Submitted By yuithegreat

Words 1352

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Words 1352

Pages 6

Exploratory Data Analysis

Keller Graduate School of Management

GM533: Managerial Statistics (Downers Grove, IL)

Michael Knapp

Table of Contents

I. Introduction...pg 3 II. Individual Variables a. Location…pg 3 b. Income…pg 3 and 4 c. Size…pg 4 and 5 III. Relationships d. Size and Location…pg 5 and 6 e. Income and Location…pg 7 and 8 f. Size and Income…pg 8 and 9

This analysis is to compare the information presented by AJ DAVIS which is a department store chain, which has many credit customers and wants to find out more information about these customers. A sample of 50 credit customers is selected with data collected on five variables, I have selected 3 to compare side by side to one another and analyze the data provided. The 3 variables are LOCATION (Rural, Urban, Suburban), INCOME (in $1,000ʼs – be careful with this) and SIZE (Household Size, meaning number of people living in the household). After I cover each variable I will compare the relationship between size and location, income and location, and size and income.

The first variable is location. The location refers to three categories: rural, suburban and urban. Based off of the information provided I found that 13/50 or 26% of the sample group live in a rural area, 15/50 or 30% of the sample group live in a suburban area and 22/50 or 44% live in a urban area.

Tally for Discrete Variables: Location

Location Count Percent Rural 13 26.00

Suburban 15 30.00 Urban 22 44.00 N= 50

The second variable is income. Income which is measured in thousands of dollars refers to the amount of money that is earned by the person in the sample. I chose income because it would be very informative to compare to other variables that I selected. I found that the average or mean income…...

... Cost of raw materials per can $0.25 Other variable production costs per can $0.05 Costs to purchase cans - per can $0.45 Required rate of return 12% Tax rate 35% Make Purchase Cost to produce Annual cost of direct material: Need of 1,100,000 cans per year $330,000 Annual cost of direct labor for new employees: Wages $72,000 Health benefits $7,500 Other benefits $12,960 Total wages and benefits $92,460 Total annual production costs $422,460 Annual cost to purchase cans $495,000 Part 1 Cash flows over the life of the project Before Tax Tax Effect After Tax Item Amount Amount Annual cash savings (make vs buy) $72,540 0.65 $47,151 * Tax effect on Annual Cash Savings is 1 - tax rate= 1-0.35=0.65 Tax savings due to depreciation $32,000 0.35 $11,200 * Tax effect on Depreciation is the tax rate=0.35 Total annual cash flow 58,351 Part 2 Payback Period Initial investment/Annual cash saving $200,000/$58,351= 3.4 years Part 3 Annual rate of return Accounting income as result of decreased costs Annual cash savings (before tax effect) $72,540 Less Depreciation $(32,000) Before tax......

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...Clark Paints – Course Project B, Question 2 The production department determined that 1,100,000 cans would need to be manufactured each year for the next 5 years if Clark Paints were to begin making their paints cans instead of purchasing them. Considering all relevant costs it was determine that it would cost the company $422,460 annually to make the paints can versus $495,000 they are currently paying to buy the paint can. Clark Paints should accept the proposal to manufacture paint cans because it would result in an annual, before tax, cash savings of $72,540, as well as $32,000 in tax savings as a result of equipment depreciation. The total annual cash flow generated, after tax, is $ 58,351. The initial investment of $200,000, for equipment, would paid back in 3.43 years due to a 13.18% annual rate of return and overall decreased costs. The Net Present Value was calculated at $33,035. The Positive NPV indicates positive future cash flows and present equity. Annual cash flow generated within the 5 years would result in an Internal Rate of Return of 18%. The high Internal Rate of Return indicates an increased rate of future growth as a result of the reduced cost and increased cash flow. Again, this proposal should be accepted because of the significant reduction in cost, the attractive positive Net Present Value and the high Internal Rate of Return. Calculations Summary: Annual cash flows over the expected life of the equipment = $ 58,351 Payback period = 3.4 Years ...

