In the early 20th century, the French Canadian microbiologist Félix d’Hérelle used a virus called a bacteriophage (“phage”) to successfully treat some diseases caused by bacteria, such as dysentery and cholera. Subsequent experiments with “phage therapy” yielded mixed results; however, and enthusiasm quickly waned—especially once antibiotics became available in the 1940s. The therapy is not currently approved in the United States.

Phage therapy involves obtaining a pure culture of a disease-causing bacterium and exposing samples of the culture to different phages to see which ones kill the bacterium. The successful phage is then administered to a patient. For skin infections, the phage is applied directly to the infected area. For systemic diseases, the phage may be given orally or delivered intravenously.

Imagine you are part of a hospital medical team conveyed to treat Jerry, a 71-year-old diabetic patient, who has been suffering from a persistent infection on his foot. His doctor has tried multiple topical antibiotics, but the infection continues to worsen, so the doctor admitted him to your hospital for a new intravenous antibiotic treatment. To Jerry’s relief, the infection cleared up; however, two weeks later, the infection returned—worse than ever. Jerry’s doctor explains that the bacterium causing the infection is a multidrug resistant strain and that Jerry’s foot will need to be amputated.

Jerry’s sister, a nurse, mentions that she studied bacteriophages and asks the doctor whether phage therapy is a treatment option.

As a member of Jerry’s medical team, answer these questions:

• How would you respond to Jerry’s sister?

• Which type of phage would be used for phage therapy: a lytic or a lysogenic phage?

• What are the drawbacks of phage therapy? What are the advantages?

A Business Dilemma

Subway, the fast food restaurant franchise, announced in early 2018 it planned to bring back the “$5 Footlong” promotion. Hundreds of Subway franchise owners protested the promotion saying that they cannot afford to sell the footlong sub sandwiches for $5. You'll want to review the Subway webpage featured in the Chapter 8 module.

Assume that the costs related to a Subway footlong and a Subway franchise include the following

Question #1:  Bob owns a subway franchise and he is furious at the thought of offering $5.00 footlongs. His comment was “they cost us $5.41 each so we will be upside down on each sub sold. I’ll lose my shirt!”. Do you agree or disagree with Bob that this idea should be immediately rejected without any further analysis? If you don’t agree with Bob, why do you think further analysis is required?  

Question #2: What are the relevant and irrelevant costs in this pricing decision? (hint: there are 6 relevant costs)

Question #3: Can you think of any other reasons/factors besides the costs listed above that might be relevant to the pricing decision to offer the $5.00 footlongs? Use your imagination.

Ricardo is aware that he should save as much as possible early in his career while his personal responsibilities are minimal. Therefore he has adopted an aggressive savings plan – put aside $1,500 in his TFSA at the beginning of each month for a year. (He has never contributed to a TFSA and has sufficient contribution room.) Ricardo’s savings are expected to earn 2% per annum, compounded semi-annually and he will make his first contribution 6 months from today. How much will he have in his TFSA in 2 years’ time if no further contributions are made?

Hi,

Working through a chapter on sampling distributions and getting stuck very early on something that must be so simple the book didn't see fit to explain properly.

Example: In a certain population 30% of people are of blood type A. A random sample of size 5 is drawn. Therefore the population proportion with type A is p = 0.3.
The possible values of pˆ are 0, 0.2, 0.4, 0.6, 0.8, 1.

Why are these the possible values of p^? The numbers given create 5 intervals - is it because we have a sample of 5? If the sample was 10, would the possible values changed? It makes sense to me that they would, but my book doesn't go this way, the next paragraph shows that P(0.2 ≤ pˆ ≤ 0.4) increases as the sample size increases so it seems that the 'possible values' haven't moved.

Could anybody explain to me what is the story with the 'possible values' pf p^ here?

Thanks a lot

In the early stages of CoVID 19 many public figures compared coronavirus to the influenza virus. The basis for this claim was because they both cause respiratory illness and because the flu shows seasonality they thought so would coronavirus. However the viruses that cause flu and CoVID 19 are very different from each other.

Discussion Post (3 points) : Identify and explain a feature that is different between these viruses.

