Let's discuss the format of the Schedule of Cost of Goods Manufactured. What is included in this schedule and what does it tell us?

In a random sample of five microwave​ ovens, the mean repair cost was $60.00 and the standard deviation was $11.50

Assume the population is normally distributed and use a​ t-distribution to construct a 90​% confidence interval for the population mean μ. What is the margin of error of μ​? Interpret the results.

(a)The confidence interval for the population mean is _, _   ​(Round to one decimal place as​ needed.)

(b)The margin of error is _ ​(Round to two decimal places as​ needed.)

(c) Interpret the results. Choose the correct answer below:

1. It can be said that 95​% of microwaves have a repair cost between the bounds of the confidence interval.

2.With 95​% confidence, it can be said that the population mean repair cost is between the bounds of the confidence interval.

3.With 95​% confidence, it can be said that the repair cost is between the bounds of the confidence interval.

4.If a large sample of microwaves are taken approximately 95​% of them will have repair costs between the bounds of the confidence interval.

An investment has an initial cost of $3.2 million. This investment will be depreciated by $900,000 a year over the 3-year life of the project. Should this project be accepted based on the average accounting rate of return (AAR) if the required rate is 10.5 percent? Why or why not?

years----------------net income

1------------------------ 211700

2 -----------------------186400

3---------------------- 165500

You are evaluating the following project. All $ are in millions Initial cost of the project at t=0 is $70. Annual cash flows from the project depends on the demand for the product and is estimated to be as follows: With probability of 30%, the demand is high and the annual cash flow is $45 With probability of 40%, the demand is average and the annual cash flow is $30 With probability of 30%, the demand is low and the annual cash flow is $15 The above cash flows occur for the next 3 years, that is, until from t=1 to t=3. The company plans to finance the project by issuing bonds and stocks. The company will issue a ten-year bond at par with the coupon rate of 5%. The company’s stock has a beta of 2.1. The risk-free rate is 2.07% and the market risk premium is 6%. The marginal tax rate of the firm is 40%. The firm’s target and current capital structure is 40% debt and 60% equity. Questions: (In your calculations, please keep up to two decimal points after %. For example, 12.34%.)

1. What is the expected NPV of the project?

2. What feature of the project makes the managers hesitant with starting this project?

3. Now assume that if we wait one year, we will gain additional information regarding demand. That is, at t=1, we will know whether the demand will be high, average, or low. (The probability of the demand is 30%,40%,30% at t=0 and then becomes certain at t=1). Find out the expected NPV of the project. The same demand continues throughout the life of the project. (That is, the demand is high-high-high with 30%, avg-avg-avg with 40%, and low-low-low with 30%). The demand cannot be, for example, high-low-avg.

In Q3, the following paragraph provides further information. 3. Now assume that if we wait one year, we will gain additional information regarding demand and can decide whether to do the project or not at t=1. That is, at t=1, we will know whether the demand for the product will be high, average, or low. (The probability of the demand is 30%,40%,30% at t=0 and then becomes certain at t=1). If you decide to do the project at t=1, the initial cost occurs at t=1, and cash flow according to the demand type will stay the same during the life of the project until t=4. Find out the expected NPV of the project at t=0.

If your opportunity cost of capital is 12%. What is the future value of $500 in 5 years if it

is compounded:

a. Annually

b. Semi-annually

c. Quarterly

d. Monthly

Why is there a difference in the balances between the investment compounded quarterly

to the one compounded annually?

Find MIRR for the project with a cost of -$20,000 and subsequent cash flows of 10,000; $40,000; - $5,000; -$30,000. Use WACC of 6%. Will you proceed with this project? Why or why not?

You are evaluating the following project. All $ are in millions Initial cost of the project at t=0 is $70. Annual cash flows from the project depends on the demand for the product and is estimated to be as follows: With probability of 30%, the demand is high and the annual cash flow is $45 With probability of 40%, the demand is average and the annual cash flow is $30 With probability of 30%, the demand is low and the annual cash flow is $15 The above cash flows occur for the next 3 years, that is, until from t=1 to t=3. The company plans to finance the project by issuing bonds and stocks. The company will issue a ten-year bond at par with the coupon rate of 5%. The company’s stock has a beta of 2.1. The risk-free rate is 2.07% and the market risk premium is 6%. The marginal tax rate of the firm is 40%. The firm’s target and current capital structure is 40% debt and 60% equity. Questions: (In your calculations, please keep up to two decimal points after %. For example, 12.34%.) 1. What is the expected NPV of the project? 2. What feature of the project makes the managers hesitant with starting this project? 3. Now assume that if we wait one year, we will gain additional information regarding demand. That is, at t=1, we will know whether the demand will be high, average, or low. (The probability of the demand is 30%,40%,30% at t=0 and then becomes certain at t=1). Find out the expected NPV of the project. 3. Now assume that if we wait one year, we will gain additional information regarding demand and can decide whether to do the project or not at t=1. That is, at t=1, we will know whether the demand for the product will be high, average, or low. (The probability of the demand is 30%,40%,30% at t=0 and then becomes certain at t=1). If you decide to do the project at t=1, the initial cost occurs at t=1, and cash flow according to the demand type will stay the same during the life of the project until t=4. Find out the expected NPV of the project at t=0.

A new office building has been constructed at a cost of $3,000,000. It is estimated to have a life of 50 years with a value at that time of $200,000. It will have maintenance costs of $10,000 per year. It will also have major repairs costing $80,000 that occur at years 10, 20, 30 and 40. It will have additional repairs at the end of year 25 costing $250,000. Determine the equivalent uniform annual cost if the rate of interest of the firm is 7%

Match each of the following terms to the appropriate definition.

The answers for each one are one of these, Least squared regression method, Fixed Costs, Incremental Analysis, Relevant Range, Mixed Costs, Operating Leverage, Margin of Safety, Variable costs, and Contribution Margin per Unit