Cars on Campus. Statistics students at a community college wonder whether the cars belonging to students are, on average, older than the cars belonging to faculty. They select a random sample of 47 cars in the student parking lot and find the average age to be 9.7 years with a standard deviation of 6.5 years. A random sample of 48 cars in the faculty parking lot have an average age of 3 years with a standard deviation of 3.8 years.

Note: The degrees of freedom for this problem is df = 73.845664. Round all results to 4 decimal places. Remember not to round for intermediate calculations!

1. The null hypothesis is ?0:??=??H0:μs=μf. What is the alternate hypothesis?
A. ??:??<??HA:μs<μf
B. ??:??≠??HA:μs≠μf
C. ??:??>??HA:μs>μf

2. Calculate the test statistic.  ? z t X^2 F  =

3. Calculate the p-value for this hypothesis test.  
p value =

4. Suppose that students at a nearby university decide to replicate this test. Using the information from the community college, they calculate an effect size of 1.26. Next, they obtain samples from the university student and faculty lots and, using their new sample data, conduct the same hypothesis test. They calculate a p-value of 0.029 and an effect size of 0.821. Do their results confirm or conflict with the results at the community college?
A. It contradicts the community college results because the effect size is much smaller.
B. It contradicts the community college results because the p-value is much bigger
C. It confirms the community college results because the effect size is nearly the same.
D. It can neither confirm or contradict the community college results because we don't know the sample sizes the university students used.
E. It confirms the community college results because the p-value is much smaller.

The next two questions (7 and 8) refer to the following:

The weight of bags of organic fertilizer is normally distributed with a mean of 60 pounds and a standard deviation of 2.5 pounds.

7. What is the probability that a random sample of 33 bags of organic fertilizer has a total weight between 1963.5 and 1996.5 pounds?

8. If we take a random sample of 9 bags of organic fertilizer, there is a 75% chance that their mean weight will be less than what value? Keep 4 decimal places in intermediate calculations and report your final answer to 4 decimal places.

The next two questions (8 and 9) refer to the following:

Question 10 and 11

Suppose that 40% of students at a university drive to campus.

10. If we randomly select 100 students from this university, what is the approximate probability that less than 35% of them drive to campus?

Keep 6 decimal places in intermediate calculations and report your final answer to 4 decimal places.

11. If we randomly select 100 students from this university, what is the approximate probability that more than 50 of them drive to campus?

Keep 6 decimal places in intermediate calculations and report your final answer to 4 decimal places.

12. Suppose that IQs of adult Canadians follow a normal distribution with standard deviation 15. A random sample of 30 adult Canadians has a mean IQ of 112.

We would like to construct a 97% confidence interval for the true mean IQ of all adult Canadians. What is the critical value z* to be used in the interval? (You do not need to calculate the calculate the confidence interval. Simply find z*. Input a positive number since we always use the positive z* value when calculating confidence intervals.)

Report your answer to 2 decimal places.

Occupational health and safety (OH&S) is an important aspect of the operation of every food service facility - regardless of size.

1) How has safety been discussed in your workplaces? (As usual, if you don't have work experience - interview a friend or family member) (2 examples - 2 marks)

2) After learning this week, If you were the manager how would you improve it? (2 marks - 2 examples)

Conduct an interview with an Estate Planning Attorney utilizing the internet, friend, relative, or personal connection. Ask them the following:

* Note: Please do not only define the terminology. I need thorough explanations of the question accompanied by the interviewee's opinion and advice of the content. 2 paragraphs minimum.

There are a series of 6 questions that I will post in 6 separate post questions.

Question #1 - What is the importance of estate planning in today's world?

Please discuss the following question in your own words 400 word on the following question.

Choose a real health care organization to study. Interview 1 key leader who is involved in the organization's health care delivery. Based on questions asked and answers given, the report will summarize the questions and answers and then present detailed information evaluating the following: proposed operational changes, and how these changes may impact operations and budgets.

You want to determine if there is a relationship between birth order (first, or second child in the family) and current relationship status. You interview 1000 people who are all either 1st, or 2nd born in their family and group them as follows: (i) never been in a relationship, (ii) in a committed relationship, (iii) in a casual relationship, (iv) was in a relationship, but currently unattached, (v) pursuing multiple relationships.

A) type out the rules for your analysis

As businesses increasingly emphasize workplace ethics, you may be asked in an interview to tell about a time when you were challenged ethically. One workplace compliance officer advised candidates not to respond that you have never faced an ethical challenge. "You want a candidate," he said, "who avoids misconduct, not someone who lies and says they've never done anything wrong." Do you agree?

Flight Plan Consulting, Inc.

Cost of Capital and Firm Valuation Project

The Company background

Bill Gibson began Flight Plan Consulting, Inc. (FPC) in 1990. The company offered very specialized consulting services to corporate flight departments, i.e., to those companies that have their own planes for purposes of executive transportation. This consultancy focused on the cost versus benefit considerations of the acquisition and use of corporate aircraft. Bill Gibson was ideally suited for this line of work; he was both a commercial pilot and had held an adjunct position as a finance professor in a university near his home. His company had its first and only public offering of stock in 1995; at that time revenue had reached $5 million, and the employee headcount was up to ten. In the twelve years since the company's inception, sales, earnings and the company's fine reputation have increased steadily. The company's financial information, and selected capital market and industry data and information are provided in Table 1.

A major contributor to the company's good fortunes is a particular area of concern taking place in many corporate flight departments around the United States. This concern is known as “fractional ownership” versus full ownership of corporate aircraft. Gibson, while not a corporate pilot, understood well the costs, benefits, concerns and industry dynamics of corporate flight departments and the companies that supplied the aircraft. This knowledge and breadth of understanding formed the basis for his consulting company.

