We need to find the confidence interval for the SLEEP variable. To do this, we need to find the mean and standard deviation with the Week 1 spreadsheet. Then we can the Week 5 spreadsheet to find the confidence interval.

First, find the mean and standard deviation by copying the SLEEP variable and pasting it into the Week 1 spreadsheet. Write down the mean and the sample standard deviation as well as the count. Open the Week 5 spreadsheet and type in the values needed in the green cells at the top. The confidence interval is shown in the yellow cells as the lower limit and the upper limit.

1. Give and interpret the 95% confidence interval for the hours of sleep a student gets.
2. Give and interpret the 99% confidence interval for the hours of sleep a student gets
3. Compare the 95% and 99% confidence intervals for the hours of sleep a student gets. Explain the difference between these intervals and why this difference occurs.

In the Week 2 Lab, you found the mean and the standard deviation for the HEIGHT variable for both males and females. Use those values for follow these directions to calculate the numbers again.

(From Week 2 Lab: Calculate descriptive statistics for the variable Height by Gender. Click on Insert and then Pivot Table. Click in the top box and select all the data (including labels) from Height through Gender. Also click on “new worksheet” and then OK. On the right of the new sheet, click on Height and Gender, making sure that Gender is in the Rows box and Height is in the Values box.   Click on the down arrow next to Height in the Values box and select Value Field Settings. In the pop up box, click Average then OK. Write these down. Then click on the down arrow next to Height in the Values box again and select Value Field Settings. In the pop up box, click on StdDev then OK. Write these values down.)

You will also need the number of males and the number of females in the dataset. You can either use the same pivot table created above by selecting Count in the Value Field Settings, or you can actually count in the dataset.

Then use the Week 5 spreadsheet to calculate the following confidence intervals. The male confidence interval would be one calculation in the spreadsheet and the females would be a second calculation.

1. Give and interpret the 95% confidence intervals for males and females on the HEIGHT variable. Which is wider and why?

2. Give and interpret the 99% confidence intervals for males and females on the HEIGHT variable. Which is wider and why?

3. Find the mean and standard deviation of the DRIVE variable by copying that variable into the Week 1 spreadsheet. Use the Week 4 spreadsheet to determine the percentage of data points from that data set that we would expect to be less than 40. To find the actual percentage in the dataset, sort the DRIVE variable and count how many of the data points are less than 40 out of the total 35 data points. That is the actual percentage. How does this compare with your prediction?

4. What percentage of data would you predict would be between 40 and 70 and what percentage would you predict would be more than 70 miles? Use the Week 4 spreadsheet again to find the percentage of the data set we expect to have values between 40 and 70 as well as for more than 70. Now determine the percentage of data points in the dataset that fall within this range, using same strategy as above for counting data points in the data set. How do each of these compare with your prediction and why is there a difference?

Transformers Industry & Technology Inc. is a diversified industrial company. The Company owns businesses providing products & services to the energy, transportation, chemical, and construction sectors.

The energy segment operates as an oil and natural gas contract drilling company the United States. The energy segment acquires, explores, develops, and produces oil and natural gas properties primarily located in Oklahoma and Texas, as well as in Arkansas, Colorado, Kansas, Louisiana, Mississippi, Montana, New Mexico, North Dakota, Utah, and Wyoming. This segment generated over $10 billion of revenue in 2016.

The transportation segment is among the largest public railroad in North America. Operating on 12,000 miles of track in the western one thirds of the U.S., This segment generated over $20 billion of revenue in 2016 by hauling coal, industrial products, intermodal containers, agriculture goods, chemicals, and automotive goods.

The chemical segment sells value-added chemicals, thermoplastic polymers, and other chemical-based products worldwide. This segment develops, produces, and supplies specialty polymers for automotive and medical applications, as well as for use in industrial products and consumer electronics. This segment generated over $5 billion of revenue in 2016.

The Construction segment produces and sells specialty construction chemicals, specialty building materials, and packaging sealants and coatings. The Company operates through two segments: Specialty Construction Chemicals and Specialty Building Materials. The Specialty Construction Chemicals segment manufactures and markets products to manage performance of Portland cement, and materials based on Portland cement, such as concrete admixtures and cement additives, as well as concrete production management systems. The Specialty Building Materials segment manufactures and markets building envelope products, residential building products and specialty construction products. This segment generated over $5 billion of revenue in 2016.

During the last few years, Transformers Industry has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining, and the company has decided to look seriously at a major expansion program that has been proposed by the marketing department. The expansion requires investment in eight projects from the four segments. Table-1 provides information about the projects.

