You work as an analyst for an institution located in Riyadh, Kingdom of Saudi Arabia (or KSA).

The Saudi Arabia’s Monetary Authority, KSA’s Central Bank, has recently released a report on the regulation of the quantity of money in the country for the upcoming Year 2021.

In answering the questions that follow: show all relevant formulas and calculations. Keep two decimal points.   

As part of the report, Saudi’s Central Bank created a reference value for money growth between 2020 and 2021, according to which they expect real growth to stay between -4.2% and -6.3%, inflation rate to be between 3.9% and 5.8%, and velocity growth to range between -1.8% and -3.1%.

Using the averages for the figures provided above, calculate KSA’s estimated money growth rate. (2 points)

Suppose that the Central Bank’s report also states that between 2019 and 2020, due to the anticipated inflation in the MENA region brought on by 2020, the Saudi Arabian Monetary Authority is planning to DECREASE the country’s ‘M2’ from SR 230 billion to SR 205 billion (SR = Saudi Riyal).

According to the report, between 2020 and 2021, the KSA’s measure of velocity is expected to stay constant at 3.25.  

Using the Quantity Theory of Money, calculate the percentage change in the KSA’s nominal GDP. (1.5 points)

*** Note: Question 4(b) is not related to Question 4(a).   

The report states that, due to the anticipated deflation in the MENA region brought on by EXPO 2020, between 2020 and 2021, the Saudi Consumer Price Index is expected to DECREASE from 185 to 155.

Using Fisher’s Equation, determine the impact of this change on the level of the nation’s real GDP. (1.5 points)

*** Note: Question 4(c) is a continuation from Question 4(b) and is not related to Question 4(a).

BECN 250 – Money and Banking – Formulas

CPI = Cost of Basket in Current YearCost of Basket in Base Year × 100%

GDP deflator= Nominal GDPReal GDP

Inflation rate 1= New CPI - Old CPIOld CPI ×100% = New Cost of Basket - Old Cost of BasketOld Cost of Basket × 100%

Percentage change = New - OldOld ×100%

% Δ M + % Δ V = % Δ P + % Δ Y = % Δ Nominal GDP   

Money growth + Velocity growth = Inflation + Real growth

Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate

Elliott Engines Inc. produces three products—pistons, valves, and cams—for the heavy equipment industry. Elliott Engines has a very simple production process and product line and uses a single plantwide factory overhead rate to allocate overhead to the three products. The factory overhead rate is based on direct labor hours. Information about the three products for 20Y2 is as follows:

The estimated direct labor rate is $26 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for Elliott Engines is $269,800.

If required, round all per unit answers to the nearest cent.

a. Determine the plantwide factory overhead rate.
$ per dlh

b. Determine the factory overhead and direct labor cost per unit for each product.

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c. Use the information above to construct a budgeted gross profit report by product line for the year ended December 31, 20Y2. Include the gross profit as a percent of sales in the last line of your report, rounded to one decimal place. Enter all amounts as positive numbers, except for a negative gross profit/gross profit percentage of sales.

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d. What does the report in (c) indicate to you?

Valves have the lowest  gross profit as a percent of sales. Valves may require a higher  price or lower  cost to manufacture in order to achieve the same profitability as the other two products.

Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate

Elliott Engines Inc. produces three products—pistons, valves, and cams—for the heavy equipment industry. Elliott Engines has a very simple production process and product line and uses a single plantwide factory overhead rate to allocate overhead to the three products. The factory overhead rate is based on direct labor hours. Information about the three products for 20Y2 is as follows:

The estimated direct labor rate is $26 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for Elliott Engines is $269,800.

If required, round all per unit answers to the nearest cent.

a. Determine the plantwide factory overhead rate.
$ per dlh

b. Determine the factory overhead and direct labor cost per unit for each product.

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c. Use the information above to construct a budgeted gross profit report by product line for the year ended December 31, 20Y2. Include the gross profit as a percent of sales in the last line of your report, rounded to one decimal place. Enter all amounts as positive numbers, except for a negative gross profit/gross profit percentage of sales.

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d. What does the report in (c) indicate to you?

