Bill’s Bootstrap is analyzing whether to go ahead with a project to set up a pop-up store at the Calgary Stampede, which would be operational for the next three years.

Question 19

Part A.

The mini building would cost the company $600,000 today and would be sold at the end of the three years for $0 and have no tax consequences thereafter. With a CCA rate of d = 25%, what are the CCA deductions for the three years of operations?  

Question 20

The Gross Profit of this project will be $370,000 next year and this will grow at a rate of 3% per year for the following two years. They expect 30% of the gross profit in any year will come from customers who would have travelled to purchase their items at the old store, indicating cannibalization. The space for the mini building could be rented out for $100,000 per year, if this project is not taken on. The interest expense for the debt that Bill’s Bootstrap has to take on is $1,500 per year and the tax rate is 30%. What is the Unlevered Net Income for each year of operation?

Part C.Question 21

The net working capital is $9,000 in years 1 and 2 and will be recovered at the end of year 3. The interest rate is 8%. What is the NPV of this project?

Area Rugs​,​Inc., is considering three possible countries for the sole manufacturing site of its newest area​ rug: Spain​, Singapore, and the United States. All area rugs are to be sold to retail outlets in the United States for $280 per unit. These retail outlets add their own markup when selling to final customers. Fixed costs and variable cost per unit​ (area rug) differ in the three countries

Requirement 1

Compute the breakeven point for Area Rugs, Inc. in each country in (a) units sold and (b) revenues

Determine the formulas for the breakeven point in units and the breakeven point in revenues. begin with the breakeven point in units, then the breakeven point in revenues.  

Requirement 2

If Area Rugs, Inc. plans to produce and sell 65,000 rugs in 2014, what is the budgeted operating income for each of the three manufacturing locations? comment on the results

The following data gives the creatinine clearance Y (in $1000’s) of a sample of 33 male subjects along with their creatinine concentration (X1), age (X2) and the weight (X3). The data are:

1. Plot a scatter plot of Y against each predictor variable. What do the plots tell you about the nature of the relationship between y and each of the independent variables?
2. Obtain the correlation matrix of the X variables. Does the matrix indicate potential problems with multicollinearity?
3. Fit a regression model containing the independent variables as first order terms.
4. Obtain variance inflation factors for the model in (. Is multicollinearity a problem? Explain
5. Obtain residual plots as well as partial residual plots. Do these plots indicate that the regression model should be modified?
6. Theoretical considerations .suggest the model

E(ln(Y)) = b₀+ b₁ln(X₁)+ b₂ln(140-X₂)+b₃ln(X₃).

Fit the theoretical model and examine all the relevant model diagnostics. Do any of the problems encountered with the model in (d) (if there were any problem encountered) seem to have been resolved?

