Minion, Inc., has no debt outstanding and a total market value of $408,900. Earnings before interest and taxes, EBIT, are projected to be $54,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 13 percent higher. If there is a recession, then EBIT will be 21 percent lower. The company is considering a $200,000 debt issue with an interest rate of 5 percent. The proceeds will be used to repurchase shares of stock. There are currently 8,700 shares outstanding. The company has a tax rate of 22 percent, a market-to-book ratio of 1.0, and the stock price remains constant. a-1. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

The mean cholesterol level of women age 45-59 in Ghana, Nigeria, and Seychelles is 5.1 mmol/l and the standard deviation is 1.0 mmol/l. Assume that cholesterol levels are normally distributed. Round the probabilities to four decimal places. It is possible with rounding for a probability to be 0.0000.

a) State the random variable. rv X = the cholesterol level of a randomly selected woman age 45-59 in Ghana, Nigeria, or Seychelles Correct

b) Find the probability that a randomly selected woman age 45-59 in Ghana, Nigeria, or Seychelles has a cholesterol level of 3.5 mmol/l or more.

c) Find the probability that a randomly selected woman age 45-59 in Ghana, Nigeria, or Seychelles has a cholesterol level of 8.1 mmol/l or less.

d) Find the probability that a randomly selected woman age 45-59 in Ghana, Nigeria, or Seychelles has a cholesterol level between 3.5 and 8.1 mmol/l.

e) Find the probability that randomly selected woman age 45-59 in Ghana, Nigeria, or Seychelles has a cholesterol level that is at least 8.6 mmol/l.

f) Is a cholesterol level of 8.6 mmol/l unusually high for a randomly selected woman age 45-59 in Ghana, Nigeria, or Seychelles? Why or why not? Select an answer

g) What cholesterol level do 67% of all women age 45-59 in Ghana, Nigeria, and Seychelles have less than? Round your answer to two decimal places in the first box. Put the correct units in the second box.

The following trial balance was taken from the books of Coyote Company as of December 31, 2019.

At the year end, the following items have not been recorded.

1. Prepaid insurance expired during the year, $8,000.
2. Estimated bad debts, 1.0% of sales.
3. Inventory as of 12/31/2019 turned out to be $60,000.
4. Five months’ rent of $50,000 was paid in advance on October 1, 2019 and charged to rent expense then.
5. Furniture and equipment have an average useful life of 4 years and salvage value of $10,000. Coyote Company uses the straight-line method of depreciation.
6. Utility bill of $1,600 for the month of December 2019 will be paid on its due date, January 10, 2020.
7. Salaries earned but not yet paid by December 31, 2019, $7,000.

Instruction: prepare

1. Any necessary adjusting entries at the end of 2019.
2. Income Statement and statement of retained earnings, and balance sheet of the company for the year 2019.
3. Any necessary closing entries at the end of 2019.

After hearing a knock at your front door, you are surprised to see the Prize Patrol from your state’s online lottery agency. Upon opening your door, you learn you have won the lottery of $14.5 million. You discover that you have three options: (1) you can receive $1.45 million per year for the next 10 years, (2) you can have $11.6 million today, or (3) you can have $4.4 million today and receive $1.20 million for each of the next 8 years. Your lawyer tells you that it is reasonable to expect to earn an annual return of 10% on investments. Required: 1. What is the present value of the above options? (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Enter your answers in whole dollar not in millions (i.e., 1,000,000 not 1.0), rounded to nearest whole dollar.)

2.

The Jenkins Corporation has purchased an executive jet. The company has agreed to pay $201,200 per year for the next 10 years and an additional $2,012,000 at the end of the 10th year. The seller of the jet is charging 6% annual interest. Determine the liability that would be recorded by Jenkins. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your answer to nearest whole dollar.)

Part A: A European firm has two options: either to operate at home in Europe and export its product to India, or to invest directly and produce in India (FDI). Say that the demand function for this product in the Indian market is p = 800 − Q , where

Q ≡ q _L + q_EU , and where q_L is the output of the local (Indian) firm and q_EU is the output of the European firm under exports or FDI (all prices are supposed to be in euros). Regarding efficiency, the European firm (wherever it is located) has to use 2 units of labor to produce one unit of output, while the Indian firm has to use 4 units of labor. Regarding factor prices, in the European labor market, the cost of labor is 20 euros for each unit of labor used, while it is only 10 euros in the Indian labor market. Competition between the Indian and the European firm is as in Cournot under both exports and FDI.

If the European firm decides to operate at home and export its goods to India, it has to pay a transportation cost of 100 euros per unit of output. On the other hand, if the European firm decides to invest directly and produce in India, it has to pay a fixed cost of 26000 euros for license and other bureaucratic costs. What is better for the European firm to do? (In your solutions, present numbers with no more than two decimal points.) (Mark: 1.5)

Part B: In no more than 200 words, discuss why firms may choose FDI instead of exports to a foreign country. (Mark 1.0)

1. According to the CPI, the overall inflation rate from Sept. 2019 - Sept. 2020 was 1.4% for consumer goods and services. However, that doesn't mean prices for everything went up. Referring to the table above, which of the following categories of spending did not have price increases from Sept. 2019 - Sept. 2020? (more than one answer)

a. transportation b. tuition c. food and beverages d. housing e. medical services

2. Using the index numbers above, calculate the rate of inflation for alcoholic beverages from Sept. 2019 - Sept. 2020. (calculate within one decimal point)

