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Annisa - 1040002023 - BM016 - MidTerm (Graded) - Revision
Annisa - 1040002023 - BM016 - MidTerm (Graded) - Revision
production quantity 7 16
profit per unit $40.00 $25.00
total profit $680.00 $280.00 $400.00
desk chair
raw materials used requirements by product available feasible
wood 76 4 3 77 1 680
B. How many desks to sell by selling 12 chairs to get total profit of $340 (using solver)
Desk Chair
production quantity 1 12
profit per unit $40.00 $25.00
total profit $340.00 $40.00 $300.00
desk chair
raw materials used requirements by product available feasible
wood 40 4 3 77 1 340
Section a Ok
Section b Ok
20 marks out of 20
Wonderful Snacks, Inc.
maturity (Years) 30
face value $1,000.00
(b). Determine
payback period
NPV
PI (Profitability Index)
IRR
MIRR
Payback Period:
(1,450,000) investment
1,332,500 year 1
1,159,230 year 2
942,777 year 3
695,377 year 4
415,481 year 5
118,526 year 6
#N/A year 7
MIRR: 7% <
Decision to be made:
"Since the profitability measures are not satisfied and it indicates that the project is unprofitable, therefore the project shou
Section a Marketing research should not have been
included in initial outlay (sunk costs) Anual Cash Flow
calculations incorrect (Tax calculations should have taken
depreciation expenses into account). Terminal cash flow
missing raw materials.
Section b Ok given your inputs
537,500
577,813
606,703.13
637,038.28
652,964.24
669,288.34
number of
the value for each $25.00 coupon 60 twice a ayear
coupon payment: payments during 30 years
in 1 year
ferred to as discount rate, so it would be per six months according to the semi-annually coupon payment
ayment (annually): ($600,000) ($600,000) ($600,000) ($600,000)
ompany's financing of new equipment is nothing to do with the current prospected project, therefore this calculation is not included in the
t/cashflow
maximum
<= allowable
period
0
1
cost of capital
/WACC/required 15%
return
cost of capital
/WACC/required 15%
return
Year 7
1,378,734
275,747
850,000
252,987
88,546
150,000
314,442
#N/A
#N/A
Annual bonuses awarded to white- and blue-collar employees
A. a manager and an assembly line worker expect to receive in their bonus check
White-collar bonus Blue-collar bonus
Means 24.305 4.769
B. Group of employees that appear to be more variability in the annual bonuses distributions
Deviations from means Squared Deviations from means
White-collar bonus Blue-collar bonus White-collar bonus
Outstanding 26.195 3.131 686.178025
Strong 9.395 1.531 88.266025
Good 2.495 0.731 6.225025
Fair -11.005 -1.369 121.110025
Weak -20.205 -3.569 408.242025
Poor -24.305 -4.769 590.733025
Answer: Since the variance and stdev values of White-collar bonus is greater than Blue-collar bonus, so white-collar
(management team) group employees has more variability in their bonuses
C. The strength of association on white-collar and blue-collar bonuses and possible implications between this two
relation based on the bonuses result
Covariance 29.000155
Correlation 0.975936586
Answer:
showing that the bonuses awarded for white-collar (management
The correlation of 0.975936586 team) and blue-collar (assembly line worker) are associated in a greatly
strong relationship
The implication from this result to the relation of both group of employees is
while the bonuses received by the management team and assembly workers has linear relation, which is when the
sales performance is in outstanding condition they get very high bonus, then when the sales performance is
decreasing it also lessen their bonuses.
in case of maintaining and even enhancing the annual bonuses they will get in the future, they must work harder to
enhance the company's sales performance:
management team may keep its best strategy or find another better one to promote sales,
while the assembly line workers will make extra work in producing products as fitting to market demand
Section a Ok
Section b Ok
Section c Figure ok but explanation not
clear
17.5 out of 20
Assumption:
White-collar = members of the management team
Blue-collar = assembly line workers
distributions
ared Deviations from means
Blue-collar bonus
9.803161
2.343961
0.534361
1.874161
12.737761
22.743361
questions:
A. Annual returns are independent of each other, find the mean and std deviation!
Mean $5,600
Variance $295,940,000
Stdev $17,203
Covariances between stock returns (variances of stock returns are on the diagonal)
Stock A Stock B Stock C
Stock A 0.0016 0.00108 0.0006
Stock B 0.00108 0.0036 0.00066
Stock C 0.0006 0.00066 0.0004
Stock D -0.0012 -0.00105 -0.0008
Mean $5,600
Variance 668000
Stdev 817.3126696681
C. Change to $15000 each in stocks B and D, then change to $5000 each in stocks A and C! Mean and Stdev? intuitive explana
(See worksheet "number 4.C" for the answer)
0.0025
Stock D
-0.60
-0.35
-0.80
1.00
stock D total
$10,000 $40,000
Stock D
-0.0012
-0.00105
-0.0008
0.0025
Stdev value --> which is
ean and Stdev? intuitive explanation for the changes happened here?
C. Change to $15000 each in stocks B and D, then change to $5000 each in stocks A and C! new Mean and Stdev?
Covariances between stock returns (variances of stock returns are on the diagonal)
Stock A Stock B Stock C Stock D
Stock A 0.0016 0.00108 0.0006 -0.0012
Stock B 0.00108 0.0036 0.00066 -0.00105
Stock C 0.0006 0.00066 0.0004 -0.0008
Stock D -0.0012 -0.00105 -0.0008 0.0025
Mean $5,900
Variance 941000 the change on the values
Stdev 970.0515450222
intuitive explanation
the result indicates that the investor has:
increased his/her "expected $0 or in 0% become
return" from
total
$40,000
$5,900 or in 14.75%
k for the investor
NATURAL GAS EXPLORATION AND DEVELOPMENT
inputs
Cost to initiate a contract (by her own) $300,000
Landowner's acceptance
to the Local Energy Provider's offer
0.70
0.60
0.50
0.40 Row 27
0.30
0.20
0.10
0.00
$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000
0.40 Row 27
0.30
0.20
0.10
0.00
$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000
0.60
0.50
0.40 Row 27
0.30
0.20
0.10
0.00
($2,000,000) $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000
#MACRO?
No
0
explore and develop the land?
Landowner decision in gas exploration and development
#MACRO?
#MACRO?
Yes
0
interpreting the decision tree:
the best decision strategy in this case which is indicated by TRUE that lead to the optimal decision, is the landowner should ma
exploration and development by dealing a contract with the local experts. And if the natural gas is available, she will get optim
Section a Ok
Section b Ok (Precision tree could have generated it
for you)
Section c Ok
20 marks out of 20
for exploration rights to natural gas and option for future development
sunk cost
Outcome
Row 27
$2,500,000
Row 27
$2,500,000
Row 27
$8,000,000
EMV
$0
$1,260,000
$3,300,000
$3,300,000
#MACRO?
#MACRO?
60.0% #MACRO?
Available
$1,800,000 #MACRO?
#MACRO? natural gas found?
Local energy provider
$180,000 #MACRO?
40.0% #MACRO?
Not available
0 #MACRO?
by who?
#MACRO?
60.0% #MACRO?
Available
$6,000,000 #MACRO?
#MACRO? naural gas found?
Landowner with local experts
-300000 #MACRO?
40.0% #MACRO?
Not Available
0 #MACRO?
al decision, is the landowner should make use her land to natural gas
tural gas is available, she will get optimal profit