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Problem category: business/financial math (236 problems).

Problem #221
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Bond Prices and Yields.

a. Several years ago, Castles in the Sand, Inc., issued bonds at face value at a yield to maturity of 7 percent. Now, with 8 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 15 percent. What has happened to the price of the bond?

b. Suppose that investors believe that Castles can make good on the promised coupon payments, but that the company will go bankrupt when the bond matures and the principal comes due. The expectation is that investors will receive only 80 percent of face value at maturity. If they buy the bond today, what yield to maturity do they expect to receive?

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When the bond was issued, the Price = $1000 = FV
And the annual return rate is the coupon rate = 7%
Then yearly payment is 1000 * 7% = $70
with number of years left = 8
and new return rate= 15%
We can compute current price by:
PV=641.01
In excel, use command PV(15%,8,70,1000)
From this there is an obvious drop in price

=====================================
The FV is 80% of the face value, or 1000*80% = $800
The rest terms remain the same as part A:
PV = -641.01 (negative sign means investment)
Annual payment = 70
number of years = 8
By a financial calculator, we can compute YTM by
(I/Y) Rate = 13%
(In EXCEL, use command: =RATE(8,70,-641.01,800)

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Problem #222
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A bond with face value $1,000 has a current yield of 7 percent and a coupon rate of 8 percent. What is the bond's price?

A 6 year Circular File bond pays interest of $80 annually and sells for $950. What are it's coupon rate, current yield and yield to maturity?

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Problem #223
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Please see attached document. Question is related to marginal costs.

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Problem #224
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This problem must be resolved with the Quantitative Methods: TRANSPORTATION, TRANSSHIPMENT AND ASSIGNMENT PROBLEMS - TRANSPORTATION, TRANSSHIPMENT AND ASSIGNMENT PROBLEMS

The Darby Company manufactures and distributes meter used to measure
electric power consumption. The company started with a small production
plant in El Paso and gradually built a customer base throughout Texas.
A distribution center was established in Ft. Worth, Texas later, as
business expanded to thenorth, a second distribution center was
established in Santa Fe, New Mexico.
The El Paso plant was expanded when the company began marketing
itsmeters in Arizona, California, Nevada, and Utah. With the growth of the
West Coast business, the Darby Company opened a third distribution center
in Las Vegas and just two years ago opened a second production plant in
San Bernardino, California.
Manufacturing costs differe between the company\'s production plants.
The cost of each meter produced at the El Paso plant is $10.50. The
San Bernardino plant utilizes newr and more efficient; as a result,
manufacturing costs are $.50 per meter less than at the El Paso plant.
The company\'s rapid growth meant that not much attention was paid to
the efficiency of the distribution system. Darby\'s management decided
it is now time to address this issue. The cost of shipping a meter
from each of the two plants to each of the three distribtion centers is
shown in Table 1 below.
The quarterly production capacity is 30,000 meters at the older ElPaso
plant and 20,000 meters at the San Bernardino plant. Note that no
shipments are allowed from the San Bernardino plant to the Ft. Worth
distribution center.
The company serves nine customer zones from the three distribution
centers. The forecast of the number of meters needed in each customer zone
for the next quarter is shown in Table 2.
The cost per unit of shipping from each distribution center to each
customer zone is given in Table 3. note that some of the distribution
centers cannot serve certain customer zones.
In the current distribution system, demand at the Dallas, San Antonio,
Wichitia, and Kansas City customer zones is satisfied by shipments from
the Ft. Worth distribution center. In a similar manner, the Denver,
Salt Lake City, and Phoenix customer zones are served by the Santa Fe
distribution, and the Los Angeles and San Diego customer zones are served
by the Las Vegas distibution center. To determine how many units to
ship from each plant, the quarterly customer demand forecasts are
aggregated at the distribution centers. and a trnspration model is used to
minimze the cost of shipping from the production plants to the
distribution centers.

Table 1
Shipping cost per unit from production plants to distribution centers
($)
Distribution Center
Plant Ft Worth Sante Fe Las Vegas
El Paso 3.20 2.20 4.20
San Bernardino --- 3.90 1.20

Table 2
Quarterly Demand Forecast
Customer Zone Demand (meters)
Dallas 6300
San Antonio 4880
Wichitia 2130
Kansas City 1210
Denver 6120
Salt Lake City 4830
Phoenix 2750
Los Angeles 8580
San Diego 4460

Table 3
Shipping cost from the distribution centers to the customer zones ($)

Customer Zone
San Kansas Salt Lake
Dallas Antonio Wichita City Denver City Phoenix LA SD
Ft Wor 0.3 2.1 3.1 4.4 6.0 -- -- -- --
Sante Fe 5.2 5.4 4.5 6.0 2.7 4.7 3.4 3.3 2.7
Las Vegas - - - - 5.4 3.3 2.4 2.1 2.5

Question for overall problem
1. If the company does not change its current distribution strategy,
what will its manufacturing and distribution costs be for the following
quarter?
2. Suppose that the company is willing to consider dropping the
distribution center limitations; that is, customer could be served by any of
the distributon centers for which costs are available. Can costs be
reduced? By how much?
3. The company wants to explore the possibility of satisfying some fo
the customer demand directly from the production plants. In
particular, the shipping cost is $.30 per unit from San bernardion to Los Angeles
and $.70 from San Bernardion to San Diego. Teh cost for direct
shipments from El Paso to San Antonio is $3.50 per unit. Can distribution
costs be frther reduced by considering these direct plant customer
shipments?
4. Over the next five years. Darby is anticipating moderate growth
(5000 meters) to the North and West. Would you recommend that they
consdier plant expansion at this time?