Valves have the lowest  gross profit as a percent of sales. Valves may require a higher  price or lower  cost to manufacture in order to achieve the same profitability as the other two products.

Gross Profit Percentage
The following financial data is from Hi-Tech Instruments' financial statements (thousands of dollars, except earnings per share.)

Calculate the company's gross profit percentage for 2016.

Round answer to one decimal place. (Ex.: 0.2345 = 23.5%)

Answer%

Compare the result to the industry average.

Hi-Tech Instruments' ratio is higher than the industry average.

Hi-Tech Instruments' ratio is lower than the industry average.

Mercedes, Co. has the following quarterly financial information. 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Sales Revenue $ 925,800 $ 935,300 $ 933,600 $ 941,400 Cost of Goods Sold 305,700 318,300 317,900 323,100 Operating Expenses 248,900 260,300 258,500 262,600 Interest Expense 4,200 4,200 4,200 4,100 Income Tax Expense 85,500 88,400 88,400 90,900 Average Number of Common Shares Outstanding 799,030 794,064 795,670 809,000 Stock price when Q4 EPS released $ 24 Required: Calculate the gross profit percentage for each quarter. Calculate the net profit margin for each quarter. Calculate the EPS for each quarter. Calculate the Price/Earnings ratio at the end of the year.

• Required A
• Required B
• Required C
• Required D

Calculate the gross profit percentage for each quarter. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

• Required A
• Required B
• Required C
• Required D

Calculate the net profit margin for each quarter. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

• Required A
• Required B
• Required C
• Required D

Calculate the EPS for each quarter. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

• Required A
• Required B
• Required C
• Required D

Calculate the Price/Earnings ratio at the end of the year. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

If your answer does not match the answers given below, check with the instructor. There is always the chance, albeit small, that your answer is correct and there is a typo below.)

1.         Bank A offers to lend you money at 10 percent compounded monthly, Bank B at 11 percent compounded quarterly, and Bank C at 12 percent compounded annually. Calculate the effective rates and state which bank offers the lowest cost of borrowed capital.

2.         What are the interest payments on a $200 loan if the contractual rate is 12%, the loan will be paid back in four uniform interest and principal payments at the end of the next four years, and the remaining balance method of calculating interest will be used (fully amortized)? What is the actuarial, annual percentage, and the effective interest rate? (AIR, APR, i_e =12%)

3.         What are the interest payments on a $1,000 loan if the contractual rate is 12%, the loan will be paid back in four uniform principal payments at the end of the next four years, and the remaining balance method of calculating interest will be used? What is the actuarial, annual percentage, and the effective interest rate? (AIR, APR, i_e =12%)

4.         A farmer needs to borrow $1,000. The local PCA will make a 2‑year loan fully amortized at 10% (annual rate) with quarterly payments. A $10 loan fee and stock purchase is required. The borrower stock requirement is the lesser of $1,000 or 2% of loan principal. Assume that sufficient money is borrowed to cover the $1,000, the fee and the stock requirement. Also assume that the stock requirement is returned to borrower when the loan is paid off and the last debt payment can be reduced by the stock amount. How much money needs to be borrowed? What is the dollar amount of the stock requirement? What is the quarterly loan payment? What is the actuarial, annual percentage, and the effective interest rate? (AIR =2.83%, APR = 11.32%, i_e = 11.81%)

Smith Construction, Inc. is expected to pay a $2.78 dividend next year. The dividend is expected to grow by 4% each year for the next three years. After that the company will never pay another dividend ever again. If your required return on the stock investment is 10%, what should the stock sell for today?

Group of answer choices

• $9.31
• $28.91
• $7.46
• $35.06
• Not enough information to answer the question

Rao Construction recently reported $28.00 million of sales, $12.60 million of operating costs other than depreciation, and $3.00 million of depreciation. It had $8.50 million of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 25%. What was Rao's operating income, or EBIT, in millions?

You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $10.2 million today and $5.2 million in one year. The government will pay you $20.5 million in one year upon the​ building's completion. Suppose the interest rate is 10.5%.

a. What is the NPV of this​ opportunity?

b. How can your firm turn this NPV into cash​ today?