You have recently been hired by Swan Motors, Inc. (SMI), in its relatively new treasury management department. SMI was founded 8 years ago by Joe Swan. Joe found a method to manufacture a cheaper battery with much greater energy density than was previously possible, giving a car powered by the battery a range of 700 miles before requiring a charge. The cars manufactured by SMI are midsized and carry a price that allows the company to compete with other mainstream auto manufacturers. The company is privately owned by Joe and his family, and it had sales of $97 million last year.

SMI primarily sells to customers who buy the cars online, although it does have a limited number of company-owned dealerships. Most sales are online. The customer selects any customization and makes a deposit of 20 percent of the purchase price. After the order is taken, the car is made to order, typically within 45 days. SMI’s growth to date has come from its profits. When the company had sufficient capital, it would expand production. Relatively little formal analysis has been used in its capital budgeting process. Joe has just read about capital budgeting techniques and has come to you for help. For starters, the company has never attempted to determine its cost of capital, and Joe would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company. Joe wants you to use the pure play approach to estimate the cost of capital for SMI, and he has chosen Tesla Motors as a representative company.

1. You used Tesla as a representative company to estimate the cost of capital for SMI. What are some of the potential problems with this approach in this situation? What improvements might you suggest?

Application Exercise:
Under specified driving conditions, an automobile manufacturer hypothesizes that its new truck will get more miles per gallon (mpg) than other automobiles in its class. For automobiles of the same class, the average is 23 with a standard deviation of 4.5 mpg. To investigate, the manufacturer tested 13 of its new truck in which the average was 20.8 mpg. What can be concluded with α = 0.01?

a) What is the appropriate test statistic?
---Select--- na z-test one-sample t-test independent-samples t-test related-samples t-test

b)
Population:
---Select--- automobile manufacturer tested trucks mpg trucks in same class specified conditions
Sample:
---Select--- automobile manufacturer tested trucks mpg trucks in same class specified conditions

c) Obtain/compute the appropriate values to make a decision about H₀.
(Hint: Make sure to write down the null and alternative hypotheses to help solve the problem.)
critical value =  ; test statistic =  
Decision:  ---Select--- Reject H0 Fail to reject H0

d) If appropriate, compute the CI. If not appropriate, input "na" for both spaces below.
[  ,  ]

e) Compute the corresponding effect size(s) and indicate magnitude(s).
If not appropriate, input and select "na" below.
d =  ;   ---Select--- na trivial effect small effect medium effect large effect
r² =  ;   ---Select--- na trivial effect small effect medium effect large effect

f) Make an interpretation based on the results.

Under the specified conditions, the automobiles in its class get significantly less mpg than the new truck.

Under the specified conditions, the automobiles in its class get significantly more mpg than the new truck.     

Under the specified conditions, there was no signfiicant mpg difference between the new truck and other automobiles in its class.

1) Taxpayers are not allowed to deduct tax preparation fees as an itemized deduction.

Group of answer choices

True

False

2) Which of the following is a true statement?

Group of answer choices

a. The deduction for investment interest expense is not subject to limitation.

b. Taxpayers may only deduct interest on up to $1,500,000 of home acquisition indebtedness.

c. Taxpayers may deduct interest on up to $1,000,000 of home-equity debt.

d. A taxpayer who incurs acquisition indebtedness in 2018 may only deduct interest on up to $750,000 of home acquisition indebtedness.

e. None of the choices are true.

3) Which of the following is a true statement?

Group of answer choices

a. Fees for tax preparation are not deductible.

b. Unreimbursed employee business expenses are not deductible.

c. Fees for investment advice are not deductible.

d. Hobby expenses are not deductible.

e. All of the choices are true.

4) A taxpayer has AGI of $100,000. This same taxpayer has medical expenses of $15,000 for the tax year. Based on the 2020 tax rules, the amount of medical expenses the taxpayer may use as an itemized deduction is $1500.

Group of answer choices

True

False

5) Which of the following are NOT allowable itemized deductions? Choose all that apply. Generally speaking....

Group of answer choices

a. Unreimbursed employee business expenses

b. Contributions to a retirement plan

c. Medical Expenses (subject to limits)

d. Miles driven to visit a doctor (subject to limits)

e. Interest on a taxpayers primary residence (subject to limits)

f. Contributions to an HSA

g. Charitable Donations without a receipt

h. Interest paid on a margin account (subject to limits)

i. Taxes paid up to $10,000

j. Gambling losses (subect to limits)

6) Generally, service businesses are considered qualified trade or businesses for purposes of the deduction for qualified business income.

