The demand for Greta’s Grinders can be characterized by the following point elasticities: price elasticity = -0.8, cross-price elasticity with Melvin’s Mashers = -2, and income elasticity = 1.2. Which of the following statements is false?

1. A price increase for Greta Grinders will decrease both the number of units demanded and the total revenue Gail gets.
2. The cross-price elasticity indicates that a 4% increase in the price of Melvin’s Mashers will cause an 8% increase in quantity demanded of Greta Grinders.
3. An 8% price reduction for Greta Grinders would be necessary to overcome the effects of a 4% decline in income.
4. All the above statements are false.  

flake center is considering purchasing new manufacturing equipment for 90000. the old network can be sold for 7000. the new network will require additional working capital of 10000. its anticipated eight-year life will generate additional client revenue of 40000 annually with operating costs, excluding depreciation, of 20000. at the end of eight years, it will have a salvage value of 9000 and return 8000 in working capital. taxes are not included.

1) if the company has a required rate of 12%, what is the net present value of the proposed investment?

2) assume taxes are 30%, what is the after-tax NPV of the proposed investment?

In 2018, Congress overhauled the United States Tax code with The Tax Cut and Job ACT (TCJA). The TCJA lowered the tax bracket for everyone for 10 years. Significant changes to the tax code for individuals were lowered tax brackets and higher standard deductions. Hence, fewer individuals will have to itemize their returns.   However the Corporation and business tax cuts are permanent. Will the Corporate tax cuts increase wages and have positive impact on the economy? Also, will the individual tax cut become permanent in the future? Will the government take in more revenue due to a stronger economy even though it will be less per person?   

True or False

1.The Cross-Price elasticity of demand for good X is -2, if its demand changes from 100 units to 300 units, because of an increase in Price of Good Y from $1 to $2?

2.If the Demand for a good is inelastic, we can say that, as Price decreases, the Total Revenue will decrease.

3.If the demand for a good rises, when income falls, the good is an inferior good.

4.Because of the law of supply, we can be sure that price elasticity of supply, which measure the responsiveness of quantity supplied to a change in market price of the good, will always be NEGATIVE.

Compute the Earning After Tax using both FIFO & LIFO inventory evaluation methods from the following data:

Current operating income for Bay Area Cycles Co. is $32,000. Selling price per unit is $100, the contribution margin ratio is 20%, and fixed expense is $128,000.

Required:

1. Calculate Bay Area Cycle’s per unit variable expense and contribution margin. How many units are currently being sold?

2. How many additional unit sales would be necessary to achieve operating income of $80,000?

4. To study whether movie ratings and release season influence the box office earnings, you gather data on 70 recent movies. You characterize each movie’s rating (G, PG, PG-13, R, or NC-17) and release season (summer or not summer).
   1. Complete the ANOVA table below by filling in the shaded boxes
   2. Find the appropriate critical value(s) [?=0.05]
   3. Does box office revenue significantly vary with rating, release season, or their interaction? Clearly answer for each

   4. 	SS	df	MS	F
      Rating	455
      Season	192.5
      Interaction	140

Calculate the following ratios and comment if the ratio is favorable or unfavorable. All amounts listed are correct and don’t worry if some of the ratios look out of sync, they are intentional.

a. Company 1 current assets are $500,000 and current liabilities are $325,000.

b. Company 2-Cash and cash equivalents are $100,000, net receivables are $250,000 and current liabilities are $300,000

c. Company 3-total liabilities are $750,000 and the balance in the unrestricted Fund Balance is $850,000

d. Company 4- Operating loss of $125,000 and total operating revenue is $6,000,000

e. Company 5 EBIT is $600,000 and total assets are $4,250,000

Below is the income statement of a publicly-traded biotech company from 2004 until 2007:

The company’s stock was trading for $2 in 2004 and is now trading for $7. Are investors irrational? Should the stock be sold short? Is it possible for a company in the biotech business to be worth something even though it has no current sales? What can justify the billion-dollar values of technology companies which have yet to earn any profits?