Henry Jones is the owner of True Adventure Vacations, Inc. He is considering the purchase of computer equipment that will facilitate airline and hotel accommodations. He paid a consultant a $20,000 fee to identify the best computer system and to identify the best computer system and to identify related costs of the project. The computer will cost $300,000. Installation will cost $20,000 and training of personnel will cost $10,000. He will incur $50,000 in advertising costs to kick off the new improved services that will feature worldwide accommodations. He projects that there will be a $200,000 increase in sales annually over the 5 year life of the project. Costs are 60% of sales. The computer has a five year useful life and a salvage value of $30,000. Jones will use straight line depreciation. Working capital investment is $10,000 and will be fully recovered at the termination of the project in five years.

1. What is the annual after-tax cash flow for this project over the next five years? The tax rate is 34%.
2. What is the NPV of the project if the discount rate is 12%?

Problem 1

a) Bernard operates a chocolate shop in Paris. The annual demand for chocolatecovered cherries is 2,500 units. The setup cost is $15 per order and the unit cost is $0.6. The holding cost per unit per year is 25% of the unit cost. Backordering is allowed at a cost of $0.6/unit/year. What is the optimum number of units per order and the corresponding backorder level? What is the expected number of orders per year? Assuming a 250 day working year, what is the expected time between orders? What are the total annual inventory costs? If delivery of the chocolates takes 2 days, at what level of stock should a new order be placed?

b) Suppose now that Bernard is offered the following whole unit discount model: If Bernard buys 400 units or less, it will cost him $0.7/unit, and if he buys more than 400 units it will cost him $0.5/unit. Will Bernard buys accept this offer?

In a study, researchers wanted to measure the effect of alcohol on the hippocampal region, the portion of the brain responsible for long-term memory storage, in adolescents. The researchers randomly selected 19 adolescents with alcohol use disorders to determine whether the hippocampal volumes in the alcohol adolescents were less than the normal volume of 9.02 cm3. An analysis of the sample data revealed that the hippocampal volume is approximately normal with x=8.06 cm3 and s=0.7 cm3.

Conduct the appropriate test at the a=0.01 level of signifcance.

State the null and alternative hypotheses

Ho:u (<, > , = , =/)______________

H1:(u >,<, =,==/)____________

(type integers or decimals. Do not round)

identify the t-statistic

to=____________________(Round to two decimals places as needed)

identify the P-value.

P-value=________________(round to three decimal places as needed)

Make a conclusion regarding the hypothesis.

Fail to reject or Reject the null hypothesis. There is or is not sufficient evidence to claim that the mean hippocampal volume is greater than, less than, or equal than cm3.

Suppose a friend is completing another physics assignment in their chair at their desk and you take the opportunity to turn this scenario into the physics question you now must complete. Your friend and chair have a combined constant moment of inertia of 5.5 kg m2, and the chair can freely rotate. Now your friend picks up two solid bricks (each of mass 1.7 kg) they accidentally collected from one of the campus buildings, and experiment with rotational kinematics. Supposing they hold the masses in each hand, arms outstretched, at distance of 0.7 m from their axis of rotation, and have an initial angular speed of 2.7 revs/s.

(a) Calculate the distance in m of each brick from your friend’s axis of rotation if they pull the bricks inward such that their rotational speed has increased to 3.2 revs/s.

(b) What is the initial rotational kinetic energy of the system?

(c) What is the final rotational kinetic energy of the system?

On Sept 30th, 2011, Exxon Mobil (XOM) stock was traded at $72.63 while the December XOM put option with $75 exercise price is traded at $5.00 and the December XOM call option with $70 exercise price is traded at $5.60. The put option's delta is -0.65 and the call option's delta is 0.7.

A) On October 3rd, XOM stock price changed to $71.15 on Oct 3rd, what will be the values of the put and call options?

B) Consider a portfolio composed of:

1,005 XOM stocks

20 Dec XOM Call options

37 Dec XOM Put options

     What is the portfolio position delta?