Group of answer choices

true

false

Fueleconomy.gov, the official US government source for fuel economy information, allows users to share gas mileage information on their vehicles. The histogram below shows the distribution of gas mileage in miles per gallon (MPG) from 14 users who drive a 2012 Toyota Prius. The sample mean is 53.3 MPG and the standard deviation is 5.2 MPG. Note that these data are user estimates and since the source data cannot be verified, the accuracy of these estimates are not guaranteed. Report all answers to 4 decimal places. 1. We would like to use these data to evaluate the average gas mileage of all 2012 Prius drivers. Do you think this is reasonable? Why or why not? , because . The EPA claims that a 2012 Prius gets 50 MPG (city and highway mileage combined). Do these data provide strong evidence against this estimate for drivers who participate on fueleconomy.gov? Conduct a hypothesis test. Round numeric answers to 3 decimal places where necessary. 2. What are the correct hypotheses for conducting a hypothesis test to determine if these data provide strong evidence against this estimate for drivers who participate on fueleconomy.gov? (Reminder: check conditions) A. H0:μ=50 vs. HA:μ>50.3 B. H0:μ=50 vs. HA:μ≠50 C. H0:μ=50.3 vs. HA:μ<50 D. H0:μ=53.3 vs. HA:μ≠53.3 3. Calculate the test statistic. 4. Calculate the p-value. 5. How much evidence do we have that the null model is not compatible with our observed results? A. little evidence B. very strong evidence C. strong evidence D. extremely strong evidence E. some evidence 6. Calculate a 95% confidence interval for the average gas mileage of a 2012 Prius by drivers who participate on fueleconomy.gov.

To illustrate the effects of driving under the influence​ (DUI) of​ alcohol, a police officer brought a DUI simulator to a local high school. Student reaction time in an emergency was measured with unimpaired vision and also while wearing a pair of special goggles to simulate the effects of alcohol on vision. For a random sample of nine​ teenagers, the time​ (in seconds) required to bring the vehicle to a stop from a speed of 60 miles per hour was recorded. Complete parts​ (a) and​ (b).

​Note: A normal probability plot and boxplot of the data indicate that the differences are approximately normally distributed with no outliers.

TABLE IS BELOW.

​(a) Whether the student had unimpaired vision or wore goggles first was randomly selected. Why is this a good idea in designing the​ experiment?

A.

This is a good idea in designing the experiment because it controls for any​ "learning" that may occur in using the simulator.

B.

This is a good idea in designing the experiment because the sample size is not large enough.

C.

This is a good idea in designing the experiment because reaction times are different.

​(b) Use a​ 95% confidence interval to test if there is a difference in braking time with impaired vision and normal vision where the differences are computed as​ "impaired minus​ normal."

The lower bound is

?

The upper bound is

?

​(Round to the nearest thousandth as​ needed.)

State the appropriate conclusion. Choose the correct answer below.

There is sufficient evidence to conclude there is a difference in braking time with impaired vision and normal vision.

There is insufficient evidence to conclude there is a difference in braking time with impaired vision and normal vision.

Click to select your answer(s).

Data Table

PrintDone

Do a two-sample test for equality of means assuming unequal variances. Calculate the p-value using Excel.

(a-1) Comparison of GPA for randomly chosen college juniors and seniors:

x¯1x¯1 = 4, s₁ = .20, n₁ = 15, x¯2x¯2 = 4.25, s₂ = .30, n₂ = 15, α = .025, left-tailed test.
(Negative values should be indicated by a minus sign. Round down your d.f. answer to the nearest whole number and other answers to 4 decimal places. Do not use "quick" rules for degrees of freedom.)

(b-1) Comparison of average commute miles for randomly chosen students at two community colleges:

x¯1x¯1 = 17, s₁ = 5, n₁ = 22, x¯2x¯2 = 21, s₂ = 7, n₂ = 19, α = .05, two-tailed test.
(Negative values should be indicated by a minus sign. Round down your d.f. answer to the nearest whole number and other answers to 4 decimal places. Do not use "quick" rules for degrees of freedom.)
  

(c-1) Comparison of credits at time of graduation for randomly chosen accounting and economics students:
x¯1x¯1 = 141, s₁ = 2.8, n₁ = 12, x¯2x¯2 = 138, s₂ = 2.7, n₂ = 17, α = .05, right-tailed test.
(Negative values should be indicated by a minus sign. Round down your d.f. answer to the nearest whole number and other answers to 4 decimal places. Do not use "quick" rules for degrees of freedom.)

Do a two-sample test for equality of means assuming unequal variances. Calculate the p-value using Excel.

