What are the critical z-values for a two-tailed hypothesis test if the significant level = 0.01 RES 342 FINAL EXAM (A+)

1) What are the critical z-values for a two-tailed hypothesis test if the significant level = 0.01?

A. ± 1.96

B. ± 2.33

C. ± 2.58

D. ± 1.65

2) In classical hypothesis testing, the test statistic is to the critical value what the __________.

A. ‘p-value’ is to alpha

B. critical value is to alpha

C. test statistic is to the ‘p-value’

D. level of significance is to the test statistic

3) For a hypothesis test of a single population mean at 95% confidence level, a calculated Z score of 1.7 supports the conclusion that

A. the population mean is greater than the hypothesized value

B. the null hypothesis cannot be rejected

C. the sample is biased

D. the population mean is less than expected

4) If the paired differences are normal in a test of mean differences, then the distribution used for testing is the

A. normal distribution

B. chi-square

C. student distribution

D. F distribution

5) One hundred women were polled and 60 reported successfully communicating an automobile problem to an auto repairman. A sample of 150 men had 95 reporting the same success. The value of the test statistic for a test of the equality of proportions is

A. -0.5319

B. 0.7293

C. -0.419

D. 0.2702

6) Weekly sales of iPods® at 20 Best Buy® stores are compared before and after installing a new eye-catching display. To determine if the display is effective in increasing sales, what type of statistical test would you perform?

A. Comparison of means using independent samples using a t-test

B. Comparison of proportions using independent samples using a z-test

C. Comparison of means using a paired z-test

D. Comparison of means using a paired t-test

7) When is it appropriate to use the paired difference t-test?

A. Four samples are compared at once.

B. Any two samples are compared.

C. Two independent samples are compared.

D. Two dependent samples are compared.

8) A survey of hotels found that the average hotel room rate in New Orleans is $88.42 and the average room rate in Phoenix is $80.61. The survey sampled 50 hotels in each city. The standard deviations were $5.62 and $4.83, respectively. At alpha=.05, it can be concluded that there is a significant different in the rates?

A. 7.45

B. -1.96

C. 1.96

D. -7.45

9) If the paired differences are normal in a test of mean differences, the distribution used for testing is the

A. normal distribution

B. chi-square

C. student t distribution

D. F distribution

10) The accountant for Thomas’s Furniture Store is concerned regarding the outstanding receivable owed the company. There has been a cash flow problem and it is believed that the slow collection of accounts receivable is partially the blame. The accountant believes that 40% of the present accounts are more than 4 months behind in making payments. To be able to make a decision regarding this belief, a random sample of 100 accounts was taken. It was found that 37 accounts were more than 4 months late. Did the sample data confirm the accountant’s belief? Use the .05 significant level for the statistical test.

A. There is not enough evidence to confirm or deny the belief.

B. The accountant’s belief is not confirmed.

C. The accountant’s belief is confirmed.

D. The accountant needed to take a larger sample.

11) New college business graduates are finding it difficult to get a job. A business journal has reported that only one in five graduates is able to find a job within 6 months of their graduation. A report by University of Phoenix indicated that out of a survey of 300 recent business graduates, 75 had jobs. You are a business major at University of Phoenix and have a concern about getting a job. Based on this data, will a graduate of University of Phoenix have a better chance of getting a job in the first 6 months after graduation? Use the .05 significant level for the test.

A. No, there is not a significant difference.

B. It cannot be predicted based on this data.

C. Yes, there is a significant difference.

D. The business journal information is incorrect.

12) Analysis of variance (ANOVA) is used to

A. compare nominal data

B. compute t- test

C. compare population proportion

D. simultaneously compare several population means

13) Mr. Thomas owns three different restaurants in Cincinnati, Ohio. He is concerned about the profitability of the restaurants. There are monthly differences between the restaurants and he wants to determine if the differences in profit are significant. Mr. Thomas wants to do a statistical test to see if he should be concerned. The best test to address this problem would be

A. a paired t- test

B. two different t tests

C. an ANOVA test

D. a two sample test

14) Sound engineers studied factors that might affect the output, in decibels, of a rock concert’s speaker system. The desired level of significance was a = .05. The results of their ANOVA tests are shown:

Source of Variation SS df MS F P-value

Amplifier 99.02344 99.02344 0.005718

Position 93.98698 31.32899 3.215807 0.051003

Interaction 10.15365 3 3.384549 0.347412 0.791505

Error 155.875 16 9.742188

Total 359.0391 23

The interaction between the Position and Amplifier treatments was

A. very significant

B. slightly significant

C. insignificant

D. highly correlated

15) Totto, an automobile manufacturer, has designed a radically new engine and wants to recommend the grade of gasoline that will have the best fuel economy. The four grades are regular, below regular, premium, and super premium. The test car made three trial runs on the test track using each of the grades and the miles per gallon were recorded. At the 0.05 level, what is the critical value of F used to test the hypothesis that the miles per gallon for each fuel are the same?

