1. GDP = C + I + G + X_n

Use the information below to fill in the blanks in the table. Add only the things that are included in GDP to get the nominal GDP. Omit things not counted in GDP. (I filled in a few answers just to help you get started.)

Remember: Real GDP = (Nominal GDP/implicit price deflator) * 100

(All dollar amounts in billions)

A) Find the equation of the tangent line to the curve y = 5e^-8x at the point (0, 5).

B) Solve for t.

e^0.09t = 9

C) Rancher Johann wants to build a three-sided rectangular fence near a river, using 280 yards of fencing. Assume that the river runs straight and that Johann need not fence in the side next to the river.

Johann wants to build a fence so that the enclosed area is maximized.

• What should be the length of each side running perpendicular to the river?
  yards
  
• What should be the length of the side running parallel to the river?
  yards
  
• What is the largest total area that can be enclosed?
  square yards

D) Find the absolute maximum and minimum values on the closed interval [-3,3] for the function below. If a maximum or minimum value does not exist, enter NONE.

f(x) = (4x)/(x² + 1)

E) When a baseball park owner charges $5.00 for admission, there is an average attendance of 100 people. For every $0.25 increase in the admission price, there is a loss of 2 customers from the average number.

1. What admission price should be charged in order to maximize revenue
   
2. What is the maximum revenue?

F) Find the derivative.

f(x) = x⁶ · e^2x

A firm produces output y using two factors of production (inputs), labour L and capital K. The firm’s production function is ?(?,?)=√?+√?=?12+?12. The wage rate w = 6 and the rental price of capital r = 2 are taken as parameters (fixed) by the firm. a. Show whether this firm’s technology exhibits decreasing, constant, or increasing returns to scale. b. Solve the firm’s long run cost minimization problem (minimize long run costs subject to the output constraint) to derive this firm’s i. demand function for labour L = L(y) ii. demand function for capital K = K(y) iii. long run total cost function C = C(y). c. Suppose in the short run, capital is fixed at K = 100. Derive the firm’s short run total cost function C = C(y). d. Derive the AFC, AVC, AC, and MC curves for the firm and graph them on the same diagram – be sure to label them. (Recall: these are short run cost curves). e. Let p be the price of the output y. Derive this firm’s short run supply function y = y(p) assuming it is a competitive firm?

Cendana Berhad has made a profit of RM3 million last year. From those earnings, the company paid the dividend of RM2.00 on each of its 1,000,000 common shares outstanding. The capital structure of the company includes 30% debt, 20% preferred shares and 50% common shares. The corporate tax rate is 28%. The company wishes to venture into a new project and decided to use debt, preferred shares and common shares as sources of financing and still maintaining its current capital structure ratio. Based on the following information, calculate the weighted average cost of capital (WACC) of the company for taking the new project.

You are required to calculate:

i.         The market price of its common share is RM12 and dividend are expected to grow at constant rate of 6% and flotation costs on its new common shares are RM1.50 per share.

ii.        The company can issue 3% dividend preferred shares at a market price of RM10 per share and flotation cost of RM1.00 per share.

iii.       The company can issue 7%, 5 years bonds that can be sold for RM1, 100 each in the market and flotation cost of RM5 per bond.

iv. WACC for taking the new project :

                     (6marks)

On December 31, 2017, Berclair Inc. had 560 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $950 million. The income tax rate is 40%.

Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share.

In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value.

Required:

Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Notes for Journal Entries:

1. periodic inventory system and LIFO
2. All credit sales discounts are recorded using the net method – customers receive a 3 percent discount if they pay within 30 days.
3. Purchase discounts are recorded using the net method
4. All depreciation is straight line

Purchased 1,000 units of inventory at $150 a piece on credit from Biggie Smalls Inc. Terms are 2/10; n/60

Paid Biggie full amount owed

Sold inventory with a list price of $22,000 to M Jagger on credit

Accepted a sales return from M Jagger for half of the inventory purchased (i.e., list price of $11,000); And M Jagger paid for the remainder in cash.

Bought 1,000 units of inventory at $170 from Wolfpack Corporation with cash

Returned 100 units of inventory to Wolfpack Corporation for cash

Sold inventory to H Gilmore for $100,000 on credit

H Gilmore paid half of the amount owed

H Gilmore went bankrupt so Kuechly wrote off the balance owed by H Gilmore as uncollectible (hint: Directly write-off this Account since no allowance has been made yet).

Sold Inventory to J Lennon for $30,000 on Credit

Sold Inventory for $200,000 in Cash

Tommy Company makes a product, X-10. It has a production capacity of 10,000 units. The regular selling price is $135 each. Tommy has received a request from Chully for a special order of 1,000 units of X-10. Only for this order, no variable selling cost would be incurred. The following is the per-unit cost information:

            * based on production and sales of 10,000 units

1. Chully has suggested a price is $95 per unit. Tommy can satisfy this order without sacrificing production and sales for the regular customers. If Tommy accepts this special order, what would be the effect on the company’s profit? Indicate the direction (increase or decrease) and amount (by how much).

2. Assume that Tommy can sell all 10,000 units to its regular customers for $135 each. For each unit Tommy sells to Chully, Tommy has to give up selling to its regular customer. In this situation, Tommy has to charge at least $______ to Chully.  

Mordecai bought a 3-year 15% Treasury bond on 8 May 2020 at a yield of j2 = 18.6% p.a. Coupons can be reinvested at j2 = 14.0% p.a. The bond will be redeemed at par on the maturity date (face value $100).
a. [2 marks]Calculate the total accumulated value at maturity generated by this bond if Mordecai holds it to maturity and reinvests all coupon payments received at the available rate.
b. [2 marks]Calculate the total realised compound yield (TRCY) of this bond.
c. [2 marks]Decompose the total accumulated value generated by this bond into: original purchase price, coupons, interest on coupons, and capital gain/loss.
d. [2 marks]If Mordecai holds the bond for 2 years and sells it for a yield of j2 = 18.8% p.a., calculate the holding period yield (HPY).
e. [2 marks]Calculate duration of this bond if it is held to maturityf. [3 marks]Use the concept of modified duration to estimate the price of the bond if the yield to maturity increases to j2 = 18.7% p.a. immediately after Mordecai buys the bond.
g. [3 marks]What fixed liability could Mordecai be reasonably confident of paying off in 21/2 years’ time? Why?

1. On January 1,2018,Banno Corporation issued$1,500,000 Face Value of 10% coupon bonds at a price of 103, due December 31 2027. Interest on the bonds is payable annually each December 31. The premium on the bond is being amortized on a straight-line basis over the ten years (Straight-line is not materially different in effect from the preferred effective interest method). The bonds are callable at a price of 100 1⁄2 and on January 1, 2024, called all $1,500,000 Face amount of the bonds and redeemed them. There are no issue costs. Ignoring income taxes, compute the amount of gain or loss to be recognized by Banno as a result of retiring the bonds in 2024 and prepare the journal entry to record the redemption.

2. Re-do problem 1, but this time assume that there were $24,000 of issue costs. Also answer, what is the effect of the issue costs on the gain or loss you calculated in problem 1?

3. Re-do problem 1, but assume that there are no issue costs and that this time, only $900,000 Face Value of the bonds were redeemed.

4. Re-do problem 3, but this time assume that there were $24,000 of issue costs. Also answer, what is the effect of the issue costs on the gain or loss you calculated in problem 1?