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- Solve Exercise 14 if a 25 solution of the same mixture is added instead of pure alcohol.THE AMERICO OIL CO. CONSIDERING MAKING A BID FOR A SHALE OIL DEVELOPMENT CONTRACT TO BE AWARDED BY THE FEDERAL GOVERNMENT. THE COMPANY HAS DECIDED TO BID $110M. THE CO. ESTIMATES THAT IT HAS 60% CHANCE OF WINNING THE CONTRACT WITH HIS BID. IF THE CO. WINS THE CONTRACT, IT CAN CHOOSE 1 OF THE 3 METHODS FOR GETTING THE OIL FROM THE SHALE: IT CAN DEVELOP A NEW METHOD FOR OIL EXTRACTION, USE AN EXISTING (INEFFICIENT) PROCESS, OR SUBCON THE PROCESSING OUT TO A NUMBER OF SMALLER COMPANIES ONCE THE SHALE HAS BEEN EXCAVATED. THE RESULTS FROM THESE ALTERNATIVES ARE GIVEN AS FOLLOWS: DEVELOP NEW PROCESS PROBABILITY OUTCOMES PROFIT(M) $600 GREAT SUCCESS 0.30 0.60 300 MODERATE SUCCESS FAILURE 0.10 (100) USE PRESENT PROCESS OUTCOMES PROBABILITY PROFIT(M) GREAT SUCCESS 0.50 $300 0.30 200 MODERATE SUCCESS FAILURE 0.20 (40) SUBCONTRACT PROBABILITY OUTCOMES PROFIT(M) 250 MODERATE SUCCESS 1.00 THE COST OF PREPARING THE CONTACT PROPOSAL IS $2M. IF THE CO. DOES NOT MAKE A BID, IT WILL INVEST IN AN…Digitalis is a technology company that makes high-end computer processors. Their newest processor, the luteA, is going to be sold directly to the public. The processor is to be sold for $3300, making Digitalis a profit of $429. Unfortunately there was a manufacturing flaw, and some of these luteA processors are defective and cannot be repaired. On these defective processors, Digitalis is going to give the customer a full refund. Suppose that for each luteA there is a 13% chance that it is defective and an 87% chance that it is not defective. (If necessary, consult a list of formulas.) If Digitalis knows it will sell many of these processors, should it expect to make or lose money from selling them? How much? To answer, take into account the profit earned on each processor and the expected value of the amount refunded due to the processor being defective. Digitalis can expect to make money from selling these processors. In the long run, they should expect to make || dollars on each…
- A production process produces and packages soap in boxes weighing 140 grams. Owing to inspection carried out by several large municipalities, the penalty for placing, on the average, less than 140 grams in a box can be severe. Likewise it would also be wasteful for the company if they place, on the average, more than 140 grams in a box. Hence, the machine was adjusted to put 140 grams of soap in a box. After a year, the company wants to check if there is a need to readjust the machine. The company wishes to perform a test of hypothesis at 0.01 level of significance using the following data collected from a random sample: (photo attached). • State Ho and Ha.• Write the formula of the test statistic to be used.• State the decision rule at 0.01 level of significance.• Compute for the value of the test statistic.• Is there sufficient evidence at 0.01 level of significance for the company to conclude that mean weight of soap packaged in a box is not anymore 140 grams so that there is a need…Gulf Coast Electronics is ready to award contracts to suppliers for providing reservoir capacitors for use in its electronic devices. For the past several years, Gulf Coast Electronics has relied on two suppliers for its reservoir capacitors: Able Controls and Lyshenko Industries. A new firm, Boston Components, inquired into the possibility of providing a portion of the reservoir capacitors needed by Gulf Coast. The quality of products provided by Lyshenko Industries has been extremely high; in fact, only 0.5% of the capacitors provided by Lyshenko had to be discarded because of quality problems. Able Controls has also had a high quality level historically, producing an average of only 1% unacceptable capacitors. Because Gulf Coast Electronics has had no experience with Boston Components, it estimated Boston’s defective rate to be 10%. Gulf Coast would like to determine how many reservoir capacitors should be ordered from each firm to obtain 75,000 acceptable-quality capacitors to use…Zimlick, Inc, a US pasta-machine manufacturer, is considering a $2.1 million device from United Technologies Corporation to automate pasta-machine quality inspection. The device will be depreciated according to the straight-line method over three years. The useful life of the device is 5 years, with an estimated sale value at year 5 of $300,000. The project will allow less pasta machines to be scrapped because of low quality, generating pretax earnings of $900,000 per year, and will not change the risk level of the firm. Zimlick’s cost of capital is 18%. The tax rate is 30%. Q1. Show a forecast of the cash flows for the project Q2. What is the net present value of the project? Q3. What is the IRR of the project? Q4. Would you undertake the investment? Why or why not?
