Question 1
1 FINA200 Winter 2011, Section W Case 2 - due Wednesday, March 9, 2011 Covering Chapters 5 - 8 _______________________________________________________ PLEASE NOTE ? THIS IS AN INDIVIDUAL ASSIGNMENT. ? YOU MAY SUBMIT THIS ASSIGNMENT IN MICROSOFT WORD 2007 (.docx), MICROSOFT WORD (.doc), MICROSOFT WORKS (.wps), PLAIN TEXT (.txt) OR WORD PERFECT (.wpd). ? PLEASE DO NOT SUBMIT YOUR ASSIGNMENT IN EXCEL. ? GO TO ASSESSMENT/CASE SUBMISSIONS AND UPLOAD THE FILE TO SUBMIT YOUR ASSIGNMENT. ? PLEASE QUOTE ALL SOURCES AND DO NOT COPY AND PASTE! _______________________________________________________ Chance and Peter are soon to celebrate their 5th wedding anniversary. They have a couple of very specific financial goals - one is to celebrate their wedding anniversary with a return trip to Europe. The other is to buy their first home later this year (2011). Their combined gross income is $100,000. Overall, approximately 40% of their gross pay is deducted to cover federal and provincial taxes, along with employment benefits. From their disposable income, they set aside $500 monthly in RRSP contributions and pay approximately $1,000 a month for rent, electricity and heating. They also make payments against their debt which is structured as follows: ? Chance borrowed $10,000 on a line of credit 12 months ago to purchase a used car. She is required to reduce the balance of the loan by 1% per month, along with paying the monthly interest of 0.5%. ? Peter transferred a $20,000 balance owing on his educational line of credit to an installment loan charging 9% per annum, compounded monthly 2 three years ago. He has made regular monthly payments since then. The original term of the loan was 10 years. The couple manages their cash flows very closely. In addition to the $20,000 combined balance of their RRSPs, they have $15,000 in a TFSA deposit and $10,000 in a self-directed non-registered investment account. Aside from $3,000 they have earmarked for their anniversary trip, they would be willing to liquidate both the TFSA and investment account to make a down payment on a home. This would be in addition to the maximum withdrawal under the Home Buyers' Plan. Question 1 (10 marks) What is the balance of Chance's line of credit and Peter's education loan? Please show all calculations. Question 2 (10 marks) Assume that their financial institution applies a GDS of 30% (excluding heating and insurance) and a TDS of 40% (excluding heating and insurance). Given an estimated $300 in property taxes, what is the most they could pay each month for a mortgage use both ratios? Presume the mortgage term would be 25 years and charge 0.45% per month in interest. (Hint: Calculate next month's charge for Chance's line of credit and use this amount to estimate her required monthly debt payment.) Question 3 (35 marks) Chance and Peter are looking at homes in St-Basile-le-Grand. In this community, the average home is $250,000 with property taxes of approximately $300 a month. If they take out the maximum loan under the Home Buyers' Plan and empty their TFSAs and investment account except for their vacation funds, what will be the monthly cost of a home in 2012 and 2013? Make the following assumptions to simplify your analysis. (Research is required - please state your sources.) ? They will opt for a 25-year mortgage at a 0.45% monthly rate of interest. ? Home acquisition costs, excluding the land transfer tax, will amount to $10,000. 3 ? They will pay the land transfer tax and home acquisition costs outright, but will add the cost of insuring their mortgage with CMHC to the balance of their loan. ? They will make the minimum legal repayments to the Home Buyers' Plan when required. ? Their home insurance will be $60 a month, up $30 from the cost of their tenants' package. ? The First Time Home Buyers' federal tax credit will be received monthly in 2012. ? Their heating and utilities will amount to $200 a month. Question 4 (15 marks) In your estimation, would they be able to afford the home under the terms described? Please support your answer with calculations and refer to the GDS ratio, TDS ratio and their monthly cash flow. With respect to the latter, calculate how much they would have available each month for variable expenses currently, as tenants, and as homeowners. Question 5 (10 marks) Identify two major omissions in their analysis. Please explain. Question 6 (20 marks) The couple's home insurance costs will rise. Explain the meaning of each of the following, and how the couple can overcome the restriction that it creates. ? Named perils ? Co-insurance clause of 80% and escalating replacement costs ? High premium cost due to low deductible of $500 ? Cap on insurance coverage for electronic equipment
Question 2