Which of the following distributions from a profit-sharing plan would be subject to the 10% early withdrawal penalty, assuming the participant has not attained age 59½?

a. A distribution for a 50-year old spouse under a Qualified Domestic Relations Order (QDRO) pursuant to a divorce from the participant in the profit-sharing plan.

b. A distribution from the plan to pay income taxes due to a federal tax levy.

c. A distribution to pay for costs of higher education for a participant’s 18-year-old daughter.

d. A distribution made to the participant after he/she separated from service at age 57.

Bad Bad Benny: A True Story (Identifying Controls for a System) In the early 20th century, there was an ambitious young man named Arthur who started working at a company in Chicago as a mailroom clerk. He was a hard worker and very smart, eventually ending up as the president of the company, the James H. Rhodes Company. The firm produced steel wool and harvested sea sponges in Tarpon Springs, Florida for household and industrial use. The company was very successful, and Arthur decided that the best way to assure the continued success of the company was to hire trusted family members for key management positions—because you can always count on your family. Arthur decided to hire his brother Benny to be his Chief Financial Officer (CFO) and placed other members of the family in key management positions. He also started his eldest son, Arthur Junior (an accountant by training) in a management training program, hoping that he would eventually succeed him as president. As the company moved into the 1920s, Benny was a model employee; he worked long hours, never took vacations, and made sure that he personally managed all aspects of the cash function. For example, he handled the entire purchasing process—from issuing purchase orders through the disbursement of cash to pay bills. He also handled the cash side of the revenue process by collecting cash payments, preparing the daily bank deposits, and reconciling the monthly bank statement. The end of the 1920s saw the United States entering its worst Depression since the beginning of the Industrial Age. Because of this, Arthur and other managers did not get raises, and, in fact, took pay cuts to keep the company going and avoid layoffs. Arthur and other top management officials made ‘‘lifestyle’’ adjustments as well—for example, reducing the number of their household servants and keeping their old cars, rather than purchasing new ones. Benny, however, was able to build a new house on the shore of Lake Michigan and purchased a new car. He dressed impeccably and seemed impervious to the economic downturn. His family continued to enjoy the theater, new cars, and nice clothes. Arthur’s wife became suspicious of Benny’s good fortune in the face of others’ hardships, so she and Arthur hired an accountant to review the books. External audits were not yet required for publicly held companies, and the Securities and Exchange Commission (SEC) had not yet been formed (that would happen in 1933–1934). Jim the accountant was eventually able to determine that Benny had diverted company funds to himself by setting up false vendors and having checks mailed to himself. He also diverted some of the cash payments received from customers and was able to hide it by handling the bank deposits and the reconciliation of the company’s bank accounts. Eventually, Jim determined that Benny had embezzled about $500,000 (in 1930 dollars). If we assume annual compounding of 5% for 72 years, the value in today’s dollars would be about $17.61 million! Arthur was furious and sent Benny away. Arthur sold most of his personal stock holdings in the company to repay Benny’s embezzlement, which caused him to lose his controlling interest in the company and eventually was voted out of office by the Board of Directors. Jim, the accountant, wrote a paper about his experience with Benny (now referred to as ‘‘Bad Bad Benny’’ by the family). Jim’s paper contributed to the increasing call for required annual external audits for publicly held companies. Arthur eventually reestablished himself as a successful stockbroker and financial planner. Benny disappeared and was never heard from again.

1. Identify the five control weaknesses in Revenue and Purchase process.

2. Identify the five General controls Arthur should have implemented in the company.

3. From Chapter 13, identify the five internal control activities Arthur should have considered (or implemented) to thwart Benny’s bad behavior.

Cranston Dispensers, Inc.

In the early 1990s, Cranston Dispensers, Inc. was quick to realize that concern for the environment would cause many consumer product manufacturers to move away from aerosol dispensers to mechanical alternatives that pose no threat to the ozone layer. In the following decades, most countries banned the most popular aerosol propellants, first chlorofluorocarbons and then hydrocholrofluorocarbons. As the leading manufacturer of specialized pump and spray containers for a variety of products in cosmetics, household cleaning supplies, and pharmaceutical industries, Cranston experienced a rapid increase in sales and profitability after it made this strategic move. At that time, the firm focused much of its attention on capturing market share and keeping up with demand.

