A) A local bakery has determined a probability distribution for the number of cheesecakes that they sell in a given day. Let xx equal the number of cheesecakes sold on a randomly selected day.

What is the probability of selling 15 cheesecakes in a given day?

P(x=15)=P(x=15)=

What is the probability of selling at least 10 cheesecakes?

P(x≥10)=P(x≥10)=

What is the probability of selling 5 or 15 cheesecakes?

P(x=5P(x=5 or x=15)=x=15)=

What is the probability of selling 25 cheesecakes?

P(x=25)=P(x=25)=

What is the probability of selling at most 10 cheesecakes?

P(x≤10)=P(x≤10)=

Give the expected number of cheesecakes sold on any given day using the discrete probability distribution?

μ=μ=

B)

Consider the discrete random variable XX given in the table below. Calculate the mean, variance, and standard deviation of XX. Also, calculate the expected value of XX. Round solution to three decimal places, if necessary.

μμ =


σ2σ2 =


σσ =


What is the expected value of XX?

E(X)=E(X)=

C)

The probability distribution for the number of students in statistics classes at IRSC is given, but one value is missing. Fill in the missing value, then answer the questions that follow. Round solutions to three decimal places, if necessary.

Find the mean number of students in a Statistics class at IRSC:
μ=μ=  

Find the standard deviation of the number of students in a Statistics class at IRSC:
σ=σ=  

D)

The following table gives the probability distribution of a discrete random variable XX. Use the table to find the following probabilities. Round solutions to three decimal places, if necessary.

P(x=2)=P(x=2)=

P(x≤4)=P(x≤4)=

P(x≥1)=P(x≥1)=

P(1≤x≤3)=P(1≤x≤3)=

The shape of the probability distribution is Select an answer uniform skewed left symmetric skewed right  .

E)

The following table gives the frequencies of the nest size (number of eggs) of 199 Great Blue Heron nests recorded on a recent survey in Indian River County. Use the data to construct a discrete probability distribution.

Construct the probability distribution of xx, where xx is the number of eggs in a randomly selected Great Blue Heron nest in Indian River County. Round solutions to three decimal places, if necessary.

F)

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 0.116.

Consider your next 33 purchases that produce a game piece. Calculate the following:

This is a binomial distribution. Round your answers to 4 decimal places.

a) What is the probability that you win 4 prizes?

b) What is the probability that you win more than 5 prizes?

c) What is the probability that you win between 3 and 5 (inclusive) prizes?

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

Alabama Industries manufactures and wholesales small tools. It sells the tools to a large group of regular customers and makes most sales by telephone to this group. Additionally, it receives orders online by its sales team who signs up new customers within the sales area. In the past, Alabama Industries has had trouble with customers who do not pay their accounts on time. Despite instructing the sales team not to make sales to customers before their creditworthiness has been assessed, sales are still being made to new customers before their limits have been set and to existing customers beyond their credit limit. Also, an economic downturn has started to impact its customers, and Alabama’s management is concerned about the possibility of increasing bad debts.

1a. What sort of preventive control could be used to deal with the problems faced by Alabama Industries? Explain how the control would work.

1b. Assume the preventive control is implemented, and during this year there have been no sales to customers that have taken any customer beyond its credit limit. What are two possible explanations for this that the auditor must consider?

1c. If an auditor finds two sales transactions during the year that exceed a customer’s credit limit at the time of the sale, what conclusion would the auditor draw from this evidence? What other evidence could the auditor consider before concluding that the preventive control has failed?

1. Why is it acceptable for financial accounting to be imprecise?

2. What is materiality?

3. How is materiality determined?

4. What is a misstatement?

5. When is a misstatement considered fraud?

6. Give three examples of uncertainties faced by businesses.

7. Define “U.S. GAAP.”

8. Why is GAAP so important to the capital market system in the United States?

9. Who creates U.S. GAAP?

10. Define “asset” and give an example of one.

11. Define “liability” and give an example of one.

12. Define “revenue.”

13. Define “expense.”

4. Chipotle^TM offers three items: tacos, burritos, and bowls at the price and variable costs below. The restaurant has a fixed cost of $50,000, and average sales for the items are like below. Answer the following.

1. a) What is the sum of weighted contribution margin % (ΣW_iCM_%i) of Taco, Burrito, and Bowl?

1. b) What is the breakeven sales level in dollars (BE_$) ?

1. c) What is the desired sales revenue (S_$) in order to generate profit of $15,000?

I have identified Walmart's Neighborhood Market, a subsegment of Walmart, as an oligopolistic market structure.

I need to answer the following:

Assess how this type of market structure impacts Neighborhood Market's financial performance as measured by performance variables over the past three years. Support your response with data and graphs illustrating two performance variables of your choosing (e.g., sales, net income, stock price) over time.

I want to focus on Revenue and Stocks and Earnings Per Share as the two variables

Cited resources and scholorarly studies are appreciated.

Answer True or False

1. Recognition is the process of formally recording or incorporating an item into the financial statements.
2. When initially recording the cost of land purchased, most companies use the current value.
3. Under the accrual method expenses are recognized when revenue is earned.
4. Most companies use the cash basis of accounting.
5. Three months before year end Billings Company signed a $100,000 12%, 6- month note. Principal and interest will be paid at maturity. No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

Balley, Inc. produces three milk products (all are main products) from a joint process costing $200,000. Data from the current period’s operation follow:
                Units                  Sales Price                    Separable         Total Revenue After
                  Produced             at Split-Off                   Costs         further Processing
Regular            5,000                       $5                   $10,000            $ 40,000
Fat-free          15,000                          7                         16,000            120,000
2%                    30,000                          8                         5,000               250,000

If Lucerne produces and sells the best mix, what is the total gross margin?