A. 1.96

B. 4.07

C. 2.33

D. 12.00

16) If an ANOVA test is conducted and the null hypothesis is rejected, what does this indicate?

A. Too many degrees of freedom

B. A difference between at least one pair of population means

C. No difference between the population means

D. The variances are the same

17) Nonparametric statistics are used when

A. you have qualitative data, with your variables being measured at the nominal or interval level

B. you have qualitative data, with your variables being measured at the ordinal or ratio level

C. you have qualitative data, with your variables being measured at the nominal or ordinal level

D. you have qualitative data, with your variables being measured at the ordinal or interval level

18) The nonparametric test most commonly used for testing the statistical independence between two variables is

A. the Kruskal- Wallis test

B. the Chi- Square test

C. the Mann Whitney test

D. the Sign test

19) What nonparametric test is used when the assumptions for the parametric ANOVA cannot be met? Its purpose is to test whether three or more populations are equal. The data must be at least ordinal scaled.

A. Students’ t

B. Kruskal- Wallis

C. Mann-Whitney

D. ANOVA

20) Rachael Smith is the personnel manager at Johnson and Johnston, an accounting firm. She is concerned about absenteeism, which seems to be an increasing problem, especially after days off work. She decided to sample the records to determine if absenteeism was distributed evenly throughout the 6-day work week. The null hypothesis to be tested was: Absenteeism is distributed evenly throughout the week. The sample results were:

Day of Week Number Absent

Monday 12

Tuesday 9

Wednesday 11

Thursday 10

Friday 9

Saturday 9

What is the critical value of chi-square with a significant level of = 0.05?

A. 11.070

B. 12.592

C. 13.388

D. 15.033

21) A public opinion poll surveyed a simple random sample of voters. Respondents were classified by gender and by voting preference—Republican, Democrat, or Independent. The results follow.

Voting Preferences Republican Democrat Independent Row total

Male 200 150 50 400

Female 250 300 50 600

Column total 450 450 100 1000

If you conduct a chi-square test of independence, what is the expected frequency count of male Independents?

A. 50

B. 60

C. 40

D. 30

22) What parametric test is equivalent to the nonparametric Spearman’s rank test?

A. T-test of correlation coefficient

B. T-test of two sample means

C. T-test of one sample mean.

D. T-test of two sample proportions

23) What is the variable used to predict another variable called?

A. Independent variable

B. Dependent variable

C. Moderating variable

D. Intervening variable

24) Michelle used a sample of 50 U.S. cities to estimate the relationship between crime, or annual property crimes per 100,000 persons, and income, or median income per capita. Her estimated regression equation was crime = 428 – .01 income. Assuming her model is statistically significant, if income decreases by $1,000, we would predict that crime will

A. decrease by 1

B. increase by 10

C. decrease by 10

D. increase by 100

25) In the least squares equation, Y’ = 12 + 25X the value of 25 indicates

A. the y- intercept

B. for each unit increase in ‘x’, y’ increases by 25

C. for each unit increase in ‘y’, ‘x’ increases by 25

D. the residual of ‘x’ factor

26) A test is conducted in eight cities to see if giving away free transit system maps will increase bus ridership. In a regression analysis, the dependent variable is the increase in bus ridership in thousands of persons from the start of the test until its conclusion. The independent variables are X1 = the number in thousands of free maps distributed and X2 = a binary equal to 1, if the city has free downtown parking and 0 otherwise. The estimated regression equation is Y = 1.32+.0345X1-1.45X2. If the Y value for city 3 is 7.3, X1 = 140, and X2 = 0 the residual for city 3 in thousands is:

A. 6.34

B. 1.15

C. .57

D. 2.01

27) The following linear trend equation was developed for the annual sales of the Tractor Manufacturing Company. Y’ = 355 + 50t in thousands of dollars. How much are sales increasing by?