This Question comes from the Book of \"An introduction to Management
Science\" Quantitative approaches to decision makeing. 11th edition
Anderson, Sweeny, Williams. Chapter 7 Case Problem Distribution System
design.

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Problem #225
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Problem #226
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The demand function for a certain commodity is p=(x-5)^2.Find consumer surplus when sales level is 3.

Find the producer surplus when the selling price is $100

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Problem #227
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yolanda's $500.00 monthly expense account is set up through an automatic teller machine (ATM). She withdraws funds, using the $40.00 fast cash option. The equation describes the amount in dollars that remains in her account after x withdrawal during month.

a. which fact gives the slope?
b. which fact gives the y intercept?
c. write the equation using y=mx +b.

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Problem #228
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**Please Explain how you came up with the data in the excel sheet in sheet 1 in a word document**

Southwestern University (SWU), a large state college in Stephenville, Texas, 30 miles southwest of the Dallas/Fort Worth metroplex, enrolls close to 20,000 students. In a typical town-gown relationship, the school is a dominant force in the small city, with more students during the fall and spring than permanent residents.
A longtime football powerhouse, SWU is a member of the Big Eleven conference and is usually in the top 20 in college football rankings. To bolster its chances of reaching the elusive and long-desired number-one-ranking, in 1997 SWU hired the legendary Bo Pitterno as its head coach. Although the number-one ranking remained out of reach, attendance at the five Saturday home games each year increased. Prior to Pitterno's arrival, attendance generally averaged 25,000 to 29,000 per game. Season ticket sales bumped up by 10,000 just with the announcement of the new coach's arrival. Stephenville and SWU were ready to move to the big time!
The immediate issue facing SWU, however, was not NCAA ranking. It was capacity. The existing SWU stadium, built in 1953, has seating for 54,000 fans. The following table indicates attendance at each game for the past six years.
One of Pitterno's demands upon joining SWU had been a stadium expansion, or possibly even a new stadium. With attendance increasing, SWU administrators began to face the issue head-on. Pitterno had wanted dormitories solely for his athletes in the stadium as an additional feature of any expansion.
SWU's president, Dr. Marty Starr, decided it was time for his vice president of development to forecast when the existing stadium would "max out." He also sought a revenue projection, assuming an average ticket price of $20 in 2003 and a 5% increase each year in future prices.

1.Develop a forecasting model, justifying its selection over other techniques, and project attendance through 2004.
2. What revenues are to be expected in 2003 and 2004?
3. Disucss the school's options. Refer to sheet 2 on the attachment.

**Please Explain how you came up with the data in the excel sheet in sheet 1 in a word document**

Thanks

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Problem #229
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Problem text:

Southwestern University (SWU), a large state college in Stephenville, Texas, 30 miles southwest of the Dallas/Fort Worth metroplex, enrolls close to 20,000 students. In a typical town-gown relationsip, the school is a dominant force in the small city, with more students during fall and spring than permanent residents.
A longtime football powerhouse, SWU is a member of the Big Eleven conference and is usually in the top 20 in college football rankings. To bolster its chances of reaching the elusive and long desired number-one ranking, in 1997 SWU hired the legendary Bo Pitterno as its head coach. Although the number-one ranking remained out of reach, attendance at the first Saturday home games each year increased. Prior to Pitterno's arrival, attendance generally averaged 25,000 to 29,000 per game. Season ticket sales bumped up by 10,000 just with the announcement of the new coach's arrival. Stephenville and SMU were ready to move to the big time!
The immediate issue facing SWU, however, was not NCAA ranking. It was capacity. The existing SWU stadium, built in 1953, has seating for 54,000 fans. The following table indicates attendance at each game for the past six years.
One of Pitterno's demands upon joining SWU had been a stadium expansion, or possibly even a new stadium. With attendance increasing, SWU administrators began to face the issue head-on. Pitterno had wanted dormitories solely for his athletesin the stadiumas an additional feature of any expansion.
SWU's president, Dr. Marty Starr, decided it was time for his vice president of devlopment to forecast when the existing stadium would "max out". He also sought a revenue projection, assuming an average ticket price of $20 in 2003 and a 5% increase each year in future prices.

1.Develop a forecasting model, justifying its selection over other techniques, and project attendance through 2004.

2. What revenues are to be expected in 2003 and 2004?

3.Discuss the school's options.

See the excel sheet for the attachment.

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Problem #230
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. “Eskimo Pie Corporation”
1) What is your estimate of Eskimo Pie Corporation’s value as a stand-alone company?
2) Why would Nestle want to acquire Eskimo Pie? Are there synergies that make Eskimo Pie worth more to Nestle than its stand-alone value?
3) Would you advise Reynolds to sell to Nestle or do the IPO? Explain your answer.

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236 problems on 24 pages.
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