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...Project Part B: Hypothesis Testing and Confidence Intervals | | Your manager has speculated the following: a. the average (mean) annual income was less than $50,000, b. the true population proportion of customers who live in an urban area exceeds 40%, c. the average (mean) number of years lived in the current home is less than 13 years, d. the average (mean) credit balance for suburban customers is more than $4300. 1. Using the sample data, perform the hypothesis test for each of the above situations in order to see if there is evidence to support your manager’s belief in each case a.-d. In each case use the Seven Elements of a Test of Hypothesis, in Section 6.2 of your text book with α = .05, and explain your conclusion in simple terms. Also be sure to compute the p-value and interpret. 2. Follow this up with computing 95% confidence intervals for each of the variables described in a.-d., and again interpreting these intervals. 3. Write a report to your manager about the results, distilling down the results in a way that would be understandable to someone who does not know statistics. Clear explanations and interpretations are critical. Project Part B: Hypothesis Testing and Confidence Intervals a. The average (mean) annual income was less than $50,000 Null Hypothesis: The average annual income was greater than or equal to $50,000 H₀: µ > 50000 Alternate Hypothesis: The average annual income was less than $50,000. Ha: µ >......

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...elaborating and supporting your answer. I would recommend the acceptance of Clark Paints’ proposal to purchase the new machine to make the paint cans instead of purchasing them. My decision to accept the proposal is supported by the net present value method. The net present value of this project is $33,035. Our textbook, Managerial Accounting, provides an explanation of this concept: “Under the net present value method, the present value of a project's cash inflows is compared to the present value of the project's cash outflows. The difference between the present values of these cash flows is called the net present value” (Garrison, 2012, p.583). Furthermore, our textbook, states: “Whenever the net present value is zero or greater an investment project is acceptable. Whenever the net present value is negative (the present value of the cash outflows exceeds the present value of the cash inflows), an investment project is not acceptable” (Garrison, 2012, p. 583). Below is a chart taken from our textbook, Managerial Accounting, found on page 583: EXHIBIT 13–1 Net Present Value Analysis of a Proposed Project I included this chart because it clearly explains the rules of when to accept or reject a project. And it further supports my decision to accept the proposal of the new machine because the net present value is a positive value: $33,035. According to this analysis Clark Paints should purchase the new machine. References Garrison, R. (2012). Managerial Accounting......

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...COURSE PROJECT A INSTRUCTIONS You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of earrings, but all are sold for the same price—$10 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $4 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the......

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...6Capital Budgeting Decision These instructions can also be downloaded from DocSharing!! Due by Tuesday of week 8, midnight, Mountain Time Here is Part B: Clark Paints: The production department has been investigating possible ways to trim total production costs. One possibility currently being examined is to make the paint cans instead of purchasing them. The equipment needed would cost $200,000 with a disposal value of $40,000 and would be able to produce 5,500,000 cans over the life of the machinery. The production department estimates that approximately 1,100,000 cans would be needed for each of the next five years. The company would hire three new employees. These three individuals would be full-time employees working 2,000 hours per year and earning $12.00 per hour. They would also receive the same benefits as other production employees, 18% of wages in addition to $2,500 of health benefits. It is estimated that the raw materials will cost 25¢ per can and that other variable costs would be 5¢ per can. Since there is currently unused space in the factory, no additional fixed costs would be incurred if this proposal is accepted. It is expected that cans would cost 45¢ per can if purchased from the current supplier. The company's minimum rate of return (hurdle rate) has been determined to be 12% for all new projects, and the current tax rate of 35% is anticipated to remain unchanged. The pricing for a gallon of paint as well as number of units sold will not be......

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...Second Project The purpose of this project is for you to have some practice working with financial concepts in the real world. This will involve integrating some material from throughout the course. The project will also involve the development of your own approach to doing the work. The project does not provide a step-by-step procedure for you to follow. Your task is to determine the WACC for a given firm using what you know about WACC as well as data you can find through research. Your deliverable is to be a brief report in which you state your determination of WACC, describe and justify how you determined the number, and provide relevant information as to the sources of your data. You have selected a company for which to research and find the WACC. Your research is to be independent from any information you may find at thatswacc.com or similar sites although you might want to use such sites to provide a reasonableness check on the WACC you calculate. Assumptions As you recall, the formula for WACC is rWACC = (E/E+D) rE + D/(E+D) rD (1-TC) The formula for the required return on a given equity investment is ri= rf + βi * (RMkt-rf) RMkt-rf is the Market Risk Premium. For this project, you may assume the Market Risk Premium is 4% unless you can develop a better number. rf is the risk free rate. The YTM on 10 year US Treasury securities is a good approximation. You may assume a corporate tax rate of 40%. One good source for financial data for companies as well......

