1. List the functions of audit documentation.

2. Explain the Concept of Audit Sampling?

3. Explain the major class of transactions in the Revenue process

A firm in a perfectly competitive industry faces the following cost and revenue conditions: ATC = $6; AVC = $3; MR = MC = $5. The firm is

A company has a single zero coupon bond outstanding that matures in five years with a face value of $34 million. The current value of the company’s assets is $27 million and the standard deviation of the return on the firm’s assets is 44 percent per year. The risk-free rate is 3 percent per year, compounded continuously. a. What is the current market value of the company’s equity? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) b. What is the current market value of the company’s debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) c. What is the company’s continuously compounded cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d. The company has a new project available. The project has an NPV of $2,300,000. If the company undertakes the project, what will be the new market value of equity? Assume volatility is unchanged. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) e. Assuming the company undertakes the new project and does not borrow any additional funds, what is the new continuously compounded cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Neptune Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the company is anxious to produce and sell. The new toy will sell for $3.20 per unit. Enough capacity exists in the company’s plant to produce 30,900 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.02, and fixed expenses associated with the toy would total $54,193 per month.

The company's Marketing Department predicts that demand for the new toy will exceed the 30,900 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $2,710 per month. Variable expenses in the rented facility would total $2.24 per unit, due to somewhat less efficient operations than in the main plant.

2. From a sample of size 250, number of females is 173. What is the point estimate of population proportion? Provide an answer with 3 decimal points.

3. Which one is the point estimate of population mean? a. sample mean b. sample proportion c. sample median d. sample maximum

4. A survey of 1,206 people asked: “What would you do with an unexpected tax refund?” Forty-seven percent responded that they would pay off debts (Vanity Fair, June 2010). if the population size is 5000, then write down the upper bound of 95% confidence interval of the population proportion.

5. An article in the National Geographic News (“U.S. Racking Up Huge Sleep Debt,” February 24, 2005) argues that Americans are increasingly skimping on their sleep. A researcher in a small Midwestern town wants to estimate the mean weekday sleep time of its adult residents. He takes a random sample of 80 adult residents and records their weekday mean sleep time as 6.4 hours. Assume that the population standard deviation is fairly stable at 1.8 hours. Write down the upper bound of 95% confidence interval.

Purpose of Assignment

The purpose of the assignment is to develop students' abilities in using data sets to apply the concepts of sampling distributions and confidence intervals to make management decisions.

Assignment Steps

Resources: Microsoft Excel®, The Payment Time Case Study, The Payment Time Case Data Set

Review the Payment Time Case Study and Data Set.

Develop a 700-word report including the following calculations and using the information to determine whether the new billing system has reduced the mean bill payment time:

• Assuming the standard deviation of the payment times for all payments is 4.2 days, construct a 95% confidence interval estimate to determine whether the new billing system was effective. State the interpretation of 95% confidence interval and state whether or not the billing system was effective.
• Using the 95% confidence interval, can we be 95% confident that µ ≤ 19.5 days?
• Using the 99% confidence interval, can we be 99% confident that µ ≤ 19.5 days?
• If the population mean payment time is 19.5 days, what is the probability of observing a sample mean payment time of 65 invoices less than or equal to 18.1077 days?

Case Study – Payment Time Case Study

Major consulting firms such as Accenture, Ernst & Young Consulting, and Deloitte & Touche Consulting employ statistical analysis to assess the effectiveness of the systems they design for their customers. In this case, a consulting firm has developed an electronic billing system for a Stockton, CA, trucking company. The system sends invoices electronically to each customer’s computer and allows customers to easily check and correct errors. It is hoped the new billing system will substantially reduce the amount of time it takes customers to make payments. Typical payment times—measured from the date on an invoice to the date payment is received—using the trucking company’s old billing system had been 39 days or more. This exceeded the industry standard payment time of 30 days.

The new billing system does not automatically compute the payment time for each invoice because there is no continuing need for this information. The management consulting firm believes the new system will reduce the mean bill payment time by more than 50 percent. The mean payment time using the old billing system was approximately equal to, but no less than, 39 days. Therefore, if µ denotes the new mean payment time, the consulting firm believes that µ will be less than 19.5 days. Therefore, to assess the system’s effectiveness (whether µ < 19.5 days), the consulting firm selects a random sample of 65 invoices from the 7,823 invoices processed during the first three months of the new system’s operation. Whereas this is the first time the consulting company has installed an electronic billing system in a trucking company, the firm has installed electronic billing systems in other types of companies.

