensland. Warwick has a population of 12,223 people and 32.29% of its occupants live in rental accommodation. A real estate office claims that the average rental price in Warwick is less than $400 per week. To test if this belief is correct, a random sample of 96 rental properties is selected. The mean of the weekly rental price computed from the sample is $385. Assume that the population standard deviation of weekly rental price is $100.

a) You were recently hired as a junior data analyst working for the real estate office. Assist the office in performing a hypothesis test at a 3% level of significance to check whether the claim made is justified. Display the six steps process (involving drawing the rejection region/s and determining the critical value/s for the decision rule) in performing the test.

b) Calculate the p-value of the test above. Display working. State the decision rule of the test should you want to use the p-value method hypothesis testing.

c) This hypothesis test is conducted on the basis that the sampling distribution of the sample mean is approximately normally distributed. Specify the required condition to ensure this.

d) Identify which one of these two types of error (Type I or Type II) you could make when drawing the conclusion in part a). Briefly explain your selection.

Poulsen Industries is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price should increase with inflation. Fixed costs will also be constant, but variable costs should rise with inflation. The project should last for 3 years. Under the new tax law, the equipment for the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. At the end of the project’s life, the equipment will have no salvage value. No change in net operating working capital (NOWC) would be required for the project. This is just one of many projects for the firm, so any losses on this project can be used to offset gains on other firm projects. The marketing manager does not think it is necessary to adjust for inflation since both the sales price and the variable costs will rise at the same rate, but the CFO thinks an inflation adjustment is required. What is the difference in the expected NPV if the inflation adjustment is made versus if it is not made? Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC 10.0% Equipment cost $200,000 Units sold 54,000 Average price per unit, Year 1 $25.00 Fixed op. cost excl. depr. (constant) $150,000 Variable op. cost/unit, Year 1 $20.20 Expected annual inflation rate 4.0% Tax rate 25.0% Group of answer choices $12,621 $13,648 $15,409 $16,437 $18,345

Poulsen Industries is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price should increase with inflation. Fixed costs will also be constant, but variable costs should rise with inflation. The project should last for 3 years. Under the new tax law, the equipment for the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. At the end of the project’s life, the equipment will have no salvage value. No change in net operating working capital (NOWC) would be required for the project. This is just one of many projects for the firm, so any losses on this project can be used to offset gains on other firm projects. The marketing manager does not think it is necessary to adjust for inflation since both the sales price and the variable costs will rise at the same rate, but the CFO thinks an inflation adjustment is required. What is the difference in the expected NPV if the inflation adjustment is made versus if it is not made? Do not round the intermediate calculations and round the final answer to the nearest whole number.

Suppose you purchase a 10-year callable bond issued by ABC Corp. with annual
coupons of $20. Its redemption amount is $100 at the ends of years 2-4, is $80 at
the ends of years 5-7, is $60 at the ends of years 8-10. The market annual effective
interest rate is i = 5%. In the following, t represents the time immediately after the
t-th coupon is paid.
(a) Calculate the highest price at time t = 0 guaranteeing a yield rate no less than
5%.
(b) Calculate the highest price at time t = 6 guaranteeing a yield rate no less than
5%.
(c) Suppose the bond is called at the end of 8 years (i.e., t = 8). At t = 8, to replicate
the cash inflows that you would have received at the end of years 9 and 10 (had
the bond not been called earlier), you can purchase zero-coupon bonds (ZCBs).
Two ZCBs available in the market are (#1) 1-year ZCB and (#2) 10-year ZCB.
Suppose you can purchase each ZCB for any face value that you would like and
sell them at any time at a price calculated by the yield rate i = 5%. Design two
strategies by using
(i) both ZCBs
(ii) ZCB #2 only