FACTS In the spring of 2001, Kitsmiller purchased a house in Van Zandt County to use as rental property. In mid-June, he hired B & H Shaw Company, Inc. (B & H) to install a replacement septic tank in the back yard. The septic tank was located about two or three feet from a concrete stoop at the back door of the garage. B & H mounded dirt over the septic tank and the lateral lines going out from it upon completion. Sometime after B & H installed the septic tank, Kitsmiller smoothed out the mounds of dirt over the septic tank and lateral lines. Kitsmiller then leased the property to Moore and his wife on July 27. Kitsmiller testified that he viewed the back yard about a week or ten days prior to leasing the property to the Moores and stated that the dirt around the septic system looked firm.
On August 7, the Moores moved in. On August 11, Moore and his wife went into the back yard for the first time, and as he stepped off the stoop, he was unable to see the ground and could only see his wife and the bag of trash in his left arm. His wife testified that the ground looked flat. Moore testified that he had only taken a few steps off the stoop when his left leg sank into a hole, causing him to fall forward into his wife. As he tried to steady himself with his right foot, it hung and then sank, causing him to fall backward on his head and back. Moore testified that the injury to his back required surgery and affected his ability to earn a living.
Moore filed suit against Kitsmiller and B & H. He sought dam- ages for past and future pain and suffering, past and future mental anguish, past and future physical impairment, and past and future loss of earning capacity. In their answers to Moore’s suit, both Kitsmiller and B & H pleaded the affirmative defense of contribu- tory negligence.
During the jury trial, Moore testified Kitsmiller should have notified him where the septic tank and lateral lines were located
and that the dirt should have remained mounded over the tank and lines. Martin, an on-site septic tank complaint investigator for both the Texas Commission on Environmental Quality and Van Zandt County, testified that dirt should have been mounded over the sep- tic tank and lateral lines, so that when the dirt settled, there would be no holes in the ground around the septic tank or lateral lines.
The jury determined that (1) both Kitsmiller and Moore were negligent, but B & H was not; (2) Kitsmiller was 51 percent negli- gent and Moore was 49 percent negligent; and (3) Moore was entitled to $210,000 in damages. On September 29, 2004, the trial court entered a judgment in favor of Moore and against Kitsmiller in the amount of $210,000 plus interest and costs. Applying com- parative negligence, the trial court entered a modified final judg- ment on November 1, 2004, awarding Moore $107,100 plus interest and costs based upon Moore’s contributory negligence. Moore appealed all issues involving his contributory negligence.
DECISION The judgment of the trial court is affirmed.
OPINION Contributory negligence contemplates an injured per- son’s failure to use ordinary care regarding his or her own safety. This affirmative defense requires proof that the plaintiff was negli- gent and that the plaintiff’s negligence proximately caused his or her injuries. Negligence requires proof of proximate cause. Proxi- mate cause requires proof of both cause in fact and foreseeability. The test for cause in fact is whether the negligent act or omission was a substantial factor in bringing about an injury without which the harm would not have occurred. Foreseeability requires that a person of ordinary intelligence should have anticipated the danger created by a negligent act or omission.
Because comparative responsibility involves measuring the party’s comparative fault in causing the plaintiff’s injuries, it
requires a preliminary finding that the plaintiff was in fact con- tributorily negligent. The standards and tests for determining contributory negligence ordinarily are the same as those for deter- mining negligence. The burden of proof on the whole case is on the plaintiff. However, the burden of proof is on the defendant to prove the defense contributory negligence by a preponderance of the evidence.
The trier of fact may draw reasonable and logical inferences from the evidence. It is within the province of the jury to draw one reasonable inference from the evidence although another inference could have been made.
Moore testified that when he stepped off the stoop into the back yard for the first time on August 11, 2001, he could only see his wife and the plastic bag of trash he was carrying in his left hand. The jury was allowed to draw an inference from this evi- dence that Moore was not watching where he was walking. An individual must keep a proper lookout where he is walking, and a jury is allowed to make a reasonable inference that failure to do so
was the proximate cause of his injuries. It was reasonable for the jury to make an inference from Moore’s testimony that his failure to keep a proper lookout where he was walking contributed to the occurrence.
Moore contends that the only reasonable inference the jury could have made was that, even if he had been watching where he was walking, he would not have been able to avoid stepping in the holes because they were not visible to the naked eye. The jury could have made that inference, but chose not to do so. Thus the jury made a reasonable inference from the evidence in finding Moore contributorily negligent.
INTERPRETATION In cases in which both the plaintiff and defendant are negligent, under comparative negligence the law apportions damages between the parties in proportion to the degree of fault or negligence found against them.

If a plaintiff meets all of the requirements for a negligence claim, it does not necessarily mean that the plaintiff will automatically win their lawsuit. There are certain defenses available to the defendant. Some of those defenses are: (1) contributory negligence; (2) pure comparative negligence; and (3) modified comparative negligence (explained on pages 152-54 of Text). These three defenses were created to protect the defendant when the plaintiff may have been negligent in some way. Please note that in states that follow only "contributory negligence" it means that the plaintiff receives nothing if he/she is found even 1% negligent in the lawsuit (page 152).