Analysis of results from these other companies show, although the population mean payment time varies from company to company, the population standard deviation of payment times is the same for different companies and equals 4.2 days. The payment times for the 65 sample invoices are manually determined and are given in the Excel^® spreadsheet named “The Payment Time Case”. If this sample can be used to establish that new billing system substantially reduces payment times, the consulting firm plans to market the system to other trucking firms.

I do not need help with the paper. I need to understand the math.

Capital Budgeting Risk Analysis Project Instruction Create the pro forma income statement and estimate the cash flows for the following project. Decide whether to accept this project based on analysis of the NPV, Profitability Index, and IRR. Project Assumptions (Base Case) Equipment Life 6 Years Initial Equipment Cost $2,500,000 in year 0 Depreciation Straight Line Method Initial Revenue $1,000,000 in year 1 Revenue growth rate year 2 10% Revenue growth rate year 3 15% Revenue growth rate year 4 10% Revenue growth rate year 5 5% Variable Costs 60% of this year's revenue Fixed Costs $75,000 in year 1 Fixed Costs Inflation Rate 3% per year Long-term growth rate 2% per year Net Working Capital 4% of next year's revenue Tax Rate 35% Discount Rate 18% Model Structure Since this project does not have an end date we need to decide how many years of detailed analysis we will conduct. For this assignment, we will estimate detailed cash flows for 5 years and estimate the terminal value at the end of year 5. The Income Statement is the building block for cash flow estimation. Your income statement should contain the following items. You may include additional items if you find them useful in your model. Revenue Variable Cost Gross Profit Cash Fixed Cost Depreciation EBIT (Earnings Before Interest and Tax) Tax Net Income Cash Flows: • Operating Cash Flow = EBIT + Depreciation – Taxes • Other cash flow items o initial investment o change in Net Working Capital o Terminal value   Analyses 1. Scenario Analysis: prepare a scenario summary report. Use the values in the original assumption as the base case and add the following two cases. Case 1 (worst case) Variable Costs 65% of this year's revenue Fixed Costs $80,000 in year 1 Fixed Costs Inflation Rate 5% per year Long-term growth rate 1% per year Case 2 (best case) Variable Costs 55% of this year's revenue Fixed Costs $70,000 in year 1 Fixed Costs Inflation Rate 3% per year Long-term growth rate 3% per year 2. Sensitivity Analysis: prepare a one-way data table. Make sure to use the base case values. Allow the long-term growth rate to vary from -3.0% to +3.0% in increments of 0.5%. Show the impact on NPV and IRR. 3. Breakeven Analysis: identify the initial revenue level that will result in $0 NPV. Things to turn in: 1. A one-page memo explaining the results of your analysis and your recommendation. The memo should include important results of your analysis such as a summary table or graph. The memo is limited to one page so be very selective on what information to include. 2. An Excel spreadsheet showing the following: • Entire model for the base case • Scenario Analysis (Scenario Summary Report) • Sensitivity Analysis (Data Table) • Breakeven Analysis (Goal Seek result) Check Figures (Base case): Model Year 0 1 5 6 Pro Forma Incremental Income Statement Revenue 1,000,000 1,461,075 1,490,297 Net Income (59,583) 54,178 Pro Forma Incremental Balance Sheet Net Working Capital 40,000 44,000 59,612 Pro Forma Incremental Cash Flows Total Net AT CF (2,540,000) 353,083 3,463,856

Bradley-Link’s December 31, 2018, balance sheet included the following items: Long-Term Liabilities ($ in millions) 8.0% convertible bonds, callable at 102 beginning in 2019, due 2022 (net of unamortized discount of $4) [note 8] $146 11.0% registered bonds callable at 105 beginning in 2028, due 2032 (net of unamortized discount of $1) [note 8] 54 Shareholders’ Equity 5 Equity—stock warrants

Note 8: Bonds (in part) The 8.0% bonds were issued in 2005 at 96.0 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond is convertible into 50 shares of the Company’s no par common stock. The 11.0% bonds were issued in 2009 at 103 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitles the holder to purchase one share of the Company’s no par common stock for $30, beginning 2019. On January 3, 2019, when Bradley-Link’s common stock had a market price of $37 per share, Bradley-Link called the convertible bonds to force conversion. 90% were converted; the remainder were acquired at the call price. When the common stock price reached an all-time high of $42 in December of 2019, 40% of the warrants were exercised.

Required: 1. Prepare the journal entries that were recorded when each of the two bond issues was originally sold in 2005 and 2009. 2. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2019 and the retirement of the remainder. 3. Assume Bradley-Link induced conversion by offering $140 cash for each bond converted. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2019. 4. Assume Bradley-Link induced conversion by modifying the conversion ratio to exchange 55 shares for each bond rather than the 50 shares provided in the contract. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2019. 5. Prepare the journal entry to record the exercise of the warrants in December 2019.