Question 1
House Station, Inc., is a nationwide hardware and furnishings chain. The manager of the House Station Store in Portland is evaluated using ROI. House Station headquarters requires an ROI of 10 percent of assets. For the coming year, the manager estimates revenues will be $2,250,000, cost of goods sold will be $1,417,500, and operating expenses for this level of sales will be $225,000. Investment in the store assets throughout the year is $1,627,500 before considering the following proposal. A representative of Sharp's Appliances approached the manager about carrying Sharp's line of appliances. This line is expected to generate $700,000 in sales in the coming year at the Portland House Station store with a merchandise cost of $532,000. Annual operating expenses for this additional merchandise line total $75,000. To carry the line of goods, an inventory investment of $485,000 throughout the year is required. Sharp's is willing to floor plan the merchandise so that the House Station store will not have to invest in any inventory. The cost of floor planning would be $60,750 per year. House Station's marginal cost of capital is 10 percent. Ignore taxes. Requirement 1: What is the Portland House Station store's expected ROI for the coming year if it does not carry Sharp's appliances? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Expected ROI % Requirement 2: What is the store's expected ROI if the manager invests in Sharp's inventory and carries the appliance line? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Expected ROI % Requirement 3: What would the store's expected ROI be if the manager elected to take the floor plan option? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Expected ROI % Requirement 4: Considering the three cases given above, which do you think the manager would prefer? Requirement 5: (a) What is the Portland House Station store's expected EVA for the coming year if it does not carry Sharp's appliances? (Omit the "$" sign in your response.) Expected EVA $ (b) What is the store's expected EVA if the manager invests in Sharp's inventory and carries the appliance line? (Omit the "$" sign in your response.) Expected EVA $ (c) What would the store's expected EVA be if the manager elected to take the floor plan option? (Omit the "$" sign in your response.) Expected EVA $
Question 2
Airline Data Assignment. For this activity, for Southwest Airlines (just like for Alaska Airline) calculate following: • Mean • Median • Mode • Standard Deviation • Variance • Minimum and maximum For both airlines (Alaska and Southwest), construct 95 percent confidence intervals (alpha would equal what in this case?) for monthly load factors, monthly revenue passenger miles, and monthly available seat miles (Domestic flights only). There is a function in Excel that will calculate the confidence interval that needs to be added and subtracted from the mean to determine the 95 percent confidence interval. Develop the appropriate null and alternate hypotheses and test if the monthly load factors, monthly revenue passenger miles, and monthly available seat miles are equal for the two airlines (use alpha of 0.05). In addition, where you calculated the summary statistics for the items listed, test if the mean for each airline is equal to the mean for the industry for monthly load factors, monthly revenue passenger miles, and monthly available seat miles.
After completing the above items, prepare a brief, one page write-up of the analysis completed above. Items to include in your write-up include how a given airline is performing relative to industry and whether the results are consistent with expectations. For example, would you expect a single airline\'s available seat miles to be equal to the entire industry\'s? Cite sources and format your document in accordance with the current edition of the APA Manual. Note: This week, you\'re asked to test if the mean for each airline is equal to the mean for the industry for monthly load factors, monthly revenue passenger miles, and monthly revenue miles. You won\'t be able to do this by \"just\" calculating the mean values (relying on descriptive statistics). Instead, some t-tests are in order... These might include using t-test paired two-sample for means and two-sample assuming equal variances first, then running some more t-tests two-sample assuming unequal and equal variances... P.S. The final product should be one page word document (don’t worry about formatting) and a single Excel files with all the data. Attached files: - “Data1” is Alaska Airlines data, and industry combined data. - “Data 2” is Southwest Airlines data.
Question 3
1. A taxpayer must pay tax before litigating, unless the case is brought in: U.S. Tax Court. U.S. District Court. U.S. Court of Federal Claims. None of the above 2. (TCO F) A business bad debt is deductible for tax purposes as a(n): ordinary business deduction. short-term capital loss. long-term capital loss. miscellaneous itemized deduction. 3. (TCO I) Under the cash method of tax accounting, tax deductions are generally taken when: payment is made. the liability arises. there is net income to absorb the expense. None of the above 4. (TCO A) Which of the following constitutes tax evasion? Arranging your affairs to keep your tax liability as low as possible under the tax law Avoiding taxes Failing to disclose a tax liability from a completed transaction Trying to minimize your tax liability 5. (TCO C) Which of the following items is not subject to federal income tax? Interest on municipal bonds $5,000 birthday gift from a family member Discharge of debt through bankruptcy Life insurance proceeds All of the above 6. (TCO B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift, and Sam is bankrupt. Which of the following statements is correct concerning the impact of this transaction? Both Bob and Sam recognize $8,000 of taxable income. Bob recognizes $8,000 of taxable income. Sam recognizes $8,000 of taxable income. Neither Bob nor Sam has any taxable income from this transaction. 7. (TCO I) David, a cash basis taxpayer, owns two rental properties. Based on the following information, compute the amount that he must include in his 2011 gross rental income. Property #1, security deposit on one-year lease received 2/1/11 All of deposit returned at lease end: $1,000 Property #1, payment received 2/1/11 for last month of lease(1/12): $900 Property #1, rental income received in 2011 2/11-12/11: $8,000 Property #2, rental income received in 2011 1/11-12/11: $9,600 Property #2, security deposit received 1/1/11 to be used for last month's rent: $800 Property #2, rent 1/12 received 12/28/11: $800 (Points : 5) $21,100 $19,300 $18,500 $20,100 8. (TCO F) Section 197's intangible assets, such as patents and trademarks, are amortized for tax purposes over: 3 years. 6 years. 10 years. 15 years.