After reading ?Boeing Commercial Aircraft? case study (attached file). Complete a SWOT analysis on the case. ?Strengths?Weaknesses?Opportunities?Threats ?Personal Observations. Each section is to be 190-200 words, with reference citations if it is possible. Thank you,Yes, my course question used the word "sections" for?Strengths?Weaknesses?Opportunities ?Threats?Personal Observations. Each of these 5 "sections" need 190-200 words, total 950-1000. Thank you,Thank you.,Dear Professor, Thank you for your answer, however I`m worried, because each of the 5 sections/topics: ?Strengths?Weaknesses?Opportunities ?Threats?Personal Observations need 190-200 words, total 950-1000, as you accepted my question, and the weaknesses, and opportunities have about 40 words each, and I didn`t see the personal observation. Sincerely,There must be some technical problem, because I was checking several times a a day, and the website still shows: "awaiting answer". Thank you for the answer. I have to submit my assignment today, I`m already late, however couple of answer is under 190 words, and one has only 54, which is far from 190. Sincerely,Thank you for your answer, however,the references which are not retrieved from a website do not say which edition, and page number. Sincerely,Hill/Jones, Essentials of Strategic Management,Thank you, but as I mentioned above I had to submit my "Boeing" assignment yesterday. I was already late with it. Sincerely,Thank you. But as I mentioned it above, I already had to submit my assignment to my teacher 2 days ago. It is too late. Sincerely
Question 3
Question 1 (True/False Worth 5 points) The future value technique uses discounting to find the future value of each cash flow at the end of the project?s life. True False Question 2 (True/False Worth 5 points) In the text, the perpetual British government war bonds were referred to as consols. True False Question 3 (True/False Worth 5 points) Trey Hughes opened a pizza place last year. He expects to increase his revenue from last year by 7 percent every year for the next 10 years. This is an example of a growing annuity. True False Question 4 (True/False Worth 5 points) The sooner in the future you receive a dollar, the less it is worth today. True False Question 5 (Multiple Choice Worth 5 points) Jackson Electricals has borrowed $27,850 from its bank at an annual rate of 8.5 percent. It plans to repay the loan in eight equal installments. Beginning at the end of next year. What is its annual loan payment? (Round to the nearest dollar.) $4,708 $5,134 $4,939 $4,748 Question 6 (Multiple Choice Worth 5 points) Marcicela Sanchez needs to have $25,000 in five years. If she can earn 8 percent on any investment, what is the amount that she will have to invest every year for the next five years: (Round to the nearest dollar.) $5,000 $4,261 $4,640 $4,445 Question 7 (Multiple Choice Worth 5 points) Jack Robbins is saving for a new car. He needs to have $21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to the nearest dollar.) $22,680 $26,454 $16,671 $19,444 Question 8 (True/False Worth 5 points) The present value of a perpetuity is the promised constant cash payment divided by the interest rate (i). True False Question 9 (True/False Worth 5 points) The less frequently the interest payments are compounded, the larger the future value of $1 for a given time period. True False Question 10 (Multiple Choice Worth 5 points) Lorraine Jackson won a lottery. She will have a choice of receiving $25,000 at the end of each year for the next 30 years, or a lump sum today. If she can earn a return of 10 percent on any investment she makes, what is the minimum amount she should be willing to accept today as a lump-sum payment? (Round to the nearest hundred dollars.) $750,000 $334,600 $212,400 $235,700 Question 11 (Multiple Choice Worth 5 points) You plan to save $1,250 at the end of each of the next three years to pay for a vacation. If you can invest it at 7 percent, how much will you have at the end of three years? (Round to the nearest dollar.) $3,750 $3,918 $4,019 $4,589 Question 12 (True/False Worth 5 points) The Rule of 72 allows one to calculate the return earned on an investment over six years. True False Question 13 (Multiple Choice Worth 5 points) The process of converting future cash flows to its present value is time value of money discounting compounding none of the above Question 14 (Multiple Choice Worth 5 points) Joachim Noah is investing $5,000 in an account paying 6.75 percent annually for three years. What is the interest-on-interest if interest is compounded? $1,012.50 $1,082.38 $82.38 $69.88 Question 15 (Multiple Choice Worth 5 points) Your friend Jackson is asking to borrow today with a promise to repay $6,665 in four years. If you could earn 7.45 percent annually on any investment you make today, how much will you be willing to lend Jackson today? (Round to the nearest dollar.) $5,000 $4,035 $4,500 $5,150 Question 16 (True/False Worth 5 points) In computing the present and future value of multiple cash flows, each cash flow is discounted or compounded at the same rate. True False Question 17 (Multiple Choice Worth 5 points) Ray Seo has $5,000 to invest in a small business venture. His partner has promised to pay him back $8,200 in five years. What is the return earned on this investment? 