A. $50,000 per year

B. $5,00 per month

C. $500,000 per year

D. $6,000 per year

28) The time series component that reflects variability over short, repetitive time periods that last less than one year is called

A. long-term trend

B. cyclical variation

C. seasonal variation

D. irregular variation

29) A research company has been hired by a realty company to do an analysis of heating cost of homes in the region. The realty company wanted to be able to predict the heating cost of a typical single-family home. The realty company was constantly being asked questions regarding heating costs by potential home buyers. It was believed that these variables would impact heating costs (Y’): mean daily outdoor temperature (X1), the number of inches of insulation (X2), and the age in years of the furnace (X3). The multiple regression analysis produced the following regression equation: Y’ = 427.2 – 4.58X1 – 14.83X2 + 6.10X3. Which statement is correct based on this analysis?

A. The age of the furnace has an indirect relationship with heating costs.

B. There is an inverse relationship between outdoor temperature and heating costs.

C. There is no real clear relationship between these variables.

D. There exists a direct relationship between inches of insulation and heating costs.

30) If we fit a linear trend to data that are growing exponentially,

A. the fitted trend will be too high at the end

B. the forecasts, if extrapolated, will be too low

C. the forecasts, if extrapolated, will be too high

D. the fitted trend will be too low in the middle

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A company sells a product which has a unit sales price of $5 (A+)

A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $180,000. The number of units the company must sell to break even is

90,000 units.
60,000 units.
36,000 units.
360,000 units.

Zehms, Inc. has a contribution margin per unit of $21 and a contribution margin ratio of 60%. How much is the selling price of each unit?

$35.00
$52.50
Cannot be determined without more information.
$12.60

Boswell Company reported the following information for the current year: Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $270,000. What is Boswell’s contribution margin ratio?

55%.
68%.
45%.
32%.

Chung, Inc. sells 100,000 wrenches for $18 per unit. Fixed costs are $525,000 and net income is $375,000. What should be reported as variable expenses in the CVP income statement?

$1,425,000
$900,000
$1,275,000
$810,000

Farmers’ Industries has fixed costs of $400,000 and variable costs are 60% of sales. How much will Farmers report as sales when its net income equals $40,000?

$1,040,000
$264,000
$733,333
$1,100,000

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BUS 640 Week 1 Assignment – Economics of Risk and Uncertainty Applied Problems (A+ Guaranteed)

BUS 640 Week 1 Assignment – Economics of Risk and Uncertainty Applied Problems

Assignments

1. Due by Day 7. Economics of Risk and Uncertainty Applied Problems. Please, complete the following two applied problems. Show all your calculations and explain your results.

 

Problem 1: A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump sum of $12 million in Year 0 (the current year), or in parts, in which $7 million can be provided at the end of Year 1, and another $7 million can be provided at the end of Year 2.

Describe your answer for each item below in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:

a. Assuming the opportunity interest rate is 8%, what is the present value of the second alternative mentioned above? Which of the two alternatives should be chosen and why?

b. How would your decision change if the opportunity interest rate is 12%?

c. Provide a description of a scenario where this kind of decision between two types of payment streams applies in the “real-world” business setting.

 

 

2. Problem 2: The San Diego LLC is considering a three-year project, Project A, involving an initial investment of $80 million and the following cash inflows and probabilities:

 

Year 0

Year 1

Year 2

Year 3

Probability

Cash Flow

($ mil.)

Probability

Cash Flow

($mil.)

Probability

Cash Flow

($ mil.)

0.2

50

0.1

60

0.3

70

0.3

40

0.2

50

0.4

60

0.4

30

0.3

40

0.1

50

0.1

20

0.4

30

0.2

40

Initial Investment

$80 mil.

Discount Rate

8%

Describe your answer for each question in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:

 

a. Describe and calculate Project A’s expected net present value (ENPV) and standard deviation (SD), assuming the discount rate (or risk-free interest rate) to be 8%. What is the decision rule in terms of ENPV? What will be San Diego LLC’s decision regarding this project? Describe your answer.

b. The company is also considering another three-year project, Project B, which has an ENPV of $32 million and standard deviation of $10.5 million. Project A and B are mutually exclusive. Which of the two projects would you prefer if you do not consider the risk factor? Explain.

c. Describe the coefficient of variation (CV) and the standard deviation (SD) in connection with risk attitudes and decision making. If you now also consider your risk-aversion attitude, as the CEO of the San Diego LLC will you make a different decision between Project A and Project B? Why or why not?