C) Using the portfolio position delta, calculate the portfolio value before AND after the stock price change.

The longest "run" of S's in the sequence SSFSSSSFFS has length 4, corresponding to the S's on the fourth, fifth, sixth, and seventh positions. Consider a binomial experiment with n = 4, and let ybe the length (number of trials) in the longest run of S's. (Round your answers to four decimal places.)

(a) When p = 0.5, the 16 possible outcomes are equally likely. Determine the probability distribution of y in this case (first list all outcomes and the y value for each one).

Calculate μ_y.
μ_y =  

(b) Repeat Part (a) for the case p = 0.7.

Calculate μ_y.
μ_y =  

(c) Let z denote the longest run of either S's or F's. Determine the probability distribution of z when p = 0.5.

A syrup company sells pure maple syrup in 16-ounce bottles. As part of the company’s quality control program, random sampling is done weekly. If too little syrup is put in each bottle, customers will be dissatisfied, and if too much syrup is put in each bottle, the company will lose money. In either case, the equipment would be turned off to investigate the problem further. Testing is conducted using a 5% significance level. (a) State the appropriate hypotheses. (b) What assumptions are required to perform the test stated in part (a)? (c) How would a Type I error affect the company? (d) How would a Type II error affect the company? (e) The week’s sample of 20 bottles had a mean of 15.8 ounces and a standard deviation of 0.7 ounces. Perform the test, and report the associated p-value. (f) Based on the data and res ults of the test, what would be your recommendation?

Super Bikes (SB) Inc. is a company which manufactures bicycles and distributes to retailers across Canada. Its line of business is generally considered quite stable and low risk. SB Inc. would like to invest in a new division to manufacture skateboards.

Currently, SB Inc. has a cost of debt (before tax) of 5% and its stock has a beta of 0.6. The firm’s debt-equity ratio is 0.7. The firm has identified another company (Free Wheels Inc) whose main business is similar to this project. Free Wheels Inc. has a cost of debt (before tax) of 8%, a beta of 2.5, tax rate of 35% and a debt-equity ratio of 0.4.

SB Inc.has an effective tax rate of 35%. The expected return on the market is 10% and the risk free rate of interest is 4%.

What is the appropriate cost of capital to apply to SB Inc.’s proposed expansion into the skateboard manufacturing business?

Q No. 3: a. An investor in Canada purchased 100 shares of IBM on January 1st at $93.00/share. IBM paid an annual dividend of $0.72 on December 31st. The stock was sold that day as well for $100.25. The exchange rate is $0.68/Canadian dollar on January 1st and $0.7 1/Canadian dollar on December 31st.

What is the investor’s total return in Canadian dollars?

b. The British pound to U.S. dollar exchange rate is 1.36 and the New Zealand dollar to U.S. dollar exchange rate is 0.62. If you find that the British pound to New Zealand dollar is trading at 0.49, what would you do to earn a riskless profit?

c. The Mexican peso is trading at 10 pesos per dollar. If the expected U.S. Inflation rate is 23% while the Mexican inflation rate is 2% over the next year,

what is the expected exchange rate in one year?

Corporate Finance is subject

With a previous contractor, the mean time to repair a pothole was 3.2 days. A city councilman thinks that the new contractor’s mean time to repair a pothole is higher than 3.2 days. He randomly selects a sample of 12 pothole service calls and obtains the following times to repair (in days):

6.2            4.3         7.1          2.9          5.4              3.7         5.5        0.7             7.5         5.6           2.6          1.7

Is there enough evidence to support the councilman’s claim? (use   alpha = 0.05 level of significance)

Assume all conditions are satisfied for your chosen hypothesis test.

Show all the steps of an appropriate hypothesis test, including finding the P-value. (can I get an explanation for each step please A,B,C,D,E,F)

A.) What are the null and alternate hypotheses?

B.) What is the decision Rule?

C.)What is the test statistic?

D.) What is the decision?

E.) What does the decision infer?

F.) What is the estimated P-Value?