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...ACCT505 Part B Capital Budgeting Problem Clark Paints Data: Cost of new equipment $200,000 Expected life of equipment in years 5 Disposal value in 5 years $40,000 Life production—number of cans 5,500,000 Annual production or purchase needs 1,100,000 Initial training costs 0 Number of workers needed 3 Annual hours to be worked per employee 2,000 Earnings per hour for employees $12.00 Annual health benefits per employee $2,500 Other annual benefits per employee—% of wages 18% Cost of raw materials per can $0.25 Other variable production costs per can $0.05 Costs to purchase cans—per can $0.45 Required rate of return 12% Tax rate 35% Make Purchase Cost to produce Annual cost of direct material: Need of 1.1 million cans per year $275,000 Annual cost of direct labor for new employees: Wages 72,000 Health benefits 7,500 Other benefits 12,960 Total wages and benefits 92,460 Other variable production costs 55,000 Total annual production costs $422,460 Annual cost to purchase cans $495,000 Part 1 Cash flows over the life of the project Before Tax Tax After Tax ...

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... These three individuals would be full-time employees working 2,300 hours per year and earning $8.50 per hour. They would also receive the same benefits as other production employees, 18% of wages in addition to $1,500 of health benefits. It is estimated that the raw materials will cost 20¢ per can and that other variable costs would be 10¢ per can. Since there is currently unused space in the factory, no additional fixed costs would be incurred if this proposal is accepted. It is expected that cans would cost 50¢ per can if purchased from the current supplier. The company's minimum rate of return (hurdle rate) has been determined to be 10% for all new projects, and the current tax rate of 35% is anticipated to remain unchanged. The pricing for a gallon of paint as well as number of units sold will not be affected by this decision. The unit-of-production depreciation method would be used if the new equipment is purchased. * Based on the above information and using Excel, calculate the following items for this proposed equipment purchase: 1. Annual cash flows over the expected life of the equipment 2. Payback period 3. Annual rate of return 4. Net present value 5. Internal rate of return * Would you recommend......

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...Accounting 505 Course Project B Jodi Metzger Capital Budgeting Decision Clark Paints has been investigating possible ways to trim production costs. One option is to make their paint cans instead of purchasing them from a supplier. The company estimates that it will need to manufacture 1,100,000 paint cans over the next 5 years. They have determined that their minimum rate of return for all new projects is 12%. Upon calculating the total cost of materials, labor and other variable production costs against the cost of purchasing the paint cans from a supplier, there is an annual cash savings of $72,540 in favor of making the paint cans. There is an addition cash savings due to depreciation of $32,000 and after taxes the total positive impact to cash flows is $58,351. This amount when figured into the payback period of the new equipment cost of $200,000 will make the payback period 3.4275 years which is a positive indicator for the project which has a 5 year length. The annual rate of return has been calculated at 13.18% which is above the required 12% for new projects. The net present value of the project is a positive $33,035.36 and the internal rate of return is 17.99% which is also above the required 12% for new projects. Every indicator shows a positive impact on the company. The decision should be made to move forward with the project to manufacture their own paint cans and discontinue the purchase of paint cans from a supplier....

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...Budgeting Decisions True/False 1. Both the net present value method and the internal rate of return method can be used as a screening tool in capital budgeting decisions. Level: Easy LO: 1 Ans: T 2. When considering a number of investment projects, the project that has the best payback period will also always have the highest net present value. Level: Medium LO: 1,3 Ans: F 3. When discounted cash flow methods of capital budgeting are used, the working capital required for a project is ordinarily counted as a cash outflow at the beginning of the project and as a cash inflow at the end of the project. Level: Medium LO: 1 Ans: T 4. Discounted cash flow techniques automatically provide for recovery of initial investment. Level: Medium LO: 1 Ans: T 5. When computing the project profitability index of an investment project, the investment required will include any investment made in working capital at the beginning of the project. Level: Medium LO: 2 Ans: T 6. If investment funds are limited, the net present value of one project should not be compared directly to the net present value of another project unless the initial investments in these projects are equal. Level: Medium LO: 2 Ans: T 7. In calculating payback where new equipment is replacing old equipment, any salvage value to be received on disposal of the old equipment should be deducted from the cost of the new equipment. Level:......

