Below are revenue and profit (both in $ billions) for nine large entertainment companies. Revenue and Profit of Nine Entertainment Companies (See the attached Excel file for correct, readable format)

Company Revenue Profit

AMC Entertainment 1.792 -0.020

Clear Channel Communication 8.931 1.146

Liberty Media 2.446 -0.978 Metro-

Goldwyn-Mayer 1.883 -0.162

Regal Entertainment Group 2.490 0.185

Time Warner 43.877 2.639

Univision Communications 1.311 0.155

Viacom 26.585 1.417

Walt Disney 27.061 1.267

Correlation and Regression

Make a scatterplot of profit as a function of revenue. Use Excel to fit the Trendline to the above problem data. Display the Regression Equation and R2. Explain the meaning of the Regression Equation and the R2. How would this model be applied to financial analysis and forecasting?

Rate of Return on Investment

Commodore Entertainment recently reported sector income from operations, revenue, and invested assets as follows:

• Media Networks: The ABC television and radio network, Commodore channel, ESPN, A&E, E!, and Commodore.com
• Parks and Resorts: Commodore World Resort, Commodoreland, Commodore Cruise Line, and other resort properties
• Studio Entertainment: Commodore Entertainment, which releases films by Pixar Animation Studios, Marvel Studios, Commodore/Lucasfilm, and Touchstone Pictures
• Consumer Products: Character merchandising, Commodore stores, books, and magazines

Commodore recently reported sector income from operations, revenue, and invested assets (in millions) as follows:

a. Use the DuPont formula to determine the rate of return on investment for the four Commodore Entertainment sectors. Round Profit Margin, ROI to one decimal place and Investment Turnover to two decimal places.

b. How do the four sectors differ in their profit margin, investment turnover, and return on investment?

__(___ has the highest profit margin, while _____ has the lowest profit margin. ______ has the highest return on investment, while_____ has the lowest return on investment.

Rate of Return on Investment

Commodore Entertainment recently reported sector income from operations, revenue, and invested assets as follows:

Media Networks: The ABC television and radio network, Commodore channel, ESPN, A&E, E!, and Commodore.com

Parks and Resorts: Commodore World Resort, Commodoreland, Commodore Cruise Line, and other resort properties

Studio Entertainment: Commodore Entertainment, which releases films by Pixar Animation Studios, Marvel Studios, Commodore/Lucasfilm, and Touchstone Pictures

Consumer Products: Character merchandising, Commodore stores, books, and magazines Commodore recently reported sector income from operations, revenue, and invested assets (in millions) as follows

Use the DuPont formula to determine the rate of return on investment for the four Commodore Entertainment sectors. Round Profit Margin, ROI to one decimal place and Investment Turnover to two decimal places.

b. How do the four sectors differ in their profit margin, investment turnover, and return on investment?

has the highest profit margin, while has the lowest profit margin. has the highest return on investment, while has the lowest return on investment.

On January 1, 1998, Umbrella Corporation sold inventory costing $30,000 to Burns Industries. In return, Umbrella Corporation received a 4-year, 9% note with a face value of $100,000. Blended payments will be made yearly on December 31, and will include principal and interest. The market rate of interest is 5%. Umbrella Corporation has a December 31 year-end while Burns Industries year-end is August 31.

Instructions:

a) Calculate the annual payments Umbrella Corporation will receive each year from Burns Industries. Use the stated rate of the note in your calculation.

b) Complete the following payment and amortization schedule for the note, except for where there is "keep blank" written. (Also please make sure to include 2 decimal places for all the answers for b).

c) Record the journal entries for Umbrella Corporation on January 1, 1998 and December 31, 1998.

The Star Entertainment Group.

Company Description (up to 600 words)

a) What is/are the main source of business (the main source of revenue)?

b) What is the ownership structure of your company?

The data in the table below gives sales revenue for Continental Divide Mining from 1995 to 2005.

YEAR YEARS SINCE 1990 SALES REVENUE (MILLIONS)
1995 2.6155
1998 3.3131
1999 3.9769
2000 4.5494
2001 4.8949
2002 5.1686
2003 4.9593
2005 4.7489

(a) Complete the missing column in the table.
(b) Use Excel to determine the quadratic regression model, y, that best represents sales revenue as a
function of, x, the number of years since 1990. Round three decimal places.

