You may need to use the appropriate appendix table or technology to answer this question.

According to the National Association of Colleges and Employers, the 2015 mean starting salary for new college graduates in health sciences was $51,541. The mean 2015 starting salary for new college graduates in business was $53,901. † Assume that starting salaries are normally distributed and that the standard deviation for starting salaries for new college graduates in health sciences is $11,000. Assume that the standard deviation for starting salaries for new college graduates in business is $17,000.

(a)

What is the probability that a new college graduate in business will earn a starting salary of at least $65,000? (Round your answer to four decimal places.)

(b)

What is the probability that a new college graduate in health sciences will earn a starting salary of at least $65,000? (Round your answer to four decimal places.)

(c)

What is the probability that a new college graduate in health sciences will earn a starting salary less than $46,000? (Round your answer to four decimal places.)

(d)

How much would a new college graduate in business have to earn in dollars in order to have a starting salary higher than 99% of all starting salaries of new college graduates in the health sciences? (Round your answer to the nearest whole number.)

$

Pompeii's Pizza has a delivery car that it uses for pizza deliveries. The transmission needs to be replaced and there are several other repairs that need to be done. The car is nearing the end of its life, so the options are to either overhaul the car or replace it with a new car. Pompeii's has put together the following budgetary items:

If Pompeii’s replaces the transmission of the pizza delivery vehicle, they expect to be able to use the vehicle for another 5 years. If they sell the old vehicle and purchase a new vehicle, they will use that vehicle for 5 years and then trade it in for another new pizza delivery vehicle. If they trade for the new delivery vehicle, their operating expenses will decrease because the new vehicle is more gas efficient and the maintenance on a new car is less. This project is analyzed using a discount rate of 10%.

(Click here to see present value and future value tables)

A. Calculate the NPV on both Cars. Round your present value factor to three decimal places and the rest to nearest dollar.

Photochronograph Corporation (PC) manufactures time-series photographic equipment. It is currently at its target debt? equity ratio of .65. It’s considering building a new $58 million manufacturing facility. This new plant is expected to generate after-tax cash flows of $4.9 million in perpetuity. The company raises all equity from outside financing. There are three financing options:

1. A new issue of common stock: The flotation costs of the new common stock would be 6.5percent of the amount raised. The required return on the company’s new equity is 10 percent.

2. A new issue of 20-year bonds: The flotation costs of the new bonds would be 2.1 percent of the proceeds. If the company issues these new bonds at an annual coupon rate of 4 percent, they will sell at par.

3. Increased use of accounts payable financing: Because this financing is part of the company’s ongoing daily business, it has no flotation costs, and the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of .10. (Assume there is no difference between the pre-tax and after-tax accounts payable cost.)

What is the NPV of the new plant? Assume that PC has a 21 percent tax rate.

NPV $

PYTHON Define a function named variousChanges(...) which receives one string (origst) (with letters, digits or special characters), possibly empty, and returns a new string containing the following.

a) in those positions where the original string has an even digit, the corresponding character in the new (returned) string should have the string digit '0'
b) in those positions where the original string has a vowel letter (upper or lower case), the new (returned) string should have the letter 'V'. Note that the vowels are : 'a', 'e', 'i', 'o', 'u'
c) any other position in the new (returned) string should have a star ('*')

AND
d) at the end of the new string, there should be a number attached, which is the number of upper case letters in the original string.

For example,
variousChanges("A>e>X34S") should return the string "V*V***0*3" because:

'A' (in position 0) and 'e' (in position 2) are vowels --- so the new string has a 'V' in those positions
'4' (in position 6) is an even digit --- so the new string has a '0' in that position
all other positions have '*' in the new string
'A' , 'X' and 'S' are three upper case letters in the original string --- so the new string has a 3 at the end

Retlaw Corporation (RC) manufactures time series photographic equipment. It is currently at its target debt/equity ratio of 0.74. It’s considering building a new $48 million manufacturing facility. This new plant is expected to generate after-tax cash flows of $8.4 million in perpetuity. The company raises all equity from outside financing. There are three financing options: 1. A new issue of common stock: The flotation costs of the new common stock would be 7 percent of the amount raised. The required return on the company’s new equity is 14 percent. 2. A new issue of 20-year bonds: The flotation costs of the new bonds would be 4 percent of the proceeds. If the company issues these new bonds at an annual coupon rate of 8.0 percent, they will sell at par. 3. Increased use of accounts payable financing: Because this financing is part of the company’s ongoing daily business, it has no flotation costs, and the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of 0.135. (Assume there is no difference between the pre-tax and after-tax accounts payable cost.) What is the NPV of the new plant? Assume that RC has a 45 percent tax rate