First, please discuss whether you agree or disagree with having these three types of defenses in a negligence lawsuit.

Next, assume for the purposes of this question that you do agree with having these three defenses, which of these three defenses do you believe is the most equitable to both the plaintiff and the defendant?

Lastly, do you agree with the appellate court's decision affirming the lower court in Moore v. Kitsmiller (p. 153-54) finding that the plaintiff was 49% negligent? Why or why not? Please note that this case was a comparative negligence case as the plaintiff's overall recovery was reduced from $210,000 to $107,100.

Please separate out and fully explain all of your answers.  In your third answer, you should be discussing the specifics of the case in reaching your conclusion.

Question: Facts: Bill, a contractor in Brentwood, New York, prepared a bid for construction of an office bu... Facts: Bill, a contractor in Brentwood, New York, prepared a bid for construction of an office building for Fred. In preparation of his bid, Bill asked Sam, a tile manufacturer in Setauket, New York, for a quote on tile to Bill's specifications. On October 27, 2006, Sam returned a statement on his letterhead with a quote of $8,000.00 which stated that the quote was irrevocable. Although Bill did not tell Sam, Bill submitted a bid for the building on November 11, 2006, using Sam's quote as the basis for part of his bid. On January 8, 2007, after the price of tile had increased, Sam told Bill that he was revoking his offer. On January 9, 2007, Bill was awarded the contract to build the office building. Bill demanded that Sam deliver tile as per Sam's offer, but Sam refused. Bill thereupon purchased tile to his specifications from Ted, another tile manufacturer, for $9,000.00. Bill also needed doors for the office building. He contacted Steve, a door manufacturer in Syosset, New York, and placed an order for doors at a cost of $6,000.00, F.O.B. Syosset. Steve entered into a contract, which was reasonable, with a common carrier for the transportation of the doors from Syosset to Brentwood. While the doors were en route, the truck in which the doors were being transported was struck by lightning. The doors were completely destroyed. Bill refused Steve's demand for payment. Steve refused to supply Bill with replacement doors. Bill obtained replacement doors from Tom, another door manufacturer, for a cost of $7,000.00 which was then the current market value for doors meeting Bill's specifications. Bill and Susan, a window manufacturer in Stony Brook, New York, entered into a written contract whereby Susan agreed to provide windows to Bill's specifications no later than October 23, 2007, for a cost of $12,000.00. Susan's profit on the sale to Bill was $2,000.00. Susan has thousands of windows in stock, and can supply anyone with as many windows as he or she needs, at any time. On October 15, 2007, Susan delivered windows to Bill; however, the windows did not conform to Bill's specifications. Bill refused the windows and notified Susan in writing that day that he refused the windows. On October 16, 2007, Susan notified Bill that she would cure the non-conforming tender of goods. On October 18, 2007, Susan delivered new windows to Bill which conformed to Bill's specifications, but Bill had already purchased the windows he needed from Tina, another window supplier, for $11,500.00, on October 17, 2007, and Bill refused to accept Susan's second delivery of windows. Susan sold the windows to Frank, another buyer, for $12,000.00. Bill seeks damages from Sam, Steve and Susan. Steve and Susan seek damages from Bill.

Steve was discharged by impossibility when the doors were destroyed by lightning during transportation to Bill. True or False?

Bill is entitled to receive the full contract price of $6,000.00 from Steve. True or False?

Susan delivered defective windows to Bill on October 15, 2007. True or False ?

Susan is a lost volume seller since she had thousands of windows in stock and could supply anyone with as many windows as they need, at any time. True or False?

Susan is entitled to recover the full contract price of $12,000.00 from Bill. True or False?

