Problem I: Suppose you are the manager of Speedy Oil Change which claims that it will change the oil in customers’ cars in less than 30 minutes on average. Further suppose that several complaints have been filed from customers stating that their oil change took longer than 30 minutes. Upper-level management at Speedy Oil Change headquarters has requested that you investigate the complaints. To begin your investigation, you randomly audit 36 oil changes performed by Speedy Oil Change and record the time each customer waited for the oil change. The number of minutes to complete each of the 36 oil changes is reported below.

(data similar to http://org.elon.edu/econ/sac/Descriptive.htm)

In the questions below, you will test if the mean is significantly less than 30 minutes at a significance level of 0.01.

6. Using the confidence interval you created, calculate the range of values that answers the question “how much less than 30 minutes is our mean oil change?”

7. What other factors might you need to consider in order to address the customer complaints?

Suppose r_RF = 4%, r_M = 11%, and b_i = 2.2.

1. What is r_i, the required rate of return on Stock i? Round your answer to two decimal places.
     %

2. 1. Now suppose r_RF increases to 5%. The slope of the SML remains constant. How would this affect r_M and r_i?

   1. r_M will remain the same and r_i will increase by 1%.
   2. r_M will increase by 1% and r_i will remain the same.
   3. Both r_M and r_i will decrease by 1%.
   4. Both r_M and r_i will remain the same.
   5. Both r_M and r_i will increase by 1%.

2. Now suppose r_RF decreases to 3%. The slope of the SML remains constant. How would this affect r_M and r_i?

1. 
   
2. 1. Both r_M and r_i will remain the same.
   2. Both r_M and r_i will decrease by 1%.
   3. r_M will decrease by 1% and r_i will remain the same.
   4. r_M will remain the same and r_i will decrease by 1%.
   5. Both r_M and r_i will increase by 1%.

1. Now assume that r_RF remains at 4%, but r_M increases to 12%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to two decimal places.

1. The new r_i will be   %.

   2. Now assume that r_RF remains at 4%, but r_M falls to 10%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to two decimal places.

   The new r_i will be   %.

You are the proud new owner of a local deli, Garibaldo's, situated in a great neighborhood. When you bought the deli, you also received an accounts receivable listing of customers who owed money to the deli along with a shoe box filled with slips of paper that contained the names of the "house account" customers. (These people all had charge privileges with the former owner of Garibaldi's.) The former owner did not like computers or recordkeeping. He said he could spot a good credit risk by "a handshake and a look in the eye. " Bills were not sent to house accounts as the former owner asked these customers to pay "when he needed cash flow and they (the customers) were in a good mood. " This is your first week of business and sales seem slow. Most of the activity comes at the lunch rush and many of your customers hurry in, grab stuff from the deli case and say, "Put it on my tab. " You think you need to make some changes, but you also don't want to make any of the customers mad. Use this grid to jot down your responses to the three questions listed

1. What are Garibaldi's current credit policies?

2. How are accounts receivable recorded on the company books?

3. What three changes would you make to the current way of doing business for Garibaldi's house accounts?

The shape of the distribution of the time required to get an oil change at a

1010​-minute

​oil-change facility is unknown.​ However, records indicate that the mean time is

11.6 minutes11.6 minutes​,

and the standard deviation is

4.5 minutes4.5 minutes.

Complete parts​ (a) through​ (c) below.

Click here to view the standard normal distribution table (page 1).

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Click here to view the standard normal distribution table (page 2).

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​(a) To compute probabilities regarding the sample mean using the normal​ model, what size sample would be​ required?

Choose the required sample size below.

A.

The sample size needs to be less than 30.

B.

The normal model cannot be used if the shape of the distribution is unknown.

C.

The sample size needs to be greater than 30.

D.

Any sample size could be used.

​(b) What is the probability that a random sample of

nequals=4545

oil changes results in a sample mean time less than

1010

​minutes?The probability is approximately

​(Round to four decimal places as​ needed.)

​(c) Suppose the manager agrees to pay each employee a​ $50 bonus if they meet a certain goal. On a typical​ Saturday, the​ oil-change facility will perform

4545

oil changes between 10 A.M. and 12 P.M. Treating this as a random​ sample, at what mean​ oil-change time would there be a​ 10% chance of being at or​ below? This will be the goal established by the manager.

The Village of Hawksbill issued $4100,000 in 5 percent general obligation, tax-supported bonds on July 1, 2019, at 101. A fiscal agent is not used. Resources for principal and interest payments are to come from the General Fund Interest payment dates are December 31 and June 30. The first of 20 annual principal payments are to made on June 30, 2020. Hawksbill has a calendar fiscal year.

1. A capital projects fund transferred the premium ( in the amount of $ 41,000) to the debt service fund.

2. On December 31, 2019, funds in the amount of $102,500 were received from the General Fund and the first interest payment was made.

