For each of the following, (a) calculate the elasticity, (b) interpret your result (in terms of whether a good is elastic/inelastic, and what the percentage change in quantity will be in response to a 1% change in price), and (c) indicate what would happen to revenues for this good if the price was increased In response to a 10% increase in price, the quantity demanded of Bubly decreased by 20% In response to a 5% decrease in price, the quantity demanded of steak increased by 60% In response to a 10% increase in price, the quantity demanded did not change. Part 2: Figure out how much the quantity demanded changed for each of the following: When the price elasticity of demand is 3, and the price increases by 10%. When the price elasticity of demand is 0, and the price increases by 10%. When the price elasticity of demand is 0.3, and the price increases by 10%.

For each of the following,

(a) calculate the elasticity,

(b) interpret your result (in terms of whether a good is elastic/inelastic, luxury/necessity, and what the percentage change in quantity will be in response to a 1% change in price), and

(c) indicate what would happen to revenues for this good if the price was increased

1. In response to a 10% increase in price, the quantity demanded of Bubly decreased by 20%
2. In response to a 5% decrease in price, the quantity demanded of steak increased by 60%
3. In response to a 10% increase in price, the quantity demanded did not change.

Part 2:

Figure out how much the quantity demanded changed for each of the following:

1. When the price elasticity of demand is 3, and the price increases by 10%.
2. When the price elasticity of demand is 0, and the price increases by 10%.
3. When the price elasticity of demand is 0.3, and the price increases by 10%.

You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn's has a reported equity beta of 1.5, a debt-to-equity ratio of 0.3, and a tax rate of 40 percent. Assume a risk-free rate of 4 percent and a market risk premium of 12 percent. Lauryn’s Doll Co. had EBIT last year of $45 million, which is net of a depreciation expense of $4.5 million. In addition, Lauryn's made $4.25 million in capital expenditures and increased net working capital by $4.1 million. Assume the FCF is expected to grow at a rate of 2 percent into perpetuity. What is the value of the firm? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Firm value= million

1.

Looking to compare, thanks.

A) Allocate the two support departments' costs to the two operating departments using the following methods?

Direct Method
Step-down method (Allocate AS first)
Step -down method (Allocate IS first)

B) Compare and Explain differences in the support department costs allocated to each operating department?

C) What approaches might be used to decide the sequence in which to allocate support departments when using the step-down method?

VAR Calculation

A firm has a portfolio composed of stock A and B with normally distributed returns. Stock A has an annual expected return of 15% and annual volatility of 20%. The firm has a position of $100 million in stock A. Stock B has an annual expected return of 25% and an annual volatility of 30% as well. The firm has a position of $50 million in stock B. The correlation coefficient between the returns of these two stocks is 0.3.

a.       Compute the 5% annual VAR for the portfolio. Interpret the resulting VAR.

b.       What is the 5% daily VAR for the portfolio? Assume 365 days per year.

c.       If the firm sells $10 million of stock A and buys $10 million of stock B, by how much does the 5% annual VAR change?

The safety rules do not allow the concentration of the toxic solution exceeding 0.1 mg to be released in the environment. In a chemical factory, this toxic chemical solution is used in the process. The solution flows at a constant rate of 4 L/min into a safety tank that initially contains 100 L of pure water. The toxic solution inside the tank is kept well stirred and flows out of the tank at a rate of 3 L/min. The concentration of the toxic solution entering the tank is 0.3 mg/L.

a) Determine the mass of the toxic product in the tank after t minutes.

b) Find when the concentration of the toxic solution in the tank will be 0.1 mg/L.

c) Use Range-Kutta method with increment = Time in (question b) / 4 d) Compare your results by finding the error

Betas and risk rankings   Personal Finance Problem   You are considering three stocks A, B, and C — for possible inclusion in your investment portfolio. Stock A has a beta of 1.5, stock B has a beta of 1.2, and stock C has a beta of −0.3.

a. Rank these stocks from the most risky to the least risky.

b.  If you believed that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio?

c.  If you anticipated a major stock market rally, which stock would you add to your portfolio?

a.  Which stock is the most risky one? (Select the best answer below.) A. Stock Upper AStock A B. Stock Upper BStock B C. Stock Upper C

Forecasting 1. Demand data collected on yearly registrations for a Six Sigma seminar at the Quality College are shown in the following table

a. Estimate (forecast) demand again for years 4-12 with a 3-year weighted moving average in which registrations in the most recent year are given a weight of 0.50, 0.25, and 0.25.

b. Estimate (forecast) demand again for years 1-12 using exponential smoothing with a smoothing constant of 0.3. To being, assume that the forecast for year 1 was 5,000 people.

c. Compute the MAD forecasting error for each forecast. Which forecast is better?

. The “beta” value of Amazon shares is about 1.7. The “beta” value of WalMart shares is about 0.3. According to Standard and Poors, WalMart’s bond rating is AA and Amazon’s rating is AA!.

1. What does the difference in beta values indicate?
2. What does the difference in bond ratings indicate?
3. What is meant by the riskiness of a stock? Can you determine, from the information provided, which of the two stocks is “riskier”?
4. Based on the information provided, do you expect Amazon stock or WalMart stock to produce a higher rate of return for the stockholder, or are the indications ambiguous?
5. Suppose that you had private information indicating that the economy is about to go into recession, information that you believe has not yet been incorporated into stock prices. How could this change your answer to part (d)?

Monthly demand for a hot pizza restaurant is given as follows for 1 year (12 months). Estimate the demand including the next two months (13 and 14) by using Holt's and Exponential Smoothing methods. Compare the methods with MSE, MAD, and MAPE metrics, and discuss the superior method.

Use alpha=0.05 and beta=0.1 for Holt's model and use alpha=0.3 for exponential smoothing model. Hint: Level and trend in Holt's method could be obtained with regression. L0 in exponential smoothing is the average demand for the 12-month period.