Compare the risks and returns of a 10-year bond, a preferred stock and a common stock issued by a listed company. Explain the reason(s).

1. In each of the following scenarios, calculate the total increase in US GDP this year caused directly by the given information

   1. An individual purchases an old used car from their friend for $6,000. They buy a new engine for the car for $1,000, replace the brakes for $500, and paint it for $200. They then sell the car for $10,000

   2. A computer manufacturer in the US buys parts for its computer from Japan. The cost of these parts is $500. It produces and sells a computer for $700 using these parts.

   3. A child is running a lemonade stand. They purchase 20 lemons for $3 each and 500 grams of sugar for $0.01 per gram. Using these ingredients, they make and sell 50 cups of lemonade for $2 each and at the end of the day they have 5 lemons and 100 grams of sugar remaining (that they do not sell and eventually consume themselves).

   4. A video game company prints 2 million copies of a game that sells for $60. It sells 1.8 million of these this year and the remainder the following year.

   5. A sandwich shop buys $1000 of ham, $500 of cheese, and $300 of bread. It also buys a new meat slicer for $300. Using these, it produces and sells $2000 of sandwiches. There is no ham or cheese remaining after production, but the meat slicer is still in perfect condition.

On January 8, the end of the first weekly pay period of the year, Regis Company's payroll register showed that its employees earned $21,760 of office salaries and $70,840 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.20%, FICA Medicare taxes at the rate of 1.45%, $12,860 of federal income taxes, $1,460 of medical insurance deductions, and $860 of union dues. No employee earned more than $7,000 in this first period.

Required:
1.1 Calculate below the amounts for each of these four taxes of Regis Company. Regis’s merit rating reduces its state unemployment tax rate to 5% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.60%. (Round your answers to 2 decimal places.)
  
1.2 Prepare the journal entry to record Regis Company's January 8 (employee) payroll expenses and liabilities. (Round your answers to 2 decimal places.)
  2. Prepare the journal entry to record Regis’s (employer) payroll taxes resulting from the January 8 payroll. Regis’s merit rating reduces its state unemployment tax rate to 5% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.60%. (Round your answers to 2 decimal places.)

A three-year project will cost $150,000 to construct. This will be depreciated straight line to zero over the three-year life. The project is expected to generate sales of $450,000 per year. It has annual variables costs of $200,000 and annual fixed costs of $100,000 per year. The appropriate tax rate is 25 percent and the required rate of return on the project is 16 percent. Assume that a salvage company will pay $60,000 (before taxes) for the assets at the end of year 3. The project also has an initial net working capital requirement of $40,000, which is fully recoverable when the project ends. Note that the project only depreciates the $150,000 initial cost. The salvage value is excluded from depreciation. What is the project’s net present value (NPV)?

Alberta’s this year due the COVID-19 pandemic. Is there a glimmer in that province's economic outlook? What are your comments on clean energy sector?

Do you know any hydrogen and fuel cell solution providers in Canada? Are they listing companies? Please list their stock this week?

Following are the auditor’s calculation of two key ratios for Audisys Corporation for the current year, previous year, and the percentage change.  The primary purpose of this information is to direct the auditor’s attention to areas requiring greater audit effort.

Required:

1. State whether there is a need to investigate the results further and, if so, the reason for further investigation.

2. State the areas/accounts that would require special emphasis in the audit investigation.

3. What additional tests would be done as part of the investigation?

The Aluminum Association reports that the average American uses 56.8 pounds of aluminum in a year. A random sample of 50 households is monitored for one year to determine aluminum usage. If the population standard deviation of annual usage is 12.1 pounds, what is the probability that the sample mean will be each of the following?

Appendix A Statistical Tables

a. More than 58 pounds
b. More than 57 pounds
c. Between 56 and 58 pounds
d. Less than 55 pounds
e. Less than 47 pounds

You buy a 20-year bond with a coupon rate of 9.6% that has a yield to maturity of 10.6%. (Assume a face value of $1,000 and semiannual coupon payments.) Six months later, the yield to maturity is 11.6%. What is your return over the 6 months?

A bond has a face value of $1,000, a coupon of 5% paid annually, a maturity of 40 years, and a yield to maturity of 8%. What rate of return will be earned by an investor who purchases the bond for $642.26 and holds it for 1 year if the bond’s yield to maturity at the end of the year is 9%?

Interest is compounded annually unless stated otherwise. Payments are at the end of the year unless stated otherwise. All bonds have a face value of $1000. Taxes are 0 unless specified otherwise.

2. A project has a beta of 1.3. The risk-free return is 2% and the return on the market is 12%. The project has an IRR of 14%.

a) If the firm’s cost of capital is 10%, will they take the project using the cost of capital?

b) Using the CAPM to determine project risk, will they take the project?

c) Which method is better for analyzing this project? Why?