Retlaw Corporation (RC) manufactures time-series photographic equipment. It is currently at its target debt–equity ratio of 0.83. It’s considering building a new $46 million manufacturing facility. This new plant is expected to generate after-tax cash flows of $8.5 million in perpetuity. The company raises all equity from outside financing. There are three financing options: A new issue of common stock: The flotation costs of the new common stock would be 8% of the amount raised. The required return on the company’s new equity is 16%. A new issue of 20-year bonds: The flotation costs of the new bonds would be 4% of the proceeds. If the company issues these new bonds at an annual coupon rate of 8.0%, they will sell at par. Increased use of accounts payable financing: Because this financing is part of the company’s ongoing daily business, it has no flotation costs, and the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of 0.140. What is the NPV of the new plant? Assume that RC has a 35% tax rate. (Enter the answer in dollars. Do not round intermediate calculations. Round the WACC percentage to 2 decimal places. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $

If the company decides to move forward with its international expansion, what types of new customer categories will be created? Will the new customer constituents resemble the existing ones? Perform a hypothetical customer profitability model analysis on the new customers.

In your opinion is the US debt a problem for the United States or not? Given that monetary policy has an effect on interest rates, should monetary policy work with fiscal policy to reduce the impacts of debt? What are the pros and cons of monetary policy and fiscal policy working together? (Answer question based on the article below)

Article:

As Congress allocates trillions of dollars to support businesses and individuals impacted by the coronavirus pandemic, some project US debt skyrocketing to historical highs. This adds fuel to a long-running question: Does America’s growing debt load spell future trouble? In our view, focusing solely on the debt’s size doesn’t tell the whole story. By looking at the debt question differently, we think investors can defuse concerns about America’s allegedly ticking time bomb.

Even before the coronavirus dominated headlines, some worried about big deficits adding to America’s debt. In early May, US Treasury data show $25.1 trillion in total federal government debt outstanding. [i] While this figure includes intra-governmental holdings (i.e., money the government owes itself), even stripping this away leaves net public debt at a still-huge $19.1 trillion—nearly 2.5 times the amount on January 1, 2010. [ii]

In isolation, that big number doesn’t mean much. So to put this figure into perspective, many economists compare a country’s debt to its GDP. At the end of 2019, net public debt was 79.2% of US GDP—up from 52.3% a decade earlier and the biggest since the late 1940s. [iii] Moreover, coronavirus’ impact is almost assured to push the ratio far higher. Between Q1’s -4.8% annualized GDP decline (with worse likely in Q2) and rising debt as the government funds its coronavirus response, America’s debt-to-GDP ratio could exceed its post–World War II high of 106.1% in the not-so-distant future. [iv]

Large debt-to-GDP ratios inspire comparisons to countries like Greece, which defaulted multiple times in the past decade. But even these ratios alone don’t mean problems loom. What matters more: a country’s ability to meet interest payments. Governments don’t use GDP—an annual flow of economic activity—to meet those obligations. They use tax revenue. In fiscal year 2019, US interest payments accounted for about 10.8% of tax revenues. [v] This figure has been rising over the past 4 years, but it remains well below the 15%–18% range in effect during most of the 1980s–1990s. [vi] America had no trouble servicing its debt during these two decades. The economy boomed.

With Treasury yields historically low, many acknowledge financing debt today isn’t onerous—especially since the Treasury gets to refinance maturing debt at a cheaper rate. On May 5, 2010, the Treasury sold $24 billion in 10-year notes at a 3.51% interest rate. [vii] The Treasury effectively refinanced those at a mid-May 2020 auction of new 10-year notes. The interest rate? A far-lower 0.65%. [viii]

Which brings us to another point: Treasury bonds carry fixed rates, so rising rates don’t immediately threaten affordability. As of 12/31/2019, the weighted average maturity of US debt was nearly 70 months—higher than the 60-month historical average over the past 40 years. [ix] Hence, rates would need to rise significantly from here—and stay there for years as Treasury refinanced maturing bonds—to hit costs materially. That doesn’t seem likely today. Demand is strong, putting downward pressure on yields. With sovereign-debt yields low globally—Japan and Europe have lower rates than America—US debt remains more attractive in comparison.

Moreover, interest rates tend to move with inflation, and the latter looks unlikely to surge in the near future. Even after the spread widened between long and short rates since February’s end, the US yield curve is still around its flattest over the past 10 years. That weighs on bank lending and, relatedly, money supply growth—a key inflation component. When investors anticipate higher inflation to come, they will demand a higher premium to compensate for their loss in purchasing power. That isn’t likely to be the case with inflation benign. US debt could be on its way to making new records, but that doesn’t mean new problems will come with it.

Investing in stock markets involves the risk of loss and there is no guarantee that all or any capital invested will be repaid. Past performance is no guarantee of future returns. International currency fluctuations may result in a higher or lower investment return. This document constitutes the general views of Fisher Investments and should not be regarded as personalized investment or tax advice or as a representation of its performance or that of its clients. No assurances are made that Fisher Investments will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Not all past forecasts have been, nor future forecasts will be, as accurate as any contained herein.

