5) If a company borrows money from a bank, the interest paid on this load should be reported on the statement of cash flows:

A. Operating activity

B. Investing activity

C. Financing activity

D. Noncash investing and financing activity

E. This is not reported in the statement of cash flows.

6) The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:

A. Operating activities

B. Financing activities

C. Investing activities

D. Schedule of noncash investing or financing activity

E. Reconciliation of cash balance

7) All of the following statements related to reporting cash flows from investing and financing activities are true except:

A. Reporting of financing activities is the same under the direct method and indirect method

B. Changes in noncurrent liability accounts are analyzed to determine cash flows from financing activities.

C. Changes in noncurrent asset accounts, current notes receivable, and current investments are analyzed to determine cash flows from investing activities.

D. The direct method applies accrual accounting while the indirect method applies cash basis accounting

E. Reporting of investing activities is the same under the direct method and indirect method.

The following is the balance sheet for Ford Motor Company as of December 31, 1994 (in millions). Assets Liabilities Cash $ 19,927 Accounts payable $ 11,635 Receivables $132,904 Debt due within 1 year $ 36,240 Inventory $ 10,128 Other current liabilities $ 2,721 Current assets $ 91,524 Current liabilities $ 50,596 Fixed assets $ 45,586 Short-term debt $ 36,200 Long-term debt $ 37,490 Equity $ 12,824 Total assets $137,110 Total liabilities $137,110 The firm had revenues of $154,951 million in 1994 and cost of goods sold of $103,817 million. a. Estimate the net working capital. b. Estimate the noncash working capital. c. Estimate noncash working capital as a percent of revenues. 5. Continuing problem 4, assume that you expect Ford's revenues to grow 10% a year for the next five years. a. Estimate the expected changes in noncash working capital each year, assum- ing that noncash working capital as a percent of revenues remains at 1994 levels. b. Estimate the expected changes in noncash working capital each year, assum- ing that noncash working capital as a percent of revenues will converge on the industry average of 4.3% of revenues.

UNIT 2: PPF, TRADE, SPECIALIZATION

The Production Possibilities Frontier is a simple economic model used to illustrate a complex economic reality of productive possibilities of one economy. The PPF is an economic frontier of maximum production of two (2) goods based on available resources and the state of technology. The PPF assumes the economy is using all its resources and is using them efficiently.

Consider this scenario: The U.S. is productive efficient in its economy. It is highly diversified and enjoys economic growth. This year, the U.S. economy changes from a highly diversified one to a specialized one focused on the production of two (2) goods, oil (energy sector) and corn (agricultural sector).

DISCUSSION QUESTION

Given the breadth of the U.S.'s economic resources which were fully employed in its highly diversified economy, do you expect the economy will continue to grow annually (as it did previously) and be productive efficient?

INSTRUCTIONS:

• Your comments should connect PPF framework (changes and economic concepts) to the change noted to the U.S. economy (highly diversified to specialized with 2 products/goods).
• Do you anticipate growth in a specialized productive economy?
• Will economic resources be fully employed?
• Your post should be no more than 200 words.

The following information describes the requirements for your response: It must be at least three paragraphs long (more is usually better), grammatically correct, and demonstrate that you understand and can apply the concepts covered in the second competency module. When writing your response, follow the steps listed below in the order that they appear.

Step One: Begin by describing the process for calculating price elasticity of demand. Then, using fictitious numbers, calculate the price elasticity of demand for donuts at different prices. Remember that you are using your own prices and quantity demanded at each price.

Step Two: Next, identify a product that has a perfectly elastic price elasticity of demand (changes in price cause demand to fall to zero) and explain why, and then identify a product that has perfectly inelastic price elasticity of demand (price changes don’t affect demand) and explain why.

Step Three: Next, describe the factors that influence the price elasticity of demand for a product. Once you have done this, classify each of the following products as elastic, inelastic, or unitary elastic and explain why.

a) Athletic shoes.

b) Medicine for Diabetes.

c) Fast food.

d) College education at Harvard.

e) Pens

f) Houses in McAllen

1. Which of these transactions requires a debit entry to Cash?

a. collected balance due from customers

b. paid balance due to suppliers

c. sold merchandise on account

d. purchased supplies for cash

2. What is the impact on the accounting equation when a payment of account payable is made?

a. both sides decrease

b. both sides increase

c. only the Asset side changes

d.neither side changes

3. That a business may only report activities on financial statements that are specifically related to company operations, not those activities that affect the owner personally, is known as which of the following?

a. separate entity concept

b. monetary measurement concept

c. going concern assumption

d. time period assumption

4. Which set of accounts has the same type of normal balance?

a. Accounts payable, retained earnings

b. Cash, accounts payable

c. Prepaid rent, unearned service revenue

d. Dividends, common stock

5. The step-by-step process to record business activities and events to keep financial records up to date is ________.

a. accounting cycle

b. day-to-day cycle

c. general ledger

d. journal

A rapidly-growing fast-casual restaurant serving a regional market in the Ohio and Indiana markets was concerned about meeting demand for its burritos and burrito bowls during peak lunch hours. Therefore, the firm added a series of workers in a pilot test in their busiest shop in western Ohio. The shop added more and more workers trying to find their most efficient production point given additional workers. The following table depicts their production capabilities between their critical hours of 11:00 a.m. and 2:00 p.m. Note there have been no changes to the equipment or to the physical plant of the shop; only the number workers has changed.