Question 4
In the context of the capital asset pricing model, the systematic measure of risk is captured by _________. A. unique risk B. beta C. standard deviation of returns D. variance of returns If enough investors decide to purchase stocks they are likely to drive up stock prices thereby causing _____________ and ___________. A. expected returns to fall; risk premiums to fall B. expected returns to rise; risk premiums to fall C. expected returns to rise; risk premiums to rise D. expected returns to fall; risk premiums to rise Investors require a risk premium as compensation for bearing ______________. A. unsystematic risk B. alpha risk C. residual risk D. systematic risk The possibility of arbitrage arises when ____________. A. there is no consensus among investors regarding the future direction of the market, and thus trades are made arbitrarily B. mispricing among securities creates opportunities for riskless profits C. two identically risky securities carry the same expected returns D. investors do not diversify Which of the following variables do Fama and French claim do a better job explaining stock returns than beta? I. Book to market ratio II. Unexpected change in industrial production III. Firm size A. I only B. I and II only C. I and III only D. I, II and III Beta is a measure of ______________. A. total risk B. relative systematic risk C. relative non-systematic risk D. relative business risk According to the CAPM, investors are compensated for all but which of the following? A. Expected inflation B. Systematic risk C. Time value of money D. Residual risk The most significant conceptual difference between the arbitrage pricing theory (APT) and the capital asset pricing model (CAPM) is that the CAPM _____________. A. places less emphasis on market risk B. recognizes multiple unsystematic risk factors C. recognizes only one systematic risk factor D. recognizes multiple systematic risk factors Standard deviation of portfolio returns is a measure of ___________. A. total risk B. relative systematic risk C. relative non-systematic risk D. relative business risk One of the main problems with the arbitrage pricing theory is __________. A. its use of several factors instead of a single market index to explain the risk-return relationship B. the introduction of non-systematic risk as a key factor in the risk-return relationship C. that the APT requires an even larger number of unrealistic assumptions than the CAPM D. the model fails to identify the key macroeconomic variables in the risk-return relationship The expected return on the market portfolio is 15%. The risk-free rate is 8%. The expected return on SDA Corp. common stock is 16%. The beta of SDA Corp. common stock is 1.25. Within the context of the capital asset pricing model, _________. A. SDA Corp. stock is underpriced B. SDA Corp. stock is fairly priced C. SDA Corp. stock's alpha is -0.75% D. SDA Corp. stock alpha is 0.75% Two investment advisors are comparing performance. Advisor A averaged a 20% return with a portfolio beta of 1.5 and Advisor B averaged a 15% return with a portfolio beta of 1.2. If the T-bill rate was 5% and the market return during the period was 13%, which advisor was the better stock picker? A. Advisor A was better because he generated a larger alpha B. Advisor B was better because he generated a larger alpha C. Advisor A was better because he generated a higher return D. Advisor B was better because he achieved a good return with a lower beta The expected return on the market is the risk free rate plus the _____________. A. diversified returns B. equilibrium risk premium C. historical market return D. unsystematic return
Question 5
Wizard Industries purchased $11,600 of merchandise on February 1, 2012, subject to a trade discount of 9% and with credit terms of 3/15, n/60. It returned $4,300 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13. (a) Assuming that Wizard uses the perpetual method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (Round answers to 0 decimal places, e.g. $6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Feb. 1 Feb. 4 Feb. 13 (b) Assuming that Wizard uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (Round answers to 0 decimal places, e.g. $6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Feb. 1 Feb. 4 Feb. 13 (c) At what amount would the purchase on February 1 be recorded if the net method were used? (Round answers to 0 decimal places, e.g. $6,578.) Net price $ Show Work is REQUIRED for this question; access the WhiteBoard application by clicking this link