A. $195,000

B. $210,000

C. $180,000

D. $164,000

Aristocrat, Baker, and Chef have formed Chez Guevara, Inc. (“Chez”) as a C corporation to operate a gourmet restaurant and bakery previously operated by Chef as a sole proprietorship. Aristocrat will contribute $80,000 cash, Baker will contribute a building with a fair market value of $80,000 and an adjusted basis of $20,000, and Chef will contribute $40,000 cash and the goodwill from his proprietorship with an agreed value of $40,000 and has a zero basis. In return, each of the parties will receive 100 shares of Chez common stock, the only class outstanding.

Chez requires at least $1,800,000 of additional capital in order to renovate the building, acquire new equipment, and provide working capital. It has negotiated a $900,000 loan from Friendly National Bank on the following terms: interest will be payable at two points above the prime rate, determined semi-annually, with principal due in ten years and the loan will be secured by a mortgage on the renovated restaurant building.

Instructions:

Evaluate the following alternative proposals for raising the additional $900,000 needed to commence business, focusing on the possibility that the Service will reclassify corporate debt instruments as equity.

1. Aristocrat, Baker, and Chef each will loan Chez $300,000, and each will take back a $300,000 five-year corporate note with variable interest payable at one point below the prime rate, determined annually.

2. Same as (a) above, except that each of the parties will take back $300,000 of 10% 20-year subordinated income debentures; interest will be payable only out of the net profits of the business.

3. Same as (a) above, except that the $900,000 loan from Friendly National Bank will be unsecured but personally guaranteed by Aristocrat, Baker, and Chef, who will be jointly and severally liable.

4. Aristocrat will loan the entire $900,000, taking back a $900,000 corporate note with terms identical to those described in (a) above.

5. Same as (d) above, except that commencing two years after the incorporation, Chez ceases to pay interest on the notes because of severe cash flow problems.

A leading author in accounting and finance, Alfred Rappaport focuses in his work on the importance of a firm's management continually taking steps that increase shareholder value. In a recent article he set out his "Ten Ways to Create Shareholder Value:"

1. Do not manage earnings or provide earnings guidance; do not focus on earnings as it reflects neither the company's value or the change in value over the reporting period.
2. Make the strategic decisions that maximize expected value, even at the expense of lowering near-term earnings; this may mean divesting units that do not contribute to the company's long-term strategic goals though they do contribute to current profits.
3. Make acquisitions that maximize expected value, even at the expense of lowering near-term earnings; do not make acquisitions that improve only current earnings per share, but those that are expected to contribute to long-term value.
4. Carry only assets that maximize value; continually review assets and be prepared to sell units, brands, real estate, or other assets that can be sold for a price that is greater than their value to the company.
5. Return cash to shareholders when there are no credible value-creating opportunities to invest in the business; through cash dividends and stock buybacks.
6. Reward CEOs and other senior executives for delivering superior long-term returns.
7. Reward operating unit managers for adding superior multiyear value.
8. Reward middle managers and frontline employees for delivering superior performance on the key value drivers that they influence directly.
9. Require senior executives to bear risks of ownership just as shareholders do.
10. Provide investors with value relevant information.

Required: Based on Chapter 20, identify managerial concepts that you would apply for each of the 10 steps. Compensation concepts, management comp programs, business valuation techniques. Please do not simply write "Book Value" valuation. Explain why you would use such concepts and valuation models and why.

Compute the cost of debt financing. Compute the cost of equity financing using the capital asset pricing model. Compute the weighted average cost of capital. The capital investment is to be depreciated as a 7 year asset using this table: Ownership year 1 (14.29%), year 2 (24.49%), year 3 (17.49%), year 4 (12.49%), year 5 (8.93%), year 6 (8.92%), year 7 (4.46%). Evaluate each independent project by computing net present value, internal rate of return, and payback. Then decide whether to accept or reject the project.

Debt 40%, interest rate 5%, tax rate 26%, equity 60%, risk free rate 6%, RM 13%, beta 1.10, working capital 10% next year's sales, no terminal cash flows

project 1 capital investment 1,000,000 year 1(revenue 780,000, expenses 585,000) year 2(revenue 799,500,expenses 599,625) year 3(revenue 819,488, expenses 614,616) year 4(revenue 839,975, expenses 629,981) year 5 (revenue 860,974, expenses 645,731) year 6 (revenue 882,498, expenses 661,874) year 7 (revenue 904,561, expenses 678,421) year 8 (revenue 927,175, expenses 695,381)

project 2 capital investment 750,000 year 1(revenue 800,000, expenses 600,000) year 2 (revenue 820,000, expenses 615,000) year 3 (revenue 840,500, expenses 630,375) year 4 (revenue 861,513, expenses 646,134) year 5 (revenue 883,050, expenses 662,288) year 6 (revenue 905,127, expenses 678,845) year 7 (revenue 927,755, expenses 695,816) year 8 (revenue 950,949, expenses 713,211)

project 3 capital investment 1,000,000 year 1 ( revenue 850,000, expenses 680,000) year 2 (revenue 871,250, expenses 697,000) year 3 (revenue 893,031, expenses 714,425) year 4 (revenue 915,357, expenses 732,286) year 5 ( revenue 938,241, expenses 750,593) year 6 (revenue 961,697, expenses 769,358) year 7 (revenue 985,739, expenses 788,592) year 8 (revenue 1,010,383, expenses 808,306)