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TPP105 Lecture Notes - Lecture 1: Polskie Radio Program Iii

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olivecaribou938
26 Jul 2018
School
USC
Department
Teatiary Preparation Program
Course
TPP105
Professor
All

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Document Summary

Please go to the usc website for up to date information on the teaching sessions and campuses where this course is usually offered. This course is designed to introduce you to basic statistical skills for entry to academic programs at the university. You will gain an understanding of the research process. The ability to apply statistical concepts is an essential skill for all undergraduates regardless of discipline. This course consists of a weekly lecture where you will be presented with theoretical knowledge. This will be followed by a weekly tutorial, where the theoretical concepts are illustrated, reaffirmed and complemented with practical exercises. 100 level introductory - discipline knowledge and skills at foundational level, broad application of knowledge and skills in familiar contexts and with support. Normally associated with the first full-time year of an undergraduate program. Please be aware units from this course cannot be counted for credit towards an award-bearing program.

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Related Questions

A project requires an immediate outflow of cash of $ 400 000 in return for the following probable cash flows:

State of Economy Probability End of year 1 ($) End of year 2 ($)
Recession 0.3 100 000 150 000
Growth 0.5 300 000 350 000
Boom 0.2 500 000 550 000

Assume that the state of the economy will be the same in the second year as in the first. The required rate of return is 8%. There is no tax or inflation.

1.1 Calculate the expected NPV. (10 marks)

1.2 Calculate the standard deviation of NPV and the coefficient of variance of the NPV. Interpret these results taking into consideration the state of the economy (10 marks).

1.1 The initial cost of constructing a permanent dam (i.e., a dam that is expected to last forever, a perpetuity) is $425 million. The annual net benefits will depend on the amount of rainfall: $18 million in a “dry” year, $29 million in a “wet” year, and $52 million in a “flood” year. Meteorological records indicate that over the last 100 years there have been 86 “dry” years, 12 “wet” years, and 2 “flood” years. Assume the annual benefits, measured in real dollars, begin to accrue at the end of the first year. Using the meteorological records as a basis for prediction, what are the net benefits of the dam if the real discount rate is 5 percent? Does the dam pass the net benefits test?

1.2 Use several alternative discount rate values (1% to 10%) to investigate the sensitivity of the present value of net benefits of the dam in 1.1 to the assumed value of the real discount rate. Determine the "breakeven" value of the discount rate, which can be found by solving for the rate at which the present value of the stream of expected annual net benefits just equals the cost of construction.

CA8-10 WRITING (FIFO and LIFO) HarrisburgCompany is considering changing its inventory valuation method fromFIFO to LIFO because of the potential tax savings. However,management wishes to consider all of the effects on the company,including its reported performance, before making the finaldecision.

The inventory account, currently valued on the FIFO basis,consists of 1,000,000 units at $8 per unit on January 1, 2017.There are 1,000,000 shares of common stock outstanding as ofJanuary 1, 2017, and the cash balance is $400,000.

The company has made the following forecasts for the period2017–2019.

2017 2018 2019
Unit sales (in millions of units) 1.1 1.0 1.3
Sales price per unit $10 $12 $12
Unit purchases (in millions of units) 1.0 1.1 1.2
Purchase price per unit $8 $9 $10
Annual depreciation (in thousands of dollars) $300 $300 $300
Cash dividends per share $0.15 $0.15 $0.15
Cash payments for additions to and replacement of plant andequipment (in thousands of dollars) $350 $350 $350
Income tax rate 40% 40% 40%
Operating expenses (exclusive of depreciation) as a percent ofsales 15% 15% 15%
Common shares outstanding (in millions) 1 1 1

Instructions

(a) Prepare a schedule that illustrates andcompares the following data for Harrisburg Company under the FIFOand the LIFO inventory method for 2017–2019. Assume the companywould begin LIFO at the beginning of 2017.

(1) Year-end inventory balances.

(2) Annual net income after taxes.

(3) Earnings per share.

(4) Cash balance.

Assume all sales are collected in the year of sale and allpurchases, operating expenses, and taxes are paid during the yearincurred.

(b) Using the data above, your answer to (a),and any additional issues you believe need to be considered,prepare a report that recommends whether or not Harrisburg Companyshould change to the LIFO inventory method. Support yourconclusions with appropriate arguments.