Graph the performance of the workers using Excel; connect the points on the graph with a line or curve.

What principle of economics has the firm encountered in its pilot test of adding workers attempting to meet peak lunch demand?

Will this principle have any effect on the costs of the firm at some point? Please explain the relationship between costs and production changes displayed in the graph.

Variables typically included in a multivariate supply function (other than the price and quantity of the item the supply function represents) are prices of other goods that use similar input resources for production, the number of suppliers, techniques of production, taxes and subsidies, prices of input resources, weather, and expectations. Please answer the following questions about the affect changes in other variables might have on the supply of the item. These changes will either cause supply to increase (shift right) or decrease (shift left). Use either word as applicable, for the short answer.

1. If the market price of gasoline returns to the near $4.00 per gallon level then demand for gas-gulping large autos is likely to decrease and manufacturers of these autos are likely to _____________ their supply:

2. A relative increase in the productivity of the technology used to produce the item being considered is likely to _____________________ its supply.

3. Hailstorms have pelted south central Texas grape vineyards, spoiling acres of grapes. This is likely to ______________ the supply of grapes for Texas wine.

4. A manufacturer, operating with a fixed production budget, discovers that the cost of input resources is increasing. The manufacturer is likely to ___________________ the quantity of the product produced.

5. The six-spotted evil weevil has attacked California’s broccoli crops. Their supply of broccoli is thus likely to:

The demand curve for labor:

A) slopes downward.

B) is based on the marginal revenue product of labor.

C) shows the amount of labor that will be demanded at any given wage.

D) all of the above.

Which of the following factors, in addition to income, might be considered by an individual deciding to enter a labor market?

A) Location.

B) Long-term gains.

C) Psychological rewards.

D) All of the above.

A decrease in the equilibrium wage rate and equilibrium quantity of workers in a labor market would be caused by:

A) a decrease in labor supply.

B) an increase in labor supply.

C) a decrease in labor demand.

D) an increase in labor demand.

The basic supply and demand model predicts that a decrease in labor demand will shift the demand curve to the:

A) left and reduce wages.

B) left and increase wages.

C) right and reduce wages.

D) right and increase wages.

If labor supply decreases and labor demand increases, we should expect that:

A) wages will increase.

B) wages will decrease.

C) employment will increase.

D) employment will decrease.

Which of the following would NOT cause a supply curve of labor to shift?

A) Demographic trends.

B) Changes in the wage rate.

C) Cyclical changes in economic conditions.

D) Changing expectations of future job prospects.

We are evaluating a project that costs $660,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 69,000 units per year. Price per unit is $58, variable cost per unit is $38, and fixed costs are $660,000 per year. The tax rate is 35 percent, and we require a 12 percent return on this project.

a. Calculate the accounting break-even point. (Do not round intermediate calculations and round your final answer to nearest whole number. (e.g., 32))

Break-even point = 39600 units

b-1 Calculate the base-case cash flow and NPV. (Do not round intermediate calculations and round your NPV answers to 2 decimal places. (e.g., 32.16))

Cash flow = $ 514200

NPV = $ 1193578

b-2 What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.161)) ΔNPV/ΔQ $

??

c. What is the sensitivity of OCF to changes in the variable cost figure? (Do not round intermediate calculations and Negative amount should be indicated by a minus sign.) ΔOCF/ΔVC $

??

Direction: A small data set is given below. You will run a t-test using Excel. You must provide Excel output to get full credit for this question. A medical researcher wants to determine whether a drug changes the body’s temperature. Seven test subjects are randomly selected, and the body temperature (in degrees Fahrenheit) of each is measured. The subjects are then given the drug and after 20 minutes, the body temperature of each is measured again. The results are listed below. Use significance level α = 0.05, and we assume that the body temperatures are normally distributed.

Subject 1 2 3 4 5 6 7

Initial Temperature 101.8 98.5 98.1 99.4 98.9 100.2 97.9

Second Temperature 99.2 98.4 98.2 99.0 98.6 99.7 97.8

Provide results for the following questions: 1. Which t-test you used? 2. Degrees of freedom? 3. t-statistic of the test? 4. One or two tailed hypothesis testing used? 5. p value? 6. Do you reject or fail to reject the null hypothesis? 7. At α = 0.05, is there enough evidence to conclude that the drug changes the body’s temperature? (you will make an inference about results)