[Hint: start with the formula for calculating the % rate of inflation from the text and lecture]

Q.1 The budget department of ABC Ltd., gathered the following information for preparing its budgets for forthcoming period. 1. Sales forecast. Product Sales Quantity Selling price Inventories 01-01-2019 31-12-2019 Product-A 30,000 units Rs. 30 per unit. 5,000 units 10,000 units Product-B 40,000 units Rs. 40 per unit. 10,000 units 15,000 units Materials Purchase budget. 2. Material Product Inventories A B 01-01-2019 31-12-2019 Price per kg Materials-X 2kg 1kg 25,000kg 30,000kg Rs.2.0 Materials-Y 1kg 3kg 10,000 kg 15,000 kg Rs.1.0 3. Labor budget. Hour per unit Rate per hour Product –A 2 hours Rs 5 per hour Product-B 3 hours Rs. 4 per hour 1/4 4. Factory Overhead Factory overhead rate is Rs.2 per direct labor hour. Required:- (Marks-08) a. Prepare Sales budget product wise and total. b. Production budget in quantity product wise and total. c. Purchase budget in quantity and Rupees. d. Labor cost budget Rupees. e. Factory overhead budget Rupees. f. Manufacturing cost per unit of product-A, B and C. g. Discuss the behavioral issues that you may face while implementing budgeting in Pakistani environment. (Marks-02)  

You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks:

Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 3%, and you believe the following probability distribution for future market returns is realistic:

1. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.)
   1. r_i = 1.5% + (11.8%)b_i
   2. r_i = 3.0% + (9.5%)b_i
   3. r_i = 2.7% + (10.7%)b_i
   4. r_i = 2.7% + (9.5%)b_i
   5. r_i = 3.0% + (10.7%)b_i

   -Select-

2. Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places.

     %

3. Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount needed to take a position in the stock is $50 million, it has an expected return of 14%, and its estimated beta is 1.4. Should Kish invest in the new company?

   The new stock -Select-should or should not

   At what expected rate of return should Kish be indifferent to purchasing the stock? Round your answer to two decimal places.

     %

a) Perform a statistical test to see whether the average loans of customers before the change at the Bank of America and Wells Fargo are different.

Loans before the change at Bank of America:  

51.2
46.1
43.4
44.1
50.2
39.1
35.6
49.3
37.4
49.3
52.9
50.0
37.7
53.0
45.7
36.9
43.4
41.2
54.9
55.0
36.8
38.6
37.1
49.9
47.2
46.0
39.9
53.9
35.5
54.3
36.8
42.0
50.5
50.3
44.7
37.6
35.3
39.8
48.7
51.5

Loans before the change at Wells Fargo:

50.4
42.9
52.2
44.7
40.6
38.2
46.6
47.0
53.5
36.5
47.7
45.8
44.5
38.3
54.3
54.5
44.5
42.4
52.3
50.7
43.7
54.5
38.7
44.5
52.5
53.0
48.6

Increase in loans at BoA:

12.2
8.4
1.3
13.2
5.5
7.4
14.0
-5.1
23.2
7.2
-3.9
12.8
23.7
-2.4
-1.0
7.8
6.7
18.0
-0.1
0.4
8.9
20.5
18.1
9.6
-1.3
1.2
18.5
4.2
28.0
8.7
24.2
5.4
-6.1
13.4
5.0
20.4
13.5
17.4
14.8
-7.9
Increase in loans at Wells Fargo

4.5
16.1
5.0
7.5
19.3
10.0
12.9
11.3
5.1
20.1
14.4
13.1
13.3
10.3
-5.1
-2.1
18.4
13.9
10.3
-4.8
17.3
-1.9
6.9
12.3
0.8
-5.7
10.1
8.2

b) Construct a 95% confidence interval for the difference of average loans of customers before the change at the Bank of America and Well Fargo branch.

The following trial balance was taken from the books of Coyote Company as of December 31, 2019.

            Account                                     Debit Credit

Cash                                                                $30,000

Accounts receivable                               40,000

Allowance for doubtful accounts                                 $ 1,000

S-T Notes receivable                              20,000

Inventory, January 1, 2019                     40,000

Furniture and equipment                        110,000

Accumulated depreciation of F & E                             20,000

Patents                                                 100,000

Accounts payable                                                          22,000

Bonds payable                                                            20,000

L-T notes payable                                                       15,000

Common stock                                                            140,000

Retained earnings                                                         40,000

Sales                                                                            550,000

Purchase                                                 278,000

Insurance expense                                  20,000

Salary expense                                  120,000

Rent expense 50,000

Totals                                                   808,000         808,000

At the year end, the following items have not been recorded.

1. Prepaid insurance expired during the year, $8,000.
2. Estimated bad debts, 1.0% of sales.
3. Inventory as of 12/31/2019 turned out to be $60,000.
4. Five months’ rent of $50,000 was paid in advance on October 1, 2019 and charged to rent expense then.
5. Furniture and equipment have an average useful life of 4 years and salvage value of $10,000. Coyote Company uses the straight-line method of depreciation.
6. Utility bill of $1,600 for the month of December 2019 will be paid on its due date, January 10, 2020.
7. Salaries earned but not yet paid by December 31, 2019, $7,000.

Instruction: prepare

1. Any necessary adjusting entries at the end of 2019.
2. Income Statement and statement of retained earnings, and balance sheet of the company for the year 2019.
3. Any necessary closing entries at the end of 2019.