1. Rob took the afternoon off from his job as a tire salesman to mow his lawn. Rob told his wife that this made sense because he would be saving the $50 he would have to pay a lawn service, noting that this would be the opportunity cost to the family. Rob’s wife disagreed. What did Rob’s wife say?
   a.   That Rob just wanted to take the afternoon off.
   b.   The opportunity cost would be Rob’s lost income from selling tires that afternoon.
   c.   The opportunity cost would be Rob’s lost income from selling tires that afternoon plus the $50.
   d.   The opportunity cost would be Rob’s lost income from selling tires that afternoon minus the $50.

2. The division of labor can benefit society only if
   a.   society has no specialized resources.
   b.   society uses all of its resources efficiently.
   c.   a system of exchange exists.
   d.   labor resources are not scarce.

3. In Egypt, in 1970, the Aswan Dam was completed. By preventing the annual flood of the Nile (thereby providing millions of acres of arable land) and by providing electricity, the dam was expected to raise the living standard of the Egyptian people—and it has. However, it has also led to a rise in the water table, which causes Egypt’s limestone structures, including the pyramids, to absorb more salt water and to suffer serious erosion from crystallized salts. Combined with air pollution and traffic vibration, this erosion is turning the pyramids to dust. Economists analyze this type of problem with the concept of
   a.   an externality.
   b.   a free-rider problem.
   c.   the trade-off between equity and output.
   d.   the antiquity problem.
   e.   the public good problem.

Aguilera Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows:

                        Year                            Unit Sales

                        1                                    9

                        2                                  10

                        3                                  12

                        4                                  13

                        5                                    8                    

Working capital requirements: For each year, the total investment in net working capital will equal 10% of the dollar value of sales of the next year. All working capital is liquidated at the termination of the project at the end of year 5.

Total fixed costs are $12 per year, variable production costs are $20 per unit, and the units are priced at $30 each. The equipment needed to begin production has an installed cost of $240. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as seven –year MACRS property. In five years, this equipment can be sold for $70. AAI is in the 30 percent marginal tax bracket and has required return on all its projects of 15 percent. Based on these preliminary project estimates,

1. Calculate the cash flows from the project in the table below. (6)
2. What is the IRR of the project? (2)

(Round off the figures to nearest integer. Decimal figures not required)

MACR 7-year depreciation percentage

Copy the following format on your notebook and solve. Structure is available. You have to plug in figures with the correct signand calculate project cash flows.

Excel submission is not allowed.

Loring Company incurred the following costs last year:

X

Cost Classification

1. Classify each of the costs using the table provided. Be sure to total the amounts in each column. If an amount box does not require an entry, leave it blank. Direct materials is shown as an example.

X

Product Costs

2. What was the total product cost for last year?

The total product cost is .

3. What was the total period cost for last year?

The total unit product cost is .

The total period cost is .

4. If 30,000 units were produced last year, what was the unit product cost? Round your answer to two decimal places.

8-11. Match the part of the menstrual cycle to its hormonal description:

          a)menstruation b)luteal phase c)follicular phase d)mid-cycle

8) Progesterone peaks                                                 9) LH peaks

10) Estrogen rises, but progesterone is absent           11) Both estrogen and progesterone fall to very low levels

12) The amount of water reabsorbed in the collecting ducts of kidney nephrons is regulated by the hormone

      a)ACTH b)ADH c)ANF d)aldosterone

A study was conducted to determine whether the final grade of a student in an introductory psychology course is linearly related to his or her performance on the verbal ability test administered before college entrance. The verbal scores and final grades for 1010 students are shown in the table below.

Find the following:

(a) The correlation coefficient: r=

(b) The least squares line: y^=

(c) Calculate the residual for the first student:

You are the store manager for a Bomberland store. One of your products is a study desk. This desk comes in two colors: maple and cherry. Weekly demand for each desk color follows a Normal distribution with mean 100 and standard deviation 50. The demands for the two colors are independent. You order inventory replenishments weekly, the lead-time from your supplier is 3 weeks and your supplier is quite reliable, i.e., you always receive your entire order in three weeks. You use the order up-to model to decide your order quantities.

24. Suppose your order up-to level S is 400 for maple. After receiving your weekly delivery from your supplier at the beginning of a week, you note that you have 250 units of the maple desk on-hand, 100 maple desks still on-order and no maple desks backordered. How many maple desks will you order this week?

a. 0

b. 50

c. 100

d. 150

e. 200

25. Suppose your order up-to level is 500 for maple desks. With a 3-week lead time, what is your expected ending inventory of maple desks? Choose the closest number.

a. 98

b. 108

c. 208

d. 308

e. 408

26. If the order-up-to level for maple is S = 500, what is the approximate fill rate?

a. 92.00%

b. 95.00%

c. 98.75%

d. 99.56%

e. 100.00%

27. Suppose the ordering cost for maple desk is $100 and the unit holding cost is $5 per day. If there are 5 working days each week, the length of the review period using the economic order quantity model is (Hint: use the economic order quantity in Chapter 7 to figure out the length of a review period. The review period is the average flow time of one order cycle.)

a. Less than 1 day

b. Between 1 day and 2 days

c. At least a week

d. Two weeks or longer

Consider the following hypothesis test.

A sample of 40 provided a sample mean of 26.1. The population standard deviation is 6.

(a) Find the value of the test statistic. (Round your answer to two decimal places.)

(b) Find the p-value. (Round your answer to four decimal places.) p-value =

(c) At α = 0.01,state your conclusion.

(d)

State the critical values for the rejection rule. (Round your answer to two decimal places. If the test is one-tailed, enter NONE for the unused tail.)

test statistic≤

test statistic≥

State your conclusion.

Two method, A and B, are available for teaching a certain industrial skill. The failure rate is 20% for method A and 10% for method B. Method B is more expensive, however, and hence is used only 40% of the time. (Method A is used the other 60% of the time.) A worker is taught the skill by one of the two methods, but he fails to learn it correctly. What is the probability that he was taught by using method A? Show all work.

(A) What is the probability that the worker fails to learn it correctly? Include set notation or use a tree diagram.

(B) What is the probability that he was taught by using method A if he failed to learn it correctly? Use Bayes’ rule.

An insurance company has three types of annuity products: indexed annuity, fixed annuity, and variable annuity. You are given:

• None of the customers have both fixed annuity and variable annuity.
• 40% of the customers with fixed annuity also have indexed annuity.
• Half of the customers with two annuity products have variable annuity.
• 60% of the customers have indexed annuity.
• The number of customers who have only the variable annuity is the same as the number of customers who have two annuity products.
• All customers have at least one type of annuity.

Determine the proportion of the customers who only have the indexed annuity.

1. If the interest rate were 6%, which of these investments would you prefer?       Show your calculations!

1. A single payment of $500 in year 3
2. A payment of $40 a year for 20 years starting in one year’s time
3. A perpetuity of $30 a year starting in one year’s time
4. A perpetuity of $50 a year starting in one year’s time

2. Suenette plans to save $600 at the end of Year 1, $800 at the end of Year 2, and $1,000 at the end of Year 3. If she earns 3.4 percent on her savings, how much money will she have saved at the end of Year 3? Show your calculations!

1. $2,200.00
2. $2,238.47
3. $2,309.16
4. $2,468.69    

3. Mr. Bean wants to begin saving for his daughter’s college education and you estimate that he         will need $150,000 in 17 years. If you feel confident that he can earn a compound interest of         8%, how much does he need to invest today? Show your calculations!

1. $40,540.34
2. $8,823.53
3. $150,000
4. $8,169.93