Assuming that revenues stayed flat (meaning the company did not try to increase sales by the 5 percent target), by what percentage would they have to decrease purchasing expenses to equal the increased profit that would have come from a 5 percent increase to revenues? (Write your answer as a percentage, and display your answer to two decimal places.) Note: This question is to stretch your mind a bit and to show how much more, on a percentage basis, sales must increase in order to equal the bottom-line benefits of a modest decrease in purchasing expenses. There will not be a question like this on any assessment. The sales increase targeted percentage is (how many) times bigger than the required percentage decrease in purchasing expenses. (Display your answer as a whole number.)

Benefits and Costs of Buying vs. Renting Reem & Kareem are trying to decide whether to rent or purchase housing. Reem favors buying and Kareem leans toward renting, and both seem able to justify their particular choice. Reem thinks that the tax advantages are a very good reason for buying. Kareem, however, believes that cash flow is so much better when renting. See whether you can help them make their decision. Does the home buyer enjoy tax advantages? Explain. Discuss Kareem’s belief that cash flow is better with renting. Suggest some reasons why Reem might consider renting rather than purchasing housing. Suggest some reasons why Kareem might consider buying rather than renting housing. Is there a clear-cut basis for deciding whether to rent or buy housing? Explain why or why not.

Imagine that you run a business that manufactures a unique medical product. The potential demand for the product is very short lived and uncertain. Your production cycle is very long, which means you need to have the products ready in advance. If the demand for your product arises (only 30% chance), they will be sold well; if not, the products will remain unsold and you will need to liquidate them for $500 each. You predict that the demand will be normally distributed with mean= 15000 and standard deviation= 7000. The production cost of your product is, on average, $5500. You will sell your product for $12500. Suppose you make 18000 products, and you get lucky and demand will occur this year. What is your expected profit?

You are managing a firm with market power, and you think the price elasticity of demand for your product is between 1.3 and 1.5. You estimate that your marginal cost is between $50 and $75. The price that you should set would range between $ and $ (Round your answers to two decimal places.) If you refine your estimate of the marginal cost to $80, the price you should set would now range between $ and S. (Round your answers to two decimal places.)

In the prospectus for the Brazos Aggressive Growth fund, the fee table indicates that the fund has a 12b-1 fee of 0.35 percent and an expense ratio of 1.55 percent that is collected once a year on December 1. Joan and Don Norwood have shares valued at $114,500 on December 1. What is the amount of the 12b-1 fee this year? What is the amount they will pay for expenses this year?

Eight years ago, Burt Brownlee purchased a government bond that pays 3.60 percent interest. The face value of the bond was $1,000. What is the dollar amount of annual interest that Burt received from his bond investment each year? Assuming that comparable bonds are now paying 2.40 percent, will Burt's bond increase or decrease in value? Why did the bond increase or decrease in value?

Which of the following statements is correct for the Black-Scholes model?     A) The price of an American call written on a stock is: c = SN(d1)-Ke-rTN(d2)     B) The stock price at a future point in time follows a log-normal distribution.     C) The continuously compounded return on the stock follows a log-normal distribution.     D) Black-Scholes prices may allow for arbitrage opportunities. Please explain and justify your choice.

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You are planning to rent a car for a one-week vacation. You have the option of buying an insurance that costs $80 dollars for a week. If you do not purchase insurance, you would be personally liable for any damages. You anticipate that a minor collision will cost $2,000, whereas a major accident might cost $16,000 in repairs. Develop a payoff table for this situation. What decision should you make using each strategy? Aggressive (Optimistic) Conservative (Pessimistic) Opportunity Loss   You have recently read in a magazine that that the probability of a major accident is 0.05% and that the probability of a minor collision is 0.18%. Construct a decision tree and identify the best expected value decision.

If an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 6Y, then what is the maximum units of good Y the economy can produce? 0 60 O 600 050 500