5.23

5.23

Find the amount to which $400 will grow under each of these conditions:

1. 12% compounded annually for 8 years. Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

2. 12% compounded semiannually for 8 years. Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

3. 12% compounded quarterly for 8 years. Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

4. 12% compounded monthly for 8 years. Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

5. 12% compounded daily for 8 years. Assume 365-days in a year. Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

6. Why does the observed pattern of FVs occur?
   -Select-The future values increase because as compounding periods per year increase, interest is earned on interest less frequently.The future values decrease because as compounding periods per year increase, interest is earned on interest more frequently.The future values increase because as compounding periods per year increase, interest is earned on interest more frequently.The future values increase because as compounding periods per year decrease, interest is earned on interest more frequently.The future values decrease because as compounding periods per year decrease, interest is earned on interest more frequently.Item 6

Collusion: Exploitation or benefit?

In 2011, two soap and detergent firms, Unilever and Procter & Gamble, were fined a total of €315m (US$ 220m) for fixing the price of washing powder in eight European countries. Procter & Gamble is the world’s largest consumer products company.

The two firms had colluded over prices for more than three years. The collusion began when they agreed to implement an industry-wide programme to improve their environmental impact by obtaining their raw materials from sustainable sources. They also agreed to reduce the amount of packaging they used but to keep the prices unchanged. Then, later, they collectively agreed to raise prices in Belgium, France, Germany, Greece, Italy, Portugal, Spain and the Netherlands. This collusion was against the European Union competition laws and was regarded as ‘unfair competition’.

1. Explain what is meant by ‘collusion’ and when it is most likely to occur in an industry.

The following transactions occurred in April and May. Both companies use a perpetual inventory system.

Prepare the journal entries to record the above transactions for DeVito Company. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Calculate the gross profit earned by DeVito on these transactions.

Addressing the Risk

Supporting Lecture:

Review the following lecture:

Social Determinants of Health

Using data gathered from the text, South University Online Library resources, and websites, write an annotated bibliography related to potential interventions to address the risk and protective factors that lead you to your chosen health topic or concern.

On the basis of your research, create a 2- to 3-page report containing an annotated bibliography that includes at least three references for at least two protective and two risk factors associated with your health topic or concern. The information for each topic cannot be from the same article. There should be a total of twelve articles reviewed.

Be sure to support your points for each of the components in parentheses with data from the program and outside research.

Your firm has been hired to develop new software for the? university's class registration system. Under the? contract, you will receive

$505,000

as an upfront payment. You expect the development costs to be

$433,000

per year for the next

33

years. Once the new system is in? place, you will receive a final payment of

$834,000

from the university

44

years from now.

a. What are the IRRs of this? opportunity???? (Hint: Build an Excel model which tests the NPV at? 1% intervals from? 1% to? 40%. Then zero in on the rates at which the NPV changes? signs.)

b. If your cost of capital is

10 %

is the opportunity? attractive?

Suppose you are able to renegotiate the terms of the contract so that your final payment in year

44

will be

$ 1.2

million.??

c. What is the IRR of the opportunity? now?

d. Is it attractive at the new? terms?

Your firm has been hired to develop new software for the​ university's class registration system. Under the​ contract, you will receive $501,000 as an upfront payment. You expect the development costs to be $436,000 per year for the next 3 years. Once the new system is in​ place, you will receive a final payment of $847,000 from the university 4 years from now. a. What are the IRRs of this​ opportunity?  ​(Hint​: Build an Excel model which tests the NPV at​ 1% intervals from​ 1% to​ 40%. Then zero in on the rates at which the NPV changes​ signs.) b. If your cost of capital is 10% ​, is the opportunity​ attractive? Suppose you are able to renegotiate the terms of the contract so that your final payment in year 4 will be $1.2 million. c. What is the IRR of the opportunity​ now? d. Is it attractive at the new​ terms?

2) Using the excel data file “shopping” which shows the reasons American and East Asian students from a large Midwestern university may buy from catalogs.

a) (10 pts) For the Asian students make a pie chart of the reason they buy using a catalog. (Hint you will need to weigh cases by Asian)

b) (10 pts) Make a bar chart showing the counts for the reasons American students buy using a catalog. (Hint you will need to

weigh cases by American)

[Shopping Excel Data]

Meredith Shomers manages scholarship endowments for a major public university. Presently, she is trying to determine how much scholarship money may be awarded from an endowment with a current balance of $538,000. The endowment’s funds are invested in a portfolio whose annual return varies and may be represented as a normally distributed random variable with a mean of 6% and standard deviation of 2%. The legal terms of the endowment require Meredith to determine a constant scholarship payment amount from the endowment that, if made in each of the next 10 years, would result in only 5% chance of the endowment’s ending value drop- ping below its current value. Assume scholarship payments are withdrawn from the fund at the end of each year.
a. Create a spreadsheet model for this problem.

b. What is the maximum scholarship payment that should be made in the current
year?

Your firm has been hired to develop new software for the​ university's class registration system. Under the​ contract, you will receive $492,000 as an upfront payment. You expect the development costs to be $439,000 per year for the next 33years. Once the new system is in​ place, you will receive a final payment of $865,000 from the university 4 years from now.

a. What are the IRRs of this​ opportunity?  ​(Hint​: Build an Excel model which tests the NPV at​ 1% intervals from​ 1% to​ 40%. Then zero in on the rates at which the NPV changes​ signs.)

b. If your cost of capital is 10 ,is the opportunity​ attractive Suppose you are able to renegotiate the terms of the contract so that your final payment in year 4will be $1.2million.  

c. What is the IRR of the opportunity​ now?

d. Is it attractive at the new​ terms?