Question: Facts: Bill, a contractor in Brentwood, New York, prepared a bid for construction of an office bu... Facts: Bill, a contractor in Brentwood, New York, prepared a bid for construction of an office building for Fred. In preparation of his bid, Bill asked Sam, a tile manufacturer in Setauket, New York, for a quote on tile to Bill's specifications. On October 27, 2006, Sam returned a statement on his letterhead with a quote of $8,000.00 which stated that the quote was irrevocable. Although Bill did not tell Sam, Bill submitted a bid for the building on November 11, 2006, using Sam's quote as the basis for part of his bid. On January 8, 2007, after the price of tile had increased, Sam told Bill that he was revoking his offer. On January 9, 2007, Bill was awarded the contract to build the office building. Bill demanded that Sam deliver tile as per Sam's offer, but Sam refused. Bill thereupon purchased tile to his specifications from Ted, another tile manufacturer, for $9,000.00. Bill also needed doors for the office building. He contacted Steve, a door manufacturer in Syosset, New York, and placed an order for doors at a cost of $6,000.00, F.O.B. Syosset. Steve entered into a contract, which was reasonable, with a common carrier for the transportation of the doors from Syosset to Brentwood. While the doors were en route, the truck in which the doors were being transported was struck by lightning. The doors were completely destroyed. Bill refused Steve's demand for payment. Steve refused to supply Bill with replacement doors. Bill obtained replacement doors from Tom, another door manufacturer, for a cost of $7,000.00 which was then the current market value for doors meeting Bill's specifications. Bill and Susan, a window manufacturer in Stony Brook, New York, entered into a written contract whereby Susan agreed to provide windows to Bill's specifications no later than October 23, 2007, for a cost of $12,000.00. Susan's profit on the sale to Bill was $2,000.00. Susan has thousands of windows in stock, and can supply anyone with as many windows as he or she needs, at any time. On October 15, 2007, Susan delivered windows to Bill; however, the windows did not conform to Bill's specifications. Bill refused the windows and notified Susan in writing that day that he refused the windows. On October 16, 2007, Susan notified Bill that she would cure the non-conforming tender of goods. On October 18, 2007, Susan delivered new windows to Bill which conformed to Bill's specifications, but Bill had already purchased the windows he needed from Tina, another window supplier, for $11,500.00, on October 17, 2007, and Bill refused to accept Susan's second delivery of windows. Susan sold the windows to Frank, another buyer, for $12,000.00. Bill seeks damages from Sam, Steve and Susan. Steve and Susan seek damages from Bill.

Steve was discharged by impossibility when the doors were destroyed by lightning during transportation to Bill. True or False?

Bill is entitled to receive the full contract price of $6,000.00 from Steve. True or False?

Susan delivered defective windows to Bill on October 15, 2007. True or False ?

Susan is a lost volume seller since she had thousands of windows in stock and could supply anyone with as many windows as they need, at any time. True or False?

Susan is entitled to recover the full contract price of $12,000.00 from Bill. True or False?

Cournot Oligopoly and Number of Firms In a Cournot oligopoly, each firm assumes that its rivals do not change their output based on the output that it produces. Illustration: A Cournot oligopoly has two firms, Y and Z. Y observes the market demand curve and the number of units that Z produces. It assumes that Z does not change its output regardless of the number of units that it (Y) produces, so chooses a production level that maximizes its profits. The general effects of a Cournot oligopoly do not depend on the size of the firms, the shape of the market demand curve, or the shape of the marginal cost curve. The mathematics is easiest for firms of the same size, linear demand curves, and flat marginal cost curves. Suppose an industry has two firms, a linear demand curve, and marginal costs, and no fixed costs: Demand curve: Q = " – $ P Marginal cost curve: MC = k In a competitive industry, what is the equilibrium quantity for the industry? (Setting price equal to marginal cost gives Q = " – $ × k. Since the industry is competitive, price equals marginal cost, and the supply curve for the industry is P = k; this gives the same result.) What is the equilibrium quantity for the firm? (With two identical firms, each produces half the industry quantity.) If the two firms merge into a monopoly, what is the monopoly price? (Show that the marginal revenue curve is MR = " – 2 $ P, by setting total revenue = P × Q and differentiating with respect to Q. Setting marginal revenue equal to marginal cost gives k = " – 2 $ P A P = (" – k) / 2$ Q = " – $ P = " – ½ (" – k) = ½ " + ½ k A total of 2,400 units are produced. If there were three firms in this Cournot oligopoly, how many units would be produced? 1,800 units 2,400 units 2,700 units 3,000 units 3,600 units (In a two Cournot oligopoly, each firm produces a the competitive quantity; in a three firm Cournot oligopoly, each firm produces ¼ the competitive quantity.)