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A generous university benefactor has agreed to donate a large amount of money for student scholarships (A+ Guaranteed)

A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump sum of $12 million in Year 0 (the current year), or in parts, in which $7 million can be provided at the end of Year 1, and another $7 million can be provided at the end of Year 2.

Describe your answer for each item below in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:

a. Assuming the opportunity interest rate is 8%, what is the present value of the second alternative mentioned above? Which of the two alternatives should be chosen and why?

b. How would your decision change if the opportunity interest rate is 12%?

c. Provide a description of a scenario where this kind of decision between two types of payment streams applies in the “real-world” business setting.

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The San Diego LLC is considering a three-year project, Project A, involving an initial investment of $80 million (A+ Guaranteed)

Problem 2: The San Diego LLC is considering a three-year project, Project A, involving an initial investment of $80 million and the following cash inflows and probabilities:

 

Year 0

Year 1

Year 2

Year 3

Probability

Cash Flow

($ mil.)

Probability

Cash Flow

($mil.)

Probability

Cash Flow

($ mil.)

0.2

50

0.1

60

0.3

70

0.3

40

0.2

50

0.4

60

0.4

30

0.3

40

0.1

50

0.1

20

0.4

30

0.2

40

Initial Investment

$80 mil.

Discount Rate

8%

Describe your answer for each question in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:

 

a. Describe and calculate Project A’s expected net present value (ENPV) and standard deviation (SD), assuming the discount rate (or risk-free interest rate) to be 8%. What is the decision rule in terms of ENPV? What will be San Diego LLC’s decision regarding this project? Describe your answer.

b. The company is also considering another three-year project, Project B, which has an ENPV of $32 million and standard deviation of $10.5 million. Project A and B are mutually exclusive. Which of the two projects would you prefer if you do not consider the risk factor? Explain.

c. Describe the coefficient of variation (CV) and the standard deviation (SD) in connection with risk attitudes and decision making. If you now also consider your risk-aversion attitude, as the CEO of the San Diego LLC will you make a different decision between Project A and Project B? Why or why not?

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P4-5B Lee Choi opened Choi’s Window Washing, Inc. on July 1, 2008

P4-5B Lee Choi opened Choi’s Window Washing, Inc. on July 1, 2008. During July the following transactions were completed.
July 1 Issued $12,000 of common stock for $12,000 cash.
1 Purchased used truck for $6,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $1,300 on account.
5 Paid $2,400 cash on one-year insurance policy effective July 1.
12 Billed customers $2,500 for cleaning services.
18 Paid $1,000 cash on amount owed on truck and $800 on amount owed on cleaning supplies.
20 Paid $1,200 cash for employee salaries.
21 Collected $1,400 cash from customers billed on July 12.
25 Billed customers $5,000 for cleaning services.
31 Paid gas and oil for month on truck $200.
31 Declared and paid $900 cash dividend.

The chart of accounts for Choi’s Window Washing contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable, No. 311 Common Stock, No. 320 Retained Earnings, No. 332 Dividends, No. 350 Income Summary,No. 400 Service Revenue,No. 633 Gas & Oil Expense,No. 634 Cleaning Supplies Expense,No. 711 Depreciation Expense,No. 722 Insurance Expense, and No. 726 Salaries Expense.

Instructions
(a) Journalize and post the July transactions. Use page J1 for the journal and the three-column form of account.
(b) Prepare a trial balance at July 31 on a worksheet.
(c) Enter the following adjustments on the worksheet and complete the worksheet.
(1) Services provided but unbilled and uncollected at July 31 were $1,500.
(2) Depreciation on equipment for the month was $300.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $400 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $600.
(d) Prepare the income statement and a retained earnings statement for July and a classified balance sheet at July 31.
(e) Journalize and post adjusting entries. Use page J2 for the journal.
(f) Journalize and post closing entries and complete the closing process. Use page J3 for the journal.
(g) Prepare a post-closing trial balance at July 31.