Five Seasons Hotel is a chain with 10 hotels. Strategically, the chain implements a cookie-cutter approach to building and running its hotels, in that all hotels are practically identical. Five Seasons invested $150 million in acquiring the land for all hotels and $500 million in building and furnishing the 10 hotels to a guest-ready stage. Each hotel has 150 rooms. Each room has a rack rate of $200 per night but the hotel gives an average of discount of $30 per night off this base price. Each hotel costs $1 million in materials to run, and is staffed by 58 employees, each paid an average compensation of $50,000 a year. This staffing level implies a certain service level, which together with the rack rate and discount, determines the chain’s average occupancy rate—the percent of available rooms sold—in this approximate way:
Chain-wide average occupancy rate = 0.01 ? number of employees per hotel
? ( 0.0015 ?base Price ) + ( 0.01 ? discount),
subject to a maximum of 100% and minimum of 0% (base Price and discount are expressed in [$]). The company operates 365 nights a year.
1. Draw the ROIC tree and discuss its structure.
2. Use this tree to compute the current ROIC?
3. Reducing the number of employees reduces staffing costs, but it also reduces the occupancy rate when service level drops. What is the ROIC if Five Seasons reduces the number of employees to 50 per hotel?

1. a) If population 16 or older = 208 million and labor force participation rate (LFPR) = 65%, what is the size of the labor force?

            0.65*208,000,000 = 135,200,000

b) In a given year, there are 10 million unemployed workers and 120 employed workers the country of Landia. Calculate the unemployment rate in Landia.

120/10,000,000 = 0.0012%

1-0.0012 = 0.9988

0.9988*100 = 99.88

Unemployment rate = 99.88%

Show all your calculations for full credit.

2. Use either a shift in demand of supply to GRAPHICALLY represent each of the following situations. Also, label the graphs correctly and indicate the changes in equilibrium in each case.

1. Beef market:  Increases in the cost of cattle feed.
2. Air travel market: Reduced number of travelers due to Covid-19 pandemic.
3. SUV market: Reduced gasoline prices.
4. Smartphone market: Technology improvements reduced the cost of manufacturing smartphones.

Four separate graphs please.

3. a) How would economic contraction brought about by Covid – 19 slowdown be represented using production possibilities curve?

b) Repeat a) for improved technology which results in increased productivity?

4. Good                Quantity           Price in 1999                Price in 2000

X                      10                    $5                                $6

Y                      20                    $10                              $10

Z                      5                      $6                                $10

1. Calculate the market basket value for each year. What is the consumer price index in 1999?
2. What is the inflation rate between 1999 and 2000?

Show all calculations for full credit.

Question 4

The following is a Binomial Option Pricing Model question. There will be 7 questions asked about it. Since the order of questions chosen is random, I suggest you solve the following all at once and choose your answer to each part as it comes up.

You will be asked the following questions:

1. What are the values of the calls at maturity, t=2?

2. What are the values of the calls at t =1?

3. What is the initial (t = 0) fair market price of the call?

4. What is the initial (t = 0) hedge ratio?

5. What are the hedge ratios at t = 1?

6. If one call was written initially, what is the value of the hedged portfolio one period later (t = 1)?

7. If the stock moves down in period 1 how would you adjust your t = 0 hedge by trading only stock?

We have a 2-state, 2-period world (i.e. t = 0, 1, 2). The current stock price is 100 and the risk-free rate each period is 5%. Each period the stock can either go up by 10% or down by 10%. A European call option on this stock with an exercise price of 90 expires at the end of the second period.

What are the values of the calls at t =1? (closest answer)

The following is a Binomial Option Pricing Model question. There will be 7 questions asked about it. Since the order of questions chosen is random, I suggest you solve the following all at once and choose your answer to each part as it comes up.

You will be asked the following questions:

1. What are the values of the calls at maturity, t=2?

2. What are the values of the calls at t =1?

3. What is the initial (t = 0) fair market price of the call?

4. What is the initial (t = 0) hedge ratio?

5. What are the hedge ratios at t = 1?

6. If one call was written initially, what is the value of the hedged portfolio one period later (t = 1)?

7. If the stock moves down in period 1 how would you adjust your t = 0 hedge by trading only stock?

We have a 2-state, 2-period world (i.e. t = 0, 1, 2). The current stock price is 100 and the risk-free rate each period is 5%. Each period the stock can either go up by 10% or down by 10%. A European call option on this stock with an exercise price of 90 expires at the end of the second period.

If one call was written initially, what is the value of the hedged portfolio one period later (t = 1)? (closest answer)