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A. Jol is a small economy. The information on the categories of the people in this economy is from a recent issue of the Jol Economic Watcher Agency shown in below:

Millions

                        Have a full-time job                                                                          790

                 Don't have a job but are looking for one                         335

                 Don't have a job and are not looking for one                  675

Based on the given information:

1. Calculate the Labour Force Participation Rate for this economy.     (3.5 Marks)
2. Calculate the Unemployment Rate for this economy.   (1.5 Marks)
3. Based on your answer in (b), what can you conclude about the economic situation in Jol? Briefly explain your answer.

4. Assume that nothing changed with respect to the population, i.e. those who were working kept their jobs and those who were looking for jobs kept looking for jobs.

State your answer whether INCREASE, DECREASE or NOT CHANGE for the following question:

i) Kef 35 years old, was discouraged by the poor job opportunities, so he was not working and not looking for a job. One day, his cousin calted him offering a job which he took.

• Unemployment rate will

(0.5 Mark)

Labour force participation rate will

(0.5 Mark)

ii) if a baby is born:

• Unemployment rate will

(0.5 Mark)

Labour force participation rate will

(0.5 Mark)

iii) After 50 years of hard work, Jack, 70 years old, retires.

• Unemployment rate will

(0.5 Mark)

Labour force participation rate will

(0.5 Mark)

B.

Fill in the blank

- cyclical - countervailing            - medium of exchange

           - expansionary        -expansionary monetary policy                 - trough

            - bank rate      - required reserve ratio                                        - frictional

              - dumping                                    - contractionary monetary policy      - automatic

             - excess reserve ratio           - store of value                          - contraction

a) Commercial banks hold a fraction of their deposits in cash in their vaults (or as deposits with the central bank). This fraction is known as the

b) The most direct way in which money replaces barter is through its use as a

c) A company of the Kenya has excess products that it does not want to sell into the Kenya market because it will bring down the domestic price and instead sells it in another country at below the cost of production. This situation is referred to as

d) The period of the business cycle in which real GDP is decreasing is called the

e) Workers at a steel plant are laid off because the economy is weak and the demand for       products         requiring         steel    has      is         an example   of unemployment.    

f) Declining oil prices from 2008 through the second quarter of 2010 has caused many economies to slow down. This has caused bank profits to decline, making Canadian banks vulnerable to a recession. The appropriate policy to be implemented is fiscal policy.

g) As housing prices began to drop and the economy slowed, the central bank began cutting its discount rate from 5.25% in June 2005 all the way to 0% by the end of 2006. With the economy still weak, it embarked on purchases of government securities from January 2007 until August 2012, for a total of $3.7 trillion. This is an example of

Required information

[The following information applies to the questions displayed below.]

All-Canadian, Ltd. is a multiproduct company with three divisions: Pacific Division, Plains Division, and Atlantic Division. The company has two sources of long-term capital: debt and equity. The interest rate on All-Canadian’s $404 million debt is 9 percent, and the company’s tax rate is 30 percent. The cost of All-Canadian’s equity capital is 10 percent. Moreover, the market value of the company’s equity is $606 million. (The book value of All-Canadian’s equity is $434 million, but that amount does not reflect the current value of the company’s assets or the value of intangible assets.)

The following data (in millions) pertain to All-Canadian’s three divisions.

Compute the economic value added (or EVA) for each of the company's three divisions. (Do not round intermediate calculations. Enter your final answers in dollars and not millions.)

McEwan Industries sells on terms of 3/10, net 20. Total sales for the year are $1,381,000; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 66 days after their purchases. Assume 365 days in year for your calculations. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

1. What is the days sales outstanding? Round your answer to two decimal places.

   days

2. What is the average amount of receivables? Round your answer to the nearest cent. Do not round intermediate calculations.

   $  

3. What is the percentage cost of trade credit to customers who take the discount? Round your answers to two decimal places.

   %

4. What is the percentage cost of trade credit to customers who do not take the discount and pay in 66 days? Round your answers to two decimal places. Do not round intermediate calculations.

   Nominal cost:  %

   Effective cost:  %

5. What would happen to McEwan’s accounts receivable if it toughened up on its collection policy with the result that all nondiscount customers paid on the 20th day? Round your answers to two decimal places. Do not round intermediate calculations.

   DSO =  days

   Average receivables = $  

A large fast-food restaurant is having a promotional game where game pieces can be found on various products. Customers can win food or cash prizes. According to the company, the probability of winning a prize (large or small) with any eligible purchase is 0.131. Consider your next 32 purchases that produce a game piece. Calculate the following: This is a binomial distribution. Round your answers to at least 4 decimal places.

a) What is the probability that you win 5 prizes? 0.175 Incorrect

b) What is the probability that you win more than 6 prizes? 0.00177 Incorrect

c) What is the probability that you win between 2 and 5 (inclusive) prizes?

d) What is the probability that you win 3 prizes or fewer?

Parker Corp. develops computer video games for sale. A new development project which began in 2018 reached technological feasibility at the end of Sept. 2019 and the project was available for release to customers early in 2020. Development costs incurred prior to Sept. 30 were $1,600,000 and costs incurred from Oct. 1 to product availability were $1,200,000. Revenues in 2020 from the sale of the new product were $4,000,000 and the company anticipates another $12,000,000 in revenues. The economic life of the software is 3 years.

(a) What amount should Parker capitalize as an intangible asset?

(b) What amount should be amortized in 2020?

(c) At the beginning of 2021, Parker estimates the net realizable value of the software to be $500,000. Prepare any entries required.