9.3% 8.7% 11.1% 10.4% Question 18 (True/False Worth 5 points) The rent paid for an apartment is an example of an ordinary annuity. True False Question 19 (True/False Worth 5 points) The lower the discount rate, the lower the present value of a future cash flow. True False Question 20 (Multiple Choice Worth 5 points) Roger Stamp wants to save $1,450 at the end of each of the next four years to use as a down payment for a car. If he can invest it at 6 percent, how much will he have at the end of four years/ (Round to the nearest dollar.) $6,343 $5,918 $6,019 $6,589
Question 4
Hello! I need some help on the below problem. I can't seem to get the numbers right. I've attached an excel spreadsheet to enter the information into. The cells with the double lines should turn green once the correct numbers are entered. I think I have the right answers, but none of my cells are turning green! I just want to make sure I'm not looking at it completely wrong. Thanks for the help! On December 1, Stone Mountain Production Company had a work in process inventory of 1,200 units that were complete as to materials and 50% complete as to labor and overhead. December 1 costs follow: Materials.......$6,000 Labor...........$2,000 Overhead........$2,000 During December the following transactions occurred: a. Purchased materials costing $50,000 on account. b. Placed direct materials costing $49,000 into production. c. Incurred production wages totaling $50,500 d. Incurred overhead costs for December: Depreciation......$20,000 Utilities.........$28,000 (cash payment) Salaries..........$11,000 (cash payment) Supplies..........$2,000 (from inventory) e. Applied overhead to work process at a predetermined rate of 125% direct labor cost. f. Completed and transferred 10,000 units to Finished Goods. (Hint: you should first complete equivalent units and unit costs.) Stone Mountain uses an average cost system. The ending inventory of work in process consisted of 1,000 units that were completed as to materials and 25% complete as to labor and overhead. Required: Prepare the journal entries to record the above information for the month of December.
Question 5
You asked: "Fowle Marketing Research, Inc., bases charges to a client on the assumption that telephone surveys can be completed in a mean time of 15 minutes or less. If a longer mean survey time is necessary, a premium rate is charged. Suppose a sample of 35 surveys shows a sample mean of 17 minutes. Use = 4 minutes. Is the premium rate justified? a. Formulate the null and alternative hypotheses for this application. H0: Ha: b. Compute the value of the test statistic (to 2 decimals). c. What is the p-value (to 4 decimals)? d. Using = .01, is a premium rate justified for this client? Nielsen reported that young men in the United States watch 56.2 minutes of prime-time TV daily (The Wall Street Journal Europe, November 18, 2003). A researcher believes that young men in Germany spend more time watching prime-time TV. A sample of German young men will be selected by the researcher and the time they spend watching TV in one day will be recorded. The sample results will be used to test the following null and alternative hypotheses. H0: less than or equal to 56.2 Ha: greater than 56.2 a. In this situation, a Type I error would occur if it was concluded that the population mean prime-time TV viewing for young men in Germany was minutes per day when in fact it was not. b. In this situation, a Type II error would occur if it was concluded that the population mean prime-time TV viewing for young men in Germany was minutes per day when in fact it was not The Employment and Training Administration reported the U.S. mean unemployment insurance benefit of $238 per week (The World Almanac 2003). A researcher in the state of Virginia anticipated that sample data would show evidence that the mean weekly unemployment insurance benefit in Virginia was below the national level. a. Develop appropriate hypotheses such that rejection of H0 will support the researcher's contention. H0: Ha: b. For a sample of 110 individuals, the sample mean weekly unemployment insurance benefit was $231 with a sample standard deviation of $90. The p-value is c. Using = .05, can you conclude that the mean weekly unemployment insurance benefit in Virginia is below the national level? Answer the next three questions using the critical value approach. d. Using = .05, what is the critical value