(a-1) Comparison of GPA for randomly chosen college juniors and seniors:

x⎯⎯1x¯1 = 4.75, s₁ = .20, n₁ = 15, x⎯⎯2x¯2 = 5.18, s₂ = .30, n₂ = 15, α = .025, left-tailed test.
(Negative values should be indicated by a minus sign. Round down your d.f. answer to the nearest whole number and other answers to 4 decimal places. Do not use "quick" rules for degrees of freedom.)

d.f.

t-calculated

p-value

t-critical

b-1) Comparison of average commute miles for randomly chosen students at two community colleges:

x⎯⎯1x¯1 = 25, s₁ = 5, n₁ = 22, x⎯⎯2x¯2 = 33, s₂ = 7, n₂ = 19, α = .05, two-tailed test.
(Negative values should be indicated by a minus sign. Round down your d.f. answer to the nearest whole number and other answers to 4 decimal places. Do not use "quick" rules for degrees of freedom.)

d.f.

t-calculated

p-value

t-critical

(c-1) Comparison of credits at time of graduation for randomly chosen accounting and economics students:

x⎯⎯1x¯1 = 150, s₁ = 2.8, n₁ = 12, x⎯⎯2x¯2 = 143, s₂ = 2.7, n₂ = 17, α = .05, right-tailed test.
(Negative values should be indicated by a minus sign. Round down your d.f. answer to the nearest whole number and other answers to 4 decimal places. Do not use "quick" rules for degrees of freedom.)

d.f.

t-calculated

p-value

t-critical

Sixteen-year-old Michelle Portman was out driving at night near Sandusky, Ohio with her friend Katie Webster in the front passenger seat. They came to a railroad crossing with multiple tracks, where the mechanical arm had descended and warning bells were sounding. A Conrail train had suffered mechanical problems and was stopped 200 hundred feet from the crossing, where it had been stalled for close to an hour. Michelle and Katie saw several cars ahead of them go around the barrier and cross the tracks, despite the fact that Ohio’s vehicle and traffic laws prohibited this practice. Michelle had to decide whether she would do the same.
Long before Michelle made her decision, the train’s engineer (a Conrail employee) had seen the heavy Saturday night traffic crossing the tracks and realized the danger. The conductor and brakeman also understood the peril, but rather than posting a flagman who could have stopped traffic when a train approached, they walked to the far end of their train to repair the mechanical problem. A police officer had come upon the scene, told his dispatcher to notify the train’s parent company Conrail of the situation, and left.
Michelle made the decision to cross the tracks. She slowly followed the cars ahead of her. Seconds later, both girls were dead. A freight train traveling 60 miles per hour struck the vehicle broadside, killing Michelle and Katie instantly.
Michelle’s mother sued Conrail for negligence. The company argued that it was Michelle’s decision, one that violated Ohio traffic laws, which led to her death. Ohio is a comparative negligence state. Discuss both the plaintiff’s claim and Conrail’s defense. What verdict will result?

Please answer in the IRAC format.

Issue

Rule

Analysis

Conclusion

Plotted on the horizontal axis is distance in miles to different cities, the vertical axis is price of flight of the flight to these cities

a. looking at the scatter plot, how is the cost of the trip associated with the distance of the trip

b. use a straight edge to approximate a line of best fit to the data

c. on a scale of 0 to 1 estimate how well the line fits the data. 0= no fit 1= perfect fit. How did we choose the value of 0 or 1

d. Find the equation based on your best fit line.  HINT:  To find the estimated equation, pick two points on the line and plug into    Show your work.   Write your equation in the form,

e

.Now, let’s calculate the least-squares line based on your data.  Show your work.  You can use the following table to assist you or you may use Excel if you are more comfortable with the software. Write your equation in the form, .

Determine the Sample Correlation Coefficient, .  

AB Distribution, Inc., employed QY, Inc., to run its tire mounting and distribution operation in Mount Valley, Ohio. Robert Chase worked for QY as a second-shift supervisor at Titan. He suffered a heart attack in 2000 and underwent heart bypass surgery in 2001. He also had arthritis. In July 2006, AB Distribution decided to terminate QY. Chase applied to work at AB Distribution, Inc. On his application, he described himself as having a disability. After a physical exam, AB’s doctor concluded that Chase could work in his current capacity, and he was notified that he would be hired. Despite the notice, Natalia Baron, an AB employee, wrote “not pass px” at the top of Chase’s application, and he was not hired. He took a job with APCO Systems, a parking ramp management company. This work involved walking up to five miles a day and lifting more weight than he had at AB. In September 2008, AB eliminated its second shift. Chase filed a suit in a federal district court against AB, in part, under the Americans with Disabilities Act (ADA). AB Distribution argued that the reason it had not hired Chase was not that he did not pass the physical, but no one—including Baron—could explain why she had written “not pass px” on his application. Later, AB claimed that Chase was not hired because the entire second shift was going to be eliminated

5-A. What must Chase establish to make his case under the ADA? Can he meet these requirements? Explain.

5-B. In employment-discrimination cases, punitive damages can be appropriate when an employer acts with malice or reckless indifference to an employee’s protected rights. Would an award of punitive damages to Chase be appropriate in this case? Discuss.