REQUIRED RATE OF RETURN

Suppose r_RF = 8%, r_M = 13%, and b_i = 1.2.

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 9%. The slope of the SML remains constant. How would this affect r_M and r_i?

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

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

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%.

1. Now assume that r_RF remains at 8%, but r_M increases to 14%. 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 8%, but r_M falls 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 %.

Suppose r_RF = 6%, r_M = 11%, and b_i = 1.5.

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

1. Which of the following statements is true concerning the flexible budget?

   2.   What is the primary difference between a fixed budget and a flexible budget?

   3.   Which of the following might cause a materials variance?

The following table lists the weight of individuals before and after taking a diet prescribed by a weight-loss company for a month:

Weight-loss Data:

Individual: A, B, C, D, E, F

Weight Before (lb): 123.7, 128.7, 135.6, 194.9, 145.5, 162.3

Weight After (lb): 109.4, 109.7, 123.3, 186.5, 126.8, 151.5

Weight loss (lb): 14.3, 19.0, 12.3, 8.4, 18.7, 10.8

You may find this Student's t distribution table useful in answering the following questions. You may assume that the differences in weight are normally distributed.

a)Calculate the sample variance (sd2) of the changes in individual weights. Give your answer to 2 decimal places.

sd2 =

b)A disgruntled customer states: "This weight-loss company is a complete farce. All the people I know who signed up experienced no changes in their weight at all. I seriously doubt this diet has any effect whatsoever. I want my money back!"

You plan to do a hypothesis test on this claim where the hypotheses are:

H0: the customer's claim is true and the program has no effect on weight

HA: the customer's claim is not true and the program does have an effect on weight, whether it increases or decreases

According to the data given, you should accept, reject, or not reject the null hypothesis at a confidence level of 99%.

Vinnie is a professional road cyclist participating in the 2020 Giro d’Italia, a three-week race nearly 3,600 km in distance with some stages exceeding altitudes of 2,700 m above sea level (i.e., Stelvio Pass, Italy). As the newly hired head of the high-performance team, it is your responsibility to manage his preparation for the event. You must demonstrate to your team a fundamental understanding of physiology, the chronic adaptations expected from his training, and methods that could be implemented to improve the likelihood of success.

Q7)

Given that the average distance of each leg is 170.5 km in distance, and sometimes undulating in elevation, you understand that fatigue is inevitable. The energy depletion model of fatigue focuses around the concept that depleted substrates are just one source of fatigue, particularly observed in muscle glycogen and phosphocreatine stores.  

1. As an aerobic event, why do you expect depletion in glycogen and phosphocreatine?

Why, specifically, is it crucial to replenish muscle glycogen stores prior to the next leg?

Q8)

As the event is soon approaching, parts of Hungary are experiencing a heatwave. Indeed, temperatures may exceed 32° Celsius during the first leg of the race leaving Budapest.

1. Will the ambient temperature have any impact on Vinnie’s performance?

In terms of thermoregulation, what physiological changes are likely to occur during this leg of the race? Explain how these changes may influence

1. We are evaluating a project that costs $1,950,000, has a six-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 97,000 units per year. Price per unit is $41.25, variable cost per unit is $18.50 and fixed costs are $950,000 per year. An initial investment of $250,000 in net working capital will be required and it is assumed that this amount will be recovered at the end of the project. The tax rate is 21 percent and you have the following information about the capital structure of the firm. Do this problem in Excel and attach the spreadsheet.

1. Calculate cash flow and NPV. What is the sensitivity of NPV to changes in the sales figure. Explain what your answer tells you about a 500-unit decrease in projected sales.
2. What is the sensitivity of OCF to changes in the variable cost figure? Explain what your answer tells you about a $1 decrease in estimated variable costs.

The information on the following page was obtained from the records of Breanna, Inc.:

Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2016, and that all income statement items reflect activities that occurred during the year ended December 31, 2016. There were no changes in paid-in capital during the year.

Required:

a. Prepare an income statement and statement of changes in stockholders' equity for the year ended December 31, 2016, and a balance sheet at December 31, 2016, for Breanna, Inc. Based on the financial statements that you have prepared for part a, answer the questions in parts b-e.

b. What is the company's average income tax rate?

c. What interest rate is charged on long-term debt?

d. What is the par value per share of common stock?

e. What is the company's dividend policy (i.e., what proportion of the company's earnings are used for dividends)?

We are evaluating a project that costs $2,190,000, has a 8-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 91,200 units per year. Price per unit is $38.97, variable cost per unit is $24.05, and fixed costs are $866,000 per year. The tax rate is 22 percent, and we require a return of 11 percent on this project.

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

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

c. If there is a 350-unit decrease in projected sales, how much would the NPV change? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

d. What is the sensitivity of OCF to changes in the variable cost figure? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

e. If there is a $1 decrease in estimated variable costs, how much would the OCF change? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)