Fractional ownership, in its simplest terms, is when several companies, usually three or four, share the ownership of a corporate aircraft. For example, a company that wishes to buy fractional ownership will buy or lease a 1/5 interest in an airplane. Such an arrangement would allow for approximately 160 hours per year of usage. The total cost would depend upon the type of aircraft chosen. The fractional purchaser or lessee would also have access to aircraft crew, maintenance and everything else needed to complete the operation of a corporate aircraft.

The interest in fractional ownership has several origins, the most prominent of which is the corporate “downsizing” and “rightsizing” of the decade of the 1990's. The closing of a corporate flight department could possibly mean a significant reduction in total corporate overhead expenses. Moreover, fractional ownership may be more “flexible” in the manner in which the services are customized for each individual fractional owner. A rule of thumb among consultants was if the aircraft will be needed between 100 and 350 hours per year, fractional ownership would likely be the best option. [1]

Within that environment, FPC has become a major source of consulting services for firms that are moving from having an in-house flight department to fractional ownership, or are considering corporate aircraft acquisition for the first time. The operations of FPC involved Gibson or one of his five consultants working with the client to determine the most efficient manner in which to acquire the use of a corporate aircraft. The consulting relationships were always quite involved and of long duration. A consultant's reputation, however, depended upon the word-of-mouth goodwill of each client.

In the last year or so, Gibson had considered expanding by acquisition. There were several smaller consultancies in the same line of business as FPC. Gibson, after extensive discussions with his investment bank, had decided to focus upon two firms. Either one of those two would permit him immediately to acquire clients in Canada or Germany. The more pronounced international reach was exactly what FPC's strategic plan called for. While the company had done business in both Canada and parts of Western Europe for several years, the companies being considered for acquisition had very positive reputations in their respective locations.

Cost of Capital

Gibson believed that long-term capital from external sources would be needed to finance the acquisition. He believed FPC's common stock to be valued fairly at present. He also believed that the company's excellent bond rating would make a debt issue feasible.

Although the company’s board of directors was made up of successful and knowledgeable people from a variety of backgrounds, not all of them were intimately familiar with finance; it was, therefore, essential to answer any questions they had with authority. The firm’s investment in any asset, including other companies, was a result of the strategic plan, which the board had helped to develop and had certainly approved. The cost of capital issue was a very necessary tool in the implementation of that plan. The economic worth of any investment made by FPC would be measured against the firm’s cost of money, its opportunity cost, its cost of capital; terms that Gibson knew were interchangeable. At this crucial stage of the company’s development, he wanted his board to be “conversational” with those terms.

Gibson decided that he had better provide some specific and detailed information to his board concerning the company's cost of capital and its relation to the valuation process. In order to move the process along, Gibson decided to hand over the task of preparing a draft of “Cost of Capital and Acquisition Plans Memo”, as it had come to be called, to Kay Biddle. Biddle was a summer intern employed in FPC's controller's office. She was an MBA student and planned to graduate at the end of the fall semester with a concentration in finance. To construct her memo Biddle wondered how she, in relatively few words, could best show the interrelationship among the firm’s capital structure, the yield on the firm’s debt, and the rate of return on the firm’s equity. All of that information would be a starting point for her explanation.

Acquisition Plans

The board, Gibson believed, also needed to consider the effect of the impending acquisition upon the firm’s sales and net income after-tax. The purpose of the acquisition is to increase sales and income and to diversify the firm in terms of its geographic market. That is a key element in the long-term success of specialized consulting firms in FPC’s line of business.

FPC identified two possible target companies to acquire:

Maple Aviation, a fast-growing company with clients in major Canadian cities, such as Vancouver, Toronto, and Montreal.

Das Flugzeug, an established consulting company providing services to clients in Berlin, Frankfurt, and Munich.

Gibson asked Biddle to calculate the firm values of the above-mentioned targets and include the details in the memorandum. FPC's financial staff had spent considerable time analyzing the target companies’ current and historical financial statements. The analysis helped to determine the level of free cash flows after possible acquisition. The future expected free cash flows are the net cash flows available to the firm's investors after all investment in fixed assets and working capital have been made. The expected free cash flows from Maple Aviation and Das Flugzeug are listed in Table 2 and Table 3, respectively. All values are in US dollars. The last step of firm value calculation is to discount the cash flows at the weighted average cost of capital. The valuation process would help FPC justify the fair costs to acquire the target companies.

Table 1: Selected Firm, Industry, and Capital Market Data

Table 2: Free Cash Flows (Thousands of US Dollars) of Maple Aviation

Table 3: Free Cash Flows (Thousands of Euros) of Das Flugzeug

Your task:

Suppose you are Kay Biddle and you will prepare the memorandum. You have to structure your memorandum around the following items:

Describe the company's core business and the market it serves.

Discuss the role of a corporate board of directors. To whom is the board responsible?

Why are capital market data and information useful when a firm is considering its cost of capital?

Calculate and present FPC's weighted average cost of capital.

Calculate and present the valuation of the two target companies to acquire.

Quantitatively discuss the comparison of the two targets.

In general, describe the effect upon the cost of capital of changes in capital market conditions such as an increase in interest rates, or a decline in stock prices.

Discuss how various factors may affect the cash flow estimates and FPC's project evaluation.

Note:

The format of the report is memorandum addressing to the board of directors. The body of your memorandum must not exceed 6 single-sided letter-size pages of typed 12-point-font double-spaced characters. You may include tables and figures in an appendix and reference them in the body of the report. If you make any assumptions or use information from external sources, state or cite them clearly. Writing and analysis should be performed by each student individually.

[1] The other options are, for less than 100 hours per year, use a charter service; for usage over 350 hours per year, operate an in-house flight department.