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data.
  

Required:
Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2020. Owner Santana Rey contributed $30,000 to the business in exchange for additional stock in the first quarter of 2020 and has received $4,300 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)

Cash Flow Budgeting - Company A is experiencing rapid growth due to the popularity of its recent hardware release. Current sales of $100,000, which increased from $80,000 the previous month, are expected to grow at a 30% rate. Cost of sales are stable 70% of sales revene, yielding a 30% gross profit. Company A sales are 15% for cash with the remaining 85% collected the following month. Inventory-on-hand is maintained at a level to support the following month's sales. Inventory is paid for at the time of receipt. Company A began the period with a cash balance of $65,000.

(a) For the current month and following three months, determine Company A's: (INCLUDE FORMULAS USED TO SOLVE PROBLEM)

- Revenue

- Cost of sales

- Gross profit

- Accounts receivable

- Inventory

- Cash collections

- Cash disbursements

(b) Is Company A gross profit increasing or declining?

(c) Is Company A cash flow increasing or declining?

(d) What is Company A cash balance at the end of the four-month period?

Cash Flow Budgeting - Company B is experiencing rapid growth due to the popularity of its recent clothing line release. Current sales of $250,000, which increased from $190,000 the previous month, are expected to grow at a 20% rate. Cost of sales are a stable 35% of sales revenue, yielding a 65% gross profit. Company B sales are 30% for cash with the remaining 70% collected the following month. Inventory-on-hand is maintained at a level to support the following two months' sales. Inventory is paid for at the time of receipt. Company B began the period with a cash balance fo $70,000.

(e) For the current month and following three months, determine Company B: (INCLUDE FORMULAS USED TO SOLVE PROBLEMS)

- Revenue

- Cost of sales

- Gross profit

- Accounts receivable

- Inventory

- Cash collections

- Cash disbursements

(f) Is Company B gross profit increasing or declining?

(g) Is Company B cash flow increasing or declining?

(h) What is Company B cash balance at the end of the four-month period?

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2018 Computer services revenue $ 24,507 Net sales 18,193 Total revenue 42,700 Cost of goods sold $ 14,252 Depreciation expense—Office equipment 380 Depreciation expense—Computer equipment 1,180 Wages expense 2,950 Insurance expense 495 Rent expense 2,075 Computer supplies expense 1,285 Advertising expense 600 Mileage expense 250 Repairs expense—Computer 910 Total expenses 24,377 Net income $ 18,323 BUSINESS SOLUTIONS Comparative Balance Sheets December 31, 2017, and March 31, 2018 Mar. 31, 2018 Dec. 31, 2017 Assets Cash $ 75,517 $ 55,302 Accounts receivable 24,167 4,968 Inventory 674 0 Computer supplies 2,005 560 Prepaid insurance 1,080 1,625 Prepaid rent 755 755 Total current assets 104,198 63,210 Office equipment 7,200 7,200 Accumulated depreciation—Office equipment (760 ) (380 ) Computer equipment 19,500 19,500 Accumulated depreciation—Computer equipment (2,360 ) (1,180 ) Total assets $ 127,778 $ 88,350 Liabilities and Equity Accounts payable $ 0 $ 1,200 Wages payable 895 590 Unearned computer service revenue 0 2,200 Total current liabilities 895 3,990 Equity Common stock 106,000 77,000 Retained earnings 20,883 7,360 Total liabilities and equity $ 127,778 $ 88,350 Required: Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2018. Owner Santana Rey contributed $29,000 to the business in exchange for additional stock in the first quarter of 2018 and has received $4,800 in cash dividends.