Question 1: Your company seeks to take over Good Deal Company. Your company’s offer for Good Deal is $5,000,000 in cash upon signing the agreement followed by 10 annual payments of $200,000 starting one year later. The time value of money is 10%.   a.) Find the present worth of your company’s offer and b.) perform a sensitivity analysis i.e. find how sensitive the value of the present worth is to changes in the initial cash upon signing, annual payment amount, number of payments and rate of return. (Hint: change one of the variables in PW formula to see how it impacts the PW. You can draw a spider plot if you’d like, but it’s not required).

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Hypothesis Testing

In statistics, there are two ways to calculate the sample data. One is descriptive statistics and the other is inferential statistics.  In descriptive statistics, all of the information is defined through graphs and charts. In inferential statistics, it allows one to test the hypothesis and it is always used to predict the data. Inferential statistics has two main areas: estimating parameters and hypothesis testing. A hypothesis is a statement about the unknown parameter of the population which we want to verify from the information available from the sample. The premise may or may not be true. The estimation of the whole population would be a reasonable way of deciding if the statistical hypothesis is valid. There are two types of hypotheses. They are null hypothesis and alternative hypothesis.