For most of 20x4 and 20x5, however, Cranston’s share price was falling while shares of other companies in the industry were rising. At the end of fiscal 20x5, the company hired Susan McNulty as the new treasurer, with the expectation that she would diagnose Cranston’s problems and improve the company’s financial performance relative to that of its competitors. She decided to begin the task with a thorough review of the company’s working capital management practices.

While examining the company’s financial statements, she noted that Cranston had a higher percentage of current assets on its balance sheet than other companies in the packaging industry. The high level of current assets caused the company to carry more short-term debt and to have higher interest expense than its competitors. It was also causing the company to lag behind its competitors on some key financial measures, such as return on assets and return on equity.

In an effort to improve Cranston’s overall performance, Susan has decided to conduct a comprehensive review of working capital management policies, including those related to the cash conversion cycle, credit policy, and inventory management. Cranston’s financial statements for the three most recent years follow.    

($ in thousands)

Cranston Dispensers

Balance Sheet

($ in thousands)

5.   Cranston now bills its customers with terms of net 45. Although most customers pay on time, some routinely stretch the payment period to sixty or even ninety days. What steps can Cranston take to encourage clients to pay on time? What is the potential risk of implementing penalties for late payment?

6.   Suppose Cranston institutes a policy of granting a 1% discount for payment within fifteen days with the full amount due in 45 days. Half the customers take the discount, the other half take an average of sixty days to pay.

a.   What is the length of Cranston’s collection cycle under this new policy?

b.   In dollars, how much would the policy have cost Cranston in 20x5?

c.    If this policy had been in effect during 20x5, by how many days would Cranston have shortened the cash conversion cycle?

7.   An image-based lockbox system could accelerate Cranston’s cash collections by three days. Cranston can earn an annual rate of 6% on the cash freed by accelerated collections. Using sales for 20x5, determine the most that Cranston should pay per year for the lockbox system.

5.    Early in the year Bill Barnes and several friends organized a corporation called Barnes Communications, Inc. The corporation was authorized to issue 50,000 shares of $100 par value, 10% cumulative preferred stock and 400,000 shares of $2 par value common stock. The following transactions (among others) occurred during the year:

Jan. 6   Issued for cash 20,000 shares of common stock at $14 per share. The shares were issued to Barnes and 10 other investors.

Jan. 7   Issued an additional 500 shares of common stock to Barnes in exchange for his services in organizing the corporation. The stockholders agreed that these services were worth $7,000.

Jan. 12 Issued 2,500 shares of preferred stock for cash of $250,000.

June 4 Acquired land as a building site in exchange for 15,000 shares of common stock. In view of the appraised value of the land and the progress of the company, the directors agreed that the common stock was be valued for purposes of this transaction at $15 per share.

Nov. 15 The first annual dividend of $10 per share was declared on the preferred stock to be paid December 20.

Dec. 20 Paid the cash dividend declared on November 15.

Dec. 31 After the financial statements were prepared, the net income for the year   was $147,200.

a.    Prepare journal entries to record the above transactions.

b.    Prepare the stockholders’ equity section of the Barnes Communications, Inc. balance sheet at December 31, 2016.

To investigate if autism is marked by different brain growth patterns in early life, studies have tried to link brain size in infants and toddlers to autism. Suppose the whole-brain volume in non-autistic toddlers is known to be 1200 milliliters, on average. One study based on a sample size of 25 autistic toddlers had a sample mean volume of 1280 ml with a standard deviation of 230 ml. a. Calculate a 95% confidence interval for the whole-brain volume of autistic toddlers. Given: �!"!!" ∗ = 2.064 (3pt) b. Do the results from this study suggest that autistic toddlers have the same whole-brain volume as non-autistic toddlers, on average? Explain your answer. (2pt) c. If you used the same data from this study and calculated a 90% confidence interval, would it be wider or narrower than the 95% interval? (1pt) d. If the data from this study had the same mean and standard deviation, but was from a sample of size 15 instead of 25, would the 95% confidence have been wider or narrower? (1pt)