- Digitalis is a technology company that makes high-end computer processors. Their newest processor, the luteA, is going to be sold directly to the public. The processor is to be sold for $3300 , making Digitalis a profit of $429 . Unfortunately there was a manufacturing flaw, and some of these luteA processors are defective and cannot be repaired. On these defective processors, Digitalis is going to give the customer a full refund. Suppose that for each luteA there is a 13% chance that it is defective and an 87% chance that it is not defective.(If necessary, consult a list of formulas.) If Digitalis knows it will sell many of these processors, should it expect to make or lose money from selling them? How much? To answer, take into account the profit earned on each processor and the expected value of the amount refunded due to the processor being defective. Digitalis can expect to make money from selling these processors. In the long run,…California Wine producer Chill Wines has in their line a mid-market chardonnay, of whichthey produce 200,000 bottles a year. They have been bottling their wines with natural corkclosures, which are known to have sealing issues resulting in the spoilage of wine, aproblem that is worse in their chardonnay than in the other wines they sell. This problem,which results in a 15% spoilage rate for their chardonnay, is both expensive and impactsthe company’s reputation. They have researched several other closure products on themarket and have decided to try using a new closure in a test run of 91 bottles theirchardonnay. After allowing the wine to stay in the bottles for the time it generally takes toget it from the winery to customers, they tested the run and found 16 spoiled bottles. As thecompany has a both an immediate financial and reputation risk, they want to be 90% surethat changing the closures will help limit wine spoilage. What do their results suggest? a)What is known? What…Digitalis is a technology company that makes high-end computer processors. Their newest processor, the luteA, is going to be sold directly to the public. The processor is to be sold for $3900, making Digitalis a profit of $547. Unfortunately there was a manufacturing flaw, and some of these luteA processors are defective and cannot be repaired. On these defective processors, Digitalis is going to give the customer a full refund. Suppose that for each luteA there is an 11% chance that it is defective and an 89% chance that it is not defective. (If necessary, consult a list of formulas.) If Digitalis knows it will sell many of these processors, should it expect to make or lose money from selling them? How much? To answer, take into account the profit earned on each processor and the expected value of the amount refunded due to the processor being defective. O Digitalis can expect to make money from selling these processors. In the long run, they should expect to make dollars on each…
- Digitalis is a technology company that makes high-end computer processors. Their newest processor, the luteA, is going to be sold directly to the public. The processor is to be sold for $3900 , making Digitalis a profit of $547 . Unfortunately there was a manufacturing flaw, and some of these luteA processors are defective and cannot be repaired. On these defective processors, Digitalis is going to give the customer a full refund. Suppose that for each luteA there is an 11% chance that it is defective and an 89% chance that it is not defective. If Digitalis knows it will sell many of these processors, should it expect to make or lose money from selling them? How much? To answer, take into account the profit earned on each processor and the expected value of the amount refunded due to the processor being defective. Digitalis can expect to make money from selling these processors. In the long run, they should expect to makedollars on each…Digitalis is a technology company that makes high-end computer processors. Their newest processor, the luteA, is going to be sold directly to the public. The processor is to be sold for $4500 , making Digitalis a profit of $383 . Unfortunately there was a manufacturing flaw, and some of these luteA processors are defective and cannot be repaired. On these defective processors, Digitalis is going to give the customer a full refund. Suppose that for each luteA there is an 11% chance that it is defective and an 89% chance that it is not defective. If Digitalis knows it will sell many of these processors, should it expect to make or lose money from selling them? How much?Digitalis is a technology company that makes high-end computer processors. Their newest processor, the luteA, is going to be sold directly to the public. The processor is to be sold for $4500, making Digitalis a profit of $383. Unfortunately there was a manufacturing flaw, and some of these luteA processors are defective and cannot be repaired. On these defective processors, Digitalis is going to give the customer a full refund. Suppose that for each luteA there is an 11% chance that it is defective and an 89% chance that it is not defective. If Digitalis knows it will sell many of these processors, should it expect to make or lose money from selling them? How much? To answer, take into account the profit earned on each processor and the expected value of the amount refunded due to the processor being defective