HTB Corp. sells its virtual reality headset for $750. In addition to the headset, a customer receives an activation code to gain free access to a specific game that currently sells for $62.50. The activation code expires six months from the date of the purchase of the headset, and the company expects that 80% of customers will use the activation code. HTB sells 100 headsets during the month of October of 2019.Requirements:

1.How many performance obligations are included in the sale of the headset?

2.Allocate the transaction price to the different performance obligations.

3.Prepare the summary entry in October of 2019 to record the sale of the 100 headsets.

4.Assume that 60% of the activation codes are redeemed by 12/31/19.

Prepare the necessary adjusting entry.

Nipomo Widget reviewed the following information from its accounting records for theyear ended December 31, 2011, before adjustment:

Sales during 2011 $800,000

Credit Sales are 80% of sales

Collections from customers in 2011 590,000

Accounts Receivable 165,000

Allowance for Uncollectible Accounts

(before adjustment)

2,050 credit

Nipomo Widget uses the percent-of-sales method, at 1.5%, to estimate uncollectible accounts for 2011.

The president of the company wants to change to the aged accounts receivable method and estimates $7,500 as the uncollectible amount for 2011.

For each method of determining the estimate amount, you are to provide:

1. the adjusting Journal entry.

2. the ending balance in the Allowance account.

3. the net realizable value of accounts receivable.

Aetna Healthcare, Inc. financial statements namely the income statement and balance sheet.

See below

All publicly traded corporations are required to disclose this information in their 10K. Using the 5 ratios, compute them for the latest fiscal year:

Total margin

Operating margin

Return on assets

Return on equity

Current ratio

These ratios will touch on areas such as profitability, financial leverage, liquidity, and asset utilization ratios Summarize your findings in a write-up. Be sure to state whether each ratio is good or bad. Be sure to show your calculations in the write-up.

2016 Consolidated Balance Sheets

Consolidated Balance Sheets At December 31, (Millions) 2016 Assets: Current assets: Cash and cash equivalents $ 17,996 Investments 3,046 Premiums receivable, net 2,356 Other receivables, net 2,224 Reinsurance recoverables 292 Accrued investment income 232 Income taxes receivable 365 44 Other current assets 2,259 Total current assets 28,449 Long-term investments 21,833 Reinsurance recoverables 727 Goodwill 10,637 Other acquired intangible assets, net 1,442 Property and equipment, net 587 Deferred income taxes 195 — Other long-term assets 1,480 Separate Accounts assets 3,991 Total assets $69,146 Liabilities and shareholders’ equity: Current liabilities: Health care costs payable $ 6,558 Future policy benefits 645 Unpaid claims 801 Unearned premiums 556 Policyholders’ funds 2,772 Current portion of long-term debt 1,634 Accrued expenses and other current liabilities 5,728 Total current liabilities 18,694 Future policy benefits 5,929 Unpaid claims 1,703 Policyholders’ funds 812 Long-term debt, less current portion 19,027 Deferred income taxes — 4 Other long-term liabilities 1,043 Separate Accounts liabilities 3,991 Total liabilities 51,203 Commitments and contingencies (Note 17) Shareholders’ equity: Common stock ($.01 par value; 2.5 billion shares authorized and 326.8 million shares issued outstanding in 2016) and additional paid-in capital 4,716 Retained earnings 14,717 Accumulated other comprehensive loss (1,552) Total Aetna shareholders’ equity 17,881 Non-controlling interests 257 62 Total equity 17,943 Total liabilities and equity $69,146

Income Statement All numbers in thousands Revenue 12/31/2016 Total Revenue 63,155,000 Cost of Revenue 46,356,000 Gross Profit 16,799,000 Operating Expenses Research Development - - - Selling General and Administrative 12,085,000 Non Recurring - - - Others 247,000 Total Operating Expenses - - - Operating Income or Loss 4,467,000 Income from Continuing Operations Total Other Income/Expenses Net 128,000 Earnings Before Interest and Taxes 4,595,000 Interest Expense 604,000 Income Before Tax 3,991,000 Income Tax Expense 1,735,000 Minority Interest 62,000 Net Income From Continuing Ops 2,256,000 Non-recurring Events Discontinued Operations - - - Extraordinary Items - - - Effect Of Accounting Changes - - - Other Items - - - Net Income Net Income 2,271,000 Preferred Stock And Other Adjustments - - - Net Income Applicable To Common Shares 2,271,000 Period Ending 12/31/2016 Current Assets Cash And Cash Equivalents 17,996,000 Short Term Investments - - - Net Receivables 5,643,000 Inventory - - - Other Current Assets - - - Total Current Assets - - - Long Term Investments 25,111,000 Property Plant and Equipment 587,000 Goodwill 10,637,000 Intangible Assets 1,442,000 Accumulated Amortization - - - Other Assets 7,730,000 Deferred Long Term Asset Charges 195,000 - - Total Assets 69,146,000 Current Liabilities Accounts Payable 5,728,000 Short/Current Long Term Debt - - - Other Current Liabilities - - - Total Current Liabilities - - - Long Term Debt 20,661,000 Other Liabilities 24,810,000 Deferred Long Term Liability Charges -177,000 Minority Interest 62,000 Negative Goodwill - - - Total Liabilities 51,265,000 Stockholders' Equity Misc. Stocks Options Warrants - - - Redeemable Preferred Stock - - - Preferred Stock - - - Common Stock 4,716,000 Retained Earnings 14,717,000 Treasury Stock - - - Capital Surplus - - - Other Stockholder Equity -1,552,000 Total Stockholder Equity 17,881,000 Net Tangible Assets 5,802,000

Develop estimated regression equations, first using annual income as the independent variable and then using household size as the independent variable. Which variable is the better predictor of annual credit card charges? Discuss your findings -