for the test statistic (to 2 decimals)? e. State the rejection rule: Reject H0 if t is the critical value. f. Using = .05, can you conclude that the mean weekly unemployment insurance benefit in Virginia is below the national level? Raftelis Financial Consulting reported that the mean quarterly water bill in the United States is $47.50 (U.S. News && World Report, August 12, 2002). Some water systems are operated by public utilities, whereas other water systems are operated by private companies. An economist pointed out that privatization does not equal competition and that monopoly powers provided to public utilities are now being transferred to private companies. The concern is that consumers end up paying higher-than-average rates for water provided by private companies. The water system for Atlanta, Georgia, is provided by a private company. A sample of 64 Atlanta consumers showed a mean quarterly water bill of $51 with a sample standard deviation of $12. At = .05, does the Atlanta sample support the conclusion that above-average rates exist for this private water system? a. State your hypotheses. H0: Ha: b. What is the t statistic (to 2 decimals)? c. The p-value is d. Can you conclude that above-average rates exist for this private water system? The manager of the Danvers-Hilton Resort Hotel stated that the mean guest bill for a weekend is $600 or less. A member of the hotel's accounting staff noticed that the total charges for guest bills have been increasing in recent months. The accountant will use a sample of weekend guest bills to test the manager's claim. a. Which form of the hypotheses should be used to test the manager's claim? H0: Ha: b. When H0 cannot be rejected, can we conclude that the manager's claim is wrong? c. When H0 can be rejected, can we conclude that the manager's claim is wrong? Speaking to a group of analysts in January 2006, a brokerage firm executive claimed that at least 70% of investors are currently confident of meeting their investment objectives. A UBS Investor Optimism Survey, conducted over the period January 2 to January 15, found that 67% of investors were confident of meeting their investment objectives (CNBC, January 20, 2006). a. Formulate the hypotheses that can be used to test the validity of the brokerage firm executive's claim. H0: p Ha: p b. Assume the UBS Investor Optimism Survey collected information from 300 investors. What is the p-value for the hypothesis test (to 4 decimals)? c. At = .05, should the executive's claim be rejected? Consider the following hypothesis test: H0: 12 Ha: > 12 A sample of 25 provided a sample mean = 14 and a sample standard deviation s = 4.32. a. Compute the value of the test statistic (to 2 decimals). b. Use the t distribution table (Table 2 in Appendix B) to compute a range for the p-value. The p-value is Answer the next three questions using the critical value approach. c. Using = .05, what is the critical value for the test statistic? d. State the rejection rule: Reject H0 if t is the critical value. e. Using = .05, can you conclude that the population mean is greater than 12? Wall Street securities firms paid out record year-end bonuses of $125,500 per employee for 2005 (Fortune, February 6, 2006). Suppose we would like to take a sample of employees at the Jones & Ryan securities firm to see whether the mean year-end bonus is different from the reported mean of $125,500 for the population. a. State the null and alternative hypotheses you would use to test whether the year-end bonuses paid by Jones & Ryan were different from the population mean. H0: Ha: b. Suppose a sample of 40 Jones & Ryan employees showed a sample mean year-end bonus of $118,000. Assume a population standard deviation of $35,000 and compute the p-value (to 4 decimals). c. With = .05 as the level of significance, what is your conclusion? Answer the next three questions using the critical value approach. d. Using = .05, what is the critical value for the test statistic? +/- e. Calculate the test statistic (to 2 decimals). f. Using = .05, can you conclude that the year-end bonuses paid by Jones & Ryan were different from the population mean? A study found that, in 2005, 12.5% of U.S. workers belonged to unions (The Wall Street Journal, January 21, 2006). Suppose a sample of 390 U.S. workers is collected in 2006 to determine whether union efforts to organize have increased union membership. a. Formulate the hypotheses that can be used to determine whether union membership increased in 2006. H0: p Ha: p b. If the sample results show that 50 of the workers belonged to unions, what is the sample proportion of workers belonging to unions (to 2 decimals)? c. Complete the following, assuming an level of .05. Compute the value of the test statistic (to 2 decimals). What is the p-value (to 4 decimals)? What is your conclusion?