Check:
(b) Trial balance $22,000
(c) Adjusted trial balance $24,400
(d) Net income $5,600; Total assets $19,800
(g) Post-closing trial balance $20,100

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CP26 You would like to start a business manufacturing a unique model of bicycle helmet

CP26 You would like to start a business manufacturing a unique model of bicycle helmet. In preparation for an interview with the bank to discuss your financing needs, you develop answers to the following questions. A number of assumptions are required; clearly note all assumptions that you make.
a) Identify the types of costs that would likely be involved in making this product.
b) Set up five columns as indicated.
Product Costs
Item Direct Materials Direct Labor Manufacturing Overhead Period Costs
Classify the costs you identified in (a) into the manufacturing cost classifications of product costs (direct materials, direct labor, and manufacturing overhead) and period costs.
c) Assign hypothetical monthly dollar figures to the costs you identified in (a) and (b).
d) Assume you have no raw materials or work in process beginning or ending inventories. Prepare a projected cost of goods manufactured schedule for the first month of operations.
e) Project the number of helmets you expect to produce the first month of operations. Compute the cost to produce one bicycle helmet. Review the result to ensure it is reasonable; if not, return to part © and adjust the monthly dollar figures you assigned accordingly.
f) What type of cost accounting system will you likely use – job order or process costing?
g) Explain how you would assign costs in either job order or process costing system you plan to use.
h) Classify your costs as either variable or fixed costs. For simplicity, assign all costs to either variable or fixed, assuming there are no mixed costs, using the format shown.
Item Variable Costs Fixed Costs Total Costs
i) Compute the unit variable cost, using the production number you determined in (e).
j) Project the number of helmets you anticipate selling the first month of operations. Set a unit selling price, and compute both the contribution margin per unit and the contribution margin ratio.
k) Determine your break-even point in dollars and in units.
l) Prepare projected operating budgets (sales, production, direct materials, direct labor, manufacturing overhead, selling and administrative expense, and income statement). You will need to make assumptions for each of the following:
Direct materials budget: Quantity of direct materials required to produce one helmet; cost per unit of quantity; desired ending direct materials (assume none).
Direct Labor budget: Direct labor time required per helmet; direct labor cost per hour.
Budgeted income statement: Income tax expense is 45% of income from operations.
m) Prepare a cash budget for the month. Assume the percentage of sales that will be collected from customers is 75%, and the percentage of direct materials that will be paid in the current month is 75%.
n) Determine a relevant range of activity, using the number of helmets produced as your activity index. Recast your manufacturing overhead budget into a flexible monthly budget for two additional activity levels.
o) Identify one potential cause of materials, direct labor, and manufacturing overhead variances for your product.
p) Assume that you wish to purchase production equipment that costs $720,000. Determine the cash payback period, utilizing the monthly cash flow that you computed in part (m) multiplied by 12 months (for simplicity).
q) Identify any nonfinancial factors that should be considered before commencing your business venture.

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(Interest Rate Sensitivity) An investor purchased the following 5 bonds.

(Interest Rate Sensitivity) An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and 8 % yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell and each then had a new YTM of 7% . What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table:

Price @ 8% Price 7% Percentage change
10-yr,10% annual coupon
10-year zero
5-year zero
30-year zero
$100 perpetuity

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On October 1, Keisha King organized Real Answers, a new consulting firm

On October 1, Keisha King organized Real Answers, a new consulting firm. On October 31, the company’srecords show the following items and amounts. Use this information to prepare an October income statement for the business.

Cash . . . . . . . . . . . . . . . . . . $11,500    Cash dividends . . . . . . . . . . . . . . $ 2,000
Accounts receivable . . . . . . . 12,000     Consulting fees earned . . . . . . . . 14,000
Office supplies . . . . . . . . . . . 24,437     Rent expense . . . . . . . . . . . . . . . 2,520
Land . . . . . . . . . . . . . . . . . . . 46,000   Salaries expense . . . . . . . . . . . . . 5,600
Office equipment . . . . . . . . . 18,000     Telephone expense . . . . . . . . . . . 760
Accounts payable . . . . . . . . . 25,037    Miscellaneous expenses . . . . . . . 580
Common stock . . . . . . . . . . . 84,360

Check Net income, $4,540

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Coley Co. issued $30 million face amount of 9%, 10-year bonds on June 1, 2009

Coley Co. issued $30 million face amount of 9%, 10-year bonds on June 1, 2009. The bonds pay interest on an annual basis on May 31, each year.

a.) Assume that the market interest rates were slightly higher than 9% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain.

b.) Independent of your answer to part A, assume that the proceeds were $26,640,000. Use the horizontal model to show the effect of issuing the bonds.

c.) Calculate the interest expense that Coley Co. will show with the respect to these bonds in its income statement for the fiscal year ended September 30,2009, assuming that the discount rate of $360,000 is amortized on a straight-line basis.

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