(a) Find the year in which there is maximum revenue and find the maximum revenue. Write solution as a
complete sentence.

Problem (simple linear regression). McDonald’s Corporation reported total revenues (X) and net profits (Y) from 1998 to 2005. Using 2-var statistics, we get: x-average=15.86; standard deviation of X =2.82; y-average=1.795, standard deviation of Y=0.5278; n=8 (from 1998 to 2005). Sum of squared X=2067.50, sum of squared Y=27.73, and sum of the product of X and Y =233.28. The least-square regression is Y (net profit) =0.2107+0.0999X (total revenue), with ESS=1.3965, and standard error of estimate (Sy,x)=0.4824. For one year with total revenue of 18.0, what is the 95% confidence interval for the net profit? (a) Compute the coefficient of determination, r-square , and interpret its meaning in the context of the problem. (b) Testing the hypothesis that the slope could be 0 at 0.10 level of significance. (c) Conduct the ANOVA F-test to the overall validity of the regression analysis. Use 0.10 level of significance.

Problem (simple linear regression). McDonald’s Corporation reported total revenues (X) and net profits (Y) from 1998 to 2005.  Using 2-var statistics, we get:

x-average=15.86;  standard deviation of X =2.82;  y-average=1.795, standard deviation of Y=0.5278; n=8 (from 1998 to 2005).  Sum of squared X=2067.50, sum of squared Y=27.73, and sum of the product of X and Y =233.28.

The least-square regression is

Y (net profit) =0.2107+0.0999X (total revenue), with ESS=1.3965, and standard error of estimate (S_y,x)=0.4824.

1. For one year with total revenue of 18.0, what is the 95% confidence interval for the net profit?
2. Compute the coefficient of determination, r-square      , and interpret its meaning in the context of the problem.
3. Testing the hypothesis that the slope could be 0 at 0.10 level of significance.
4. Conduct the ANOVA F-test to the overall validity of the regression analysis. Use 0.10 level of significance.   

1.

The average price of a gallon of gasoline (regular unleaded) in 1976 was $0.64. In 1998 it was $1.06. The CPI factor in 1976 is 56.9 and the CPI factor in 1998 is 163.0.   Convert the 1976 price to constant 1998 dollars. Was gas more expensive in 1976 or in 1998? Choose two correct answers.

Question 3 options:

2.

In 1989, red delicious apples cost on average $0.57 per pound. In 1998, they cost $0.94 per pound. Were apples more expensive in 1998 or in 1989? The CPI value in 1989 is 124.0 and the CPI value in 1998 is 163.0. Convert the 1989 price to constant 1998 dollars. Were apples more expensive in 1989 or in 1998? Choose two correct answers.

Question 4 options:

3.

In 1948, the President of the United States earned a salary of $75,000. In 2000, the President earned a salary of $400,000. Knowing that the CPI for 1948 is 24.1 and the CPI for 2000 is 172.2, convert the 1948 salary to constant 2000 dollars. When comparing constant dollar amounts, whose salary was worth more--Harry Truman, President in 1948, or Bill Clinton, President in 2000?   Choose two correct answers.

Question 5 options:

The Walt Disney Company has four major sectors, described as follows:

• Media Networks: The ABC television and radio network, Disney channel, ESPN, A&E, E!, and Disney.com.
• Parks and Resorts: Walt Disney World Resort, Disneyland, Disney Cruise Line, and other resort properties.
• Studio Entertainment: Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, Miramax Films, and Buena Vista Theatrical Productions.
• Consumer Products: Character merchandising, Disney stores, books, and magazines.

Disney recently reported sector operating income, revenue, and invested assets (in millions) as follows:

a. Use the DuPont formula to determine the return on investment for the four Disney sectors. Round profit margin and return on investment to one decimal place and investment turnover to two decimal places.

b. Which two sectors are the most similar in their profit margin, investment turnover, and return on investment?
The four sectors are different from each other