Assume that you are an assistant to Jim Jones, the financial vice president. Your first task is to estimate Transformers cost of capital.

As a part of your analysis you have collected the following data:

The firm's tax rate is 40%.

The current price of Transformers 12% coupon, semiannual payment, non-callable bonds with 15 years remaining to maturity is $1,153.72. TPIT does not use short-term interest-bearing debt on a permanent basis. New bonds would be privately placed with no flotation cost.

The current price of the firm’s 10%, $100 par value, quarterly dividend, perpetual preferred stock is $116.95. Transformers would incur flotation costs equal to 5% of the proceeds on a new issue.

Transformers common stock is currently selling at $50 per share. Its last dividend was $3.12, and dividends are expected to grow at a constant rate of 5.8% in the foreseeable future. Transformers beta is 1.2, the yield on T-bonds is 5.6%, and the market risk premium is estimated to be 6%.

Suppose the firm has historically earned 15% on equity (ROE) and retained 35% of earnings, and investors expect this situation to continue in the future. How could you use this information to estimate the future dividend growth rate, and what growth rate would you get? Is this consistent with the 5.8% growth rate given earlier?

Transformers target capital structure is 30% long-term debt, 10% preferred stock, and 60% common equity.

Suggested questions

1) What sources of capital should be included when you estimate Transformers weighted average cost of capital (WACC)?

2) Should the component costs be figured on a before-tax or an after-tax basis?

3) Should the costs be historical (embedded) costs or new (marginal) costs? Explain?

4) Transformers preferred stock is riskier to investors than its debt, yet the preferred yield to investors is lower than the yield to maturity on the debt. Does this suggest that you have made a mistake? (Hint: Think about taxes.)

5) What is the market interest rate on Transformers debt and what is the component cost of this debt for WACC purposes?

6) What is the corporate cost of capital?

Part 2

1) Jim Jones was worried that whether the corporate cost of capital would be appropriate to evaluate the four segments’ project. His concern centered on whether the risk of the projects is reflected on the corporate cost of capital? What is the logical method of adjusting the cost of capital for risk? Is it wise to use the corporate cost of capital to evaluate the four segments’ projects?

2) Discuss the quantitative methods that are useful to evaluate the projects?

3) Discuss the strengths and weakness of each quantitative method you have selected to evaluate the projects?

4) Will all of the quantitative methods rank the projects identically? Why or why not?

5) Rank the projects on the basis of the measurements discussed above.

PA11-3 Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6]

Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used.   

Project 1: Retooling Manufacturing Facility

This project would require an initial investment of $5,500,000. It would generate $982,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1,156,000.

Project 2: Purchase Patent for New Product

The patent would cost $3,855,000, which would be fully amortized over five years. Production of this product would generate $732,450 additional annual net income for Hearne.

Project 3: Purchase a New Fleet of Delivery Trucks

Hearne could purchase 25 new delivery trucks at a cost of $180,000 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $6,300. Purchasing the fleet would allow Hearne to expand its customer territory resulting in $855,000 of additional net income per year.


Required:
1. Determine each project's accounting rate of return. (Round your answers to 2 decimal places.)

Accountng Rate of Return:

Project 1 percentage =

Project 2 percentage =

Project 3 percentage =

2. Determine each project's payback period. (Round your answers to 2 decimal places.)
Payback Period

Project 1 years =

Project 2 years =

Project 3 years =

3. Using a discount rate of 10 percent, calculate the net present value of each project. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.)

Net Present Value

Project 1 =

Project 2 =

Project 3 =

4. Determine the profitability index of each project and prioritize the projects for Hearne. (Round your intermediate calculations to 2 decimal places. Round your final answers to 4 decimal places.)

Profibility Index

Project 1 =

Project 2 =

Project 3 =

Exercise 12-81
Profitability Ratios

Financial statements for Steele Inc. follow.

Use the information provided above and below to respond to the following requirements.

Required:

Compute the five profitability ratios for 2018 and 2019. Round intermediate calculations and final answers to two decimal places.

The team agrees that the goal is to have a winning boat ready to leave for the competition in 45 weeks at a cost of $3.2 million.

Design of the hull, deck, mast, and accessories will initiate the boat construction. After the design is complete, the hull can be constructed, the mast ordered, sails ordered, and accessories ordered. As soon as the hull is finished, the ballast tanks can be installed. Then the deck can be built. Concurrently with the deck construction, the hull can be treated with sealant. When the deck is completed and mast, sails, and accessories received, the mast and sails can be installed concurrently with the accessories. When these installations are complete, the boat can be sea-tested.