3.The books were closed for 2019

4. On June 30, 2020, funds in the amount of $266,500 were received from the General Fund and the second interest payment ($102,500) was made along with principal payment ( $205,000)

5. On December 31, 2020 funs in the amount of $ 97,375 were received from the General Fund and the third interest payment was made ( also in the amount of $ 97,375)

6.the books were closed for 2020

A. Prepare journal entries to record the events above in the debt service fund

B. Prepare a statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2019

C. Prepare a statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31 2020

You are advising a company that is working to raise $100,000,000. You believe that it is best for the company to issue stocks and bonds to raise these funds. The key market conditions during the planning period are as follows: the required interest rates on bonds with a AAA rating is 3.35%; the company's stock is currently priced to deliver an 11% return. The company stock will pay an annual dividend of $1.60 per share after one year and dividends are expected to grow by 8%.

1. What is the share price in the planning period?

2. If the stock price changes to reflect a required return of 9% what is the share price assuming the dividends remain as planned (use the constant dividend growth model)?

3. The company bonds will have a par value of $1,000 If the yield to maturity for AAA-rated bonds changes from 3.35% in the planning period to 3.0% when the deal closes, what will the price per bond be when the deal closes?

4. If you plan to raise 40% of the funds from selling bonds and 60% of the funds from selling stock, how many bonds and how many shares of stock do you expect to sell in the planning period?

5. If you still plan to raise 40% of the funds from selling bonds and 60% of the funds from selling stock, how many bonds and how many shares of stock do you have to sell to raise the funds using the new prices on the day the market closes?

You are thinking of purchasing a house that costs $450,000. You have $55,000 in cash that you can use as a down payment, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires monthly payments and has an annual interest rate of 6.32% per year.

• What will your monthly payments be if you sign up for this mortgage?

• Present the amortization schedule (Beginning balance, Monthly payment, Principal payment, Interest payment, Ending balance) on a monthly basis using Excel.

• Calculate the total amount of interest paid throughout the life of the loan.

• Create a graph depicting the changes in the portions of interest and principal for each monthly payment throughout the life of the loan.

Suppose the interest rate decreases to 5.47% per year and the length of repayment decreases to 15 years.

• What will the new monthly payment be?

• Present a new amortization schedule (Beginning balance, Monthly payment, Principal payment, Interest payment, Ending balance) in a separate Excel sheet.

• Calculate the total amount of interest paid throughout the life of the loan.

• Create a graph depicting the changes in the portions of interest and principal for each monthly payment throughout the life of the loan.

How much do you save if you go with the 15-year mortgage versus the 30-year mortgage example above? Compute the difference between the total interest paid in parts A and B.

10. Suppose r_RF = 6%, r_M = 11%, and b_i = 1.3.

2. Now suppose r_RF decreases to 5%. The slope of the SML remains constant. How would this affect r_M and r_i?

-Select-IIIIIIIVVItem 3

1. What is r_i, the required rate of return on Stock i? Round your answer to two decimal places.
   %

2. 1. Now suppose r_RF increases to 7%. The slope of the SML remains constant. How would this affect r_M and r_i?

   1. Both r_M and r_i will remain the same.
   2. Both r_M and r_i will increase by 1%.
   3. r_M will remain the same and r_i will increase by 1%.
   4. r_M will increase by 1% and r_i will remain the same.
   5. Both r_M and r_i will decrease by 1%.
   
   
   -Select-IIIIIIIVVItem 2
   1. r_M will decrease by 1% and r_i will remain the same.
   2. r_M will remain the same and r_i will decrease by 1%.
   3. Both r_M and r_i will increase by 1%.
   4. Both r_M and r_i will remain the same.
   5. Both r_M and r_i will decrease by 1%.

3. 1. Now assume that r_RF remains at 6%, but r_M increases to 12%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to two decimal places.

   The new r_i will be  %.

   2. Now assume that r_RF remains at 6%, but r_M falls to 10%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to two decimal places.

   The new r_i will be  %.

Suppose r_RF = 7%, r_M = 11%, and b_i = 1.9.

2. Now suppose r_RF decreases to 6%. The slope of the SML remains constant. How would this affect r_M and r_i?

-Select-IIIIIIIVVItem 3

1. What is r_i, the required rate of return on Stock i? Round your answer to two decimal places.
     %

2. 1. Now suppose r_RF increases to 8%. The slope of the SML remains constant. How would this affect r_M and r_i?

   1. r_M will increase by 1% and r_i will remain the same.
   2. Both r_M and r_i will decrease by 1%.
   3. Both r_M and r_i will remain the same.
   4. Both r_M and r_i will increase by 1%.
   5. r_M will remain the same and r_i will increase by 1%.
   
   -Select-IIIIIIIVVItem 2  
   1. Both r_M and r_i will remain the same.
   2. Both r_M and r_i will decrease by 1%.
   3. r_M will decrease by 1% and r_i will remain the same.
   4. r_M will remain the same and r_i will decrease by 1%.
   5. Both r_M and r_i will increase by 1%.

3. 1. Now assume that r_RF remains at 7%, but r_M increases to 12%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to two decimal places.

   The new r_i will be   %.

   2. Now assume that r_RF remains at 7%, but r_M falls to 10%. The slope of the SML does not remain constant. How would these changes affect r_i? Round your answer to two decimal places.

   The new r_i will be   %.