The Trolley Dodgers

In 1890, the Brooklyn Trolley Dodgers professional baseball team joined the National League. Over the following years, the Dodgers would have considerable difficulty competing with the other baseball teams in the New York City area. Those teams, principal among them the New York Yankees, were much better financed and generally stocked with players of higher caliber.

After nearly seven decades of mostly frustration on and off the baseball field, the Dodgers shocked the sports world by moving to Los Angeles in 1958. Walter O’Malley, the flamboyant owner of the Dodgers, saw an opportunity to introduce professional baseball to the rapidly growing population of the West Coast. More important, O’Malley saw an opportunity to make his team more profitable. As an inducement to the Dodgers, Los Angeles County purchased a goat farm located in Chavez Ravine, an area two miles northwest of downtown Los Angeles, and gave the property to O’Malley for the site of his new baseball stadium.

Since moving to Los Angeles, the Dodgers have been the envy of the baseball world: “In everything from profit to stadium maintenance ... the Dodgers are the prototype of how a franchise should be run.”1 During the 1980s and 1990s, the Dodgers reigned as the most profitable franchise in baseball with a pretax profit margin approaching 25 percent in many years. In late 1997, Peter O’Malley, Walter O’Malley’s son and the Dodgers’ principal owner, sold the franchise for $350 million to media mogul Rupert Murdoch. A spokesman for Murdoch complimented the O’Malley family for the long-standing success of the Dodgers organization: “The O’Malleys have set a gold standard for franchise ownership.”2

During an interview before he sold the Dodgers, Peter O’Malley attributed the success of his organization to the experts he had retained in all functional areas: “I don’t have to be an expert on taxes, split-fingered fastballs, or labor relations with our ushers. That talent is all available.”3 Edward Campos, a longtime accountant for the Dodgers, was a seemingly perfect example of one of those experts in the Dodgers organization. Campos accepted an entry-level position with the Dodgers as a young man. By 1986, after almost two decades with the club, he had worked his way up the employment hierarchy to become the operations payroll chief.

After taking charge of the Dodgers’ payroll department, Campos designed and implemented a new payroll system, a system that only he fully understood. In fact, Campos controlled the system so completely that he personally filled out the weekly payroll cards for each of the Dodgers’ 400 employees. Campos was known not only for his work ethic but also for his loyalty to the club and its owners: “The Dodgers trusted him, and when he was on vacation, he even came back and did the payroll.”4

Unfortunately, the Dodgers’ trust in Campos was misplaced. Over a period of several years, Campos embezzled several hundred thousand dollars from his employer. According to court records, Campos padded the Dodgers’ payroll by adding fictitious employees to various departments in the organization. In addition, Campos routinely inflated the number of hours worked by several employees and then split the resulting overpayments 50-50 with those individuals.

The fraudulent scheme came unraveled when appendicitis struck down Campos, forcing the Dodgers’ controller to temporarily assume his responsibilities. While completing the payroll one week, the controller noticed that several employees, including ushers, security guards, and ticket salespeople, were being paid unusually large amounts. In some cases, employees earning $7 an hour received weekly paychecks approaching $2,000. Following a criminal investigation and the filing of charges against Campos and his cohorts, all the individuals involved in the payroll fraud confessed.

A state court sentenced Campos to eight years in prison and required him to make restitution of approximately $132,000 to the Dodgers. Another of the conspirators also received a prison sentence. The remaining individuals involved in the payroll scheme made restitution and were placed on probation.

Epilogue

The San Francisco Giants are easily the most heated, if not hated, rival of the Dodgers. In March 2012, a federal judge sentenced the Giants’ former payroll manager to 21 months in prison after she pleaded guilty to embezzling $2.2 million from the Giants organization. An attorney for the Giants testified that the payroll manager “wreaked havoc” on the Giants’ players, executives, and employees. The attorney said that the embezzlement “included more than 40 separate illegal transactions, including changing payroll records and stealing employees’ identities and diverting their tax payments.”5 A federal prosecutor reported that

the payroll manager used the embezzled funds to buy a luxury car, to purchase a second home in San Diego, and to travel.

When initially confronted about her embezzlement scheme, the payroll manager had “denied it completely.”6 She confessed when she was shown the proof that prosecutors had collected. During her sentencing hearing, the payroll manager pleaded with the federal judge to sentence her to five years’ probation but no jail term. She told the judge, “I cannot say how sorry that I am ... that I did this, because it’s not who I am. I have no excuse for it. There is no excuse in the world for taking something that doesn’t belong to you.”7

required:

-Describe some of the key internal controls you'd expect to find in a payroll system.

-What internal control weaknesses were evident in the Dodgers’ payroll system?

-What "red flag" was present that should have alerted management to Campos' scheme?

-Identify audit procedures that might have led to the discovery of the fraudulent scheme masterminded by Campos.