On the parallel path, choosing the crew and relocating them on site will take 6 weeks. At the same time, housing for the crew can be secured. Once the crew arrives and is housed, the training program using the old vessel will take place. After crew arrival, crew equipment can be selected and then ordered while training is underway. When training is complete, crew maintenance on the new vessel can begin. In order for the maintenance to begin, the deck must also be complete. Once crew maintenance is complete and while the boat is being sea-tested, sailing training on the new boat can be implemented. Finally, after the boat is sea-tested and sailing training is completed, regular sea training can be implemented, weather permitting.

- Fill in correct Predecessors, Contruct AON , If it’s currently the end of week 20 and $2 million has been spent to date, calculate SPI and CPI based on the following completion information: all tasks on track as planned for week 20 except C is 50%, F is 100%, and Q is 50%.  

- Fill in correct Predecessors, Find SPI , Find CPI

QUESTION 6

What is the tax treatment for rents received for a home rented out for less than 14 days?

5 points   

QUESTION 7

Assume you have a taxpayer, who wants to sell their home and they have heard they don’t have to pay any tax on the sale. You tell her there are conditions to gain exclusion. Which of the following are requirements for the §121 gain exclusion? (Choose only one, best answer)

QUESTION 9

Assume your client Peace and Love, Inc. has purchased the following assets listed below, when they moved into their new office space in 2020. The office building was purchased in 2017 and placed into service on Dec 31, 2017. Also assume they have taxable income of $350,000 for the year and charitable deductions of $50,000 (This client files a 1040 Tax Return).

Assume the income listed above and deductions are all from the taxpayers only business activity. What is the maximum §179 Deduction allowed by the client in 2020?

5 points   

QUESTION 10

Assume your client Peace and Love, Inc. has purchased the following assets listed below, when they moved into their new office space in 2020. The office building was purchased in 2017 and placed into service on Dec 31, 2017. Also assume they have taxable income of $350,000 for the year and charitable deductions of $50,000 (This client files a 1040 Tax Return).

What convention will be used for the property placed into service in 2020?

Cupcakes-Palooza (CP) is bakery in Janesville, WI, that specializes in gourmet cupcakes. CP is a privately held corporation that was founded by partners Pat and Chris Anderson. Pat and Chris are the majority shareholders.

CP currently owns a building that serves as their bakery. They sell their cupcakes at select area grocery stores. They do not currently sell directly to consumers; they only sell to grocery stores who sell to consumers. They sell an average of 1,000 cupcakes a day (five days a week, year-round) at their current location, and see demand staying strong despite the economy.

Pat and Chris would like to expand their business. They are considering adding a retail storefront to their existing building. Pat and Chris received an estimate from a construction company to add a retail presence to their existing building. The project cost is a $ 50,000 one-time charge for renovations to the building. Construction time is expected to be three months. (Note that this means that in the first year of operations, they will only receive nine months of revenue from the retail store!)

Pat and Chris did some market research and estimate the following sales from this new retail shop: 100 cupcakes a day @ $2 per cupcake, and they will be open 5 days a week, 52 weeks a year. Pat and Chris expect their cost of goods sold to be $0.46 per cupcake.

To sell to the public at the current building, they plan on hiring one new full-time employee; he or she will be managed by existing bakery employees, who will also cover for the new employee during breaks, sick days, etc. You do not need to include any expenses for the new employee other than their hourly wage. Pat and Chris estimate they will pay $10 per hour (including taxes and benefits) for this new employee. Assume the employee will work 40 hours a week, 52 weeks a year.

Pat and Chris have told you that they pay 20% of their profit in taxes. They also want you to use a discount rate of 14% in calculating this potential investment. They plan to retire in 5 years, so they want you to base your analysis on a 5 year term.

Pat and Chris have asked you to review this potential investment and write a short, one page memo to them, with an Excel file attached with the supporting financial calculations. The memo should communicate to Pat and Chris three financial measurements:

The Payback period for the investment

The Net Present Value of the investment

The Internal Rate of Return for the investment

The distribution of weights of newborn babies is bell shaped with a mean of 3200 grams and standard deviation of 450 grams.

a. what percentage of newborn babies weigh between 2300 and 4100 grams?

I have already done part A

Part b asks What percentage of newborn babies weigh less then 2300 grams?

I need to know how to do that on a ti84 plus calculator

A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $56.

Required:

a. What is the total rate of return on the stock?

b. What are the dividend yield and percentage capital gain?

c. Now suppose the year-end stock price after the dividend is paid is $48. What are the dividend yield and percentage capital gain in this case?