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...Math-144 December 8, 2015 Professor Mission Project B On This mission trip we are heading to Viedma Argentina. There will be 10 people going including myself and we will stay for a total of 4 weeks. The purpose of our mission trip is to bring supplies to the poor people of this country. The reason I chose Argentina is because of its economic issues in regards to there being so many people living in poverty (Reed, D. 2014). The supplies we will be bringing will be all donated items from churches and from different companies. This includes clothes, food, toys, pampers, toiletries, school supplies, household items (pots, dishes etc), and linens. These supplies will be sent over ahead of time eliminating us having to bring it ourselves. I will break down the total amount of expenses needed to cover this trip to make sure we are on budget and covered in every aspect. A flight to Viedma Argentina costs $3,185.60 per person round trip from May 16th until June 13th, I found this price on the Priceline website. For ten people this will cost $31,856. The flight will take 25 hours and 19 minutes from Savannah, Ga to Viedma because there will be 3 different layover stops. For our lodging instead of booking a hotel I chose to find a vacation rental because hotels don’t have kitchens in the rooms and room service will eventually be more costly. The home, Casa balneario el condor Viedma costs $130 per night instead of per person, per night at the hotels. For the duration of 27 nights......

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...Capital Budgeting Decision These instructions can also be downloaded from DocSharing!! Due by Tuesday of week 8, midnight, Mountain Time Here is Part B: Clark Paints: The production department has been investigating possible ways to trim total production costs. One possibility currently being examined is to make the paint cans instead of purchasing them. The equipment needed would cost $200,000 with a disposal value of $40,000 and would be able to produce 5,500,000 cans over the life of the machinery. The production department estimates that approximately 1,100,000 cans would be needed for each of the next five years. The company would hire three new employees. These three individuals would be full-time employees working 2,000 hours per year and earning $12.00 per hour. They would also receive the same benefits as other production employees, 18% of wages in addition to $2,500 of health benefits. It is estimated that the raw materials will cost 25¢ per can and that other variable costs would be 5¢ per can. Since there is currently unused space in the factory, no additional fixed costs would be incurred if this proposal is accepted. It is expected that cans would cost 45¢ per can if purchased from the current supplier. The company's minimum rate of return (hurdle rate) has been determined to be 12% for all new projects, and the current tax rate of 35% is anticipated to remain unchanged. The pricing for a gallon of paint as well as number of units sold will not be......

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...AC505-Managerial Accounting Project BClark Paint Capital Budgeting ProblemData: Cost of new equipment200,000$Expected life of equipment in years5Disposal value in 5 years40,000$Life production - number of cans5,500,000 Annual production or purchase needs1,100,000 Initial training costsNumber of workers needed3Annual hours to be worked per employee2000Earnings per hour for employees12.00$Annual health benefits per employee2,500$Other annual benefits per employee-% of wages18%Cost of raw materials per can0.25$Other variable production costs per can0.05$Costs to purchase cans - per can0.45$Required rate of returnTax rate35%12% MakePurchaseCost to Produce Annual cost of direct material:Need of 1,1,000,000 cans per year275,000$Annual cost of direct labor for new employees:Wages72,000$Health benefits7,500$Other benefits12,960$Total wages and benefits92,460$Other variable cost:55,000$Total annual production costs422,460$Annual cost to purchase cans495,000$ Part 1 Cash Flows over the life of the projectBefore TaxTax EffectAfter Tax ItemAmountAmountAnnual cash savings (make vs buy)72,540$ 65%47,151$ * Tax effect on Annual Cash Savings is 1 - tax ratTax savings due to depreciation32,000$ 35%11,200$ * Tax effect on Depreciation is the tax rate Total annual cash flow 104,540$ 58,351.00$Part 2 Payback Period ($200,000)/ $87,690 = 3.4yearsPart 3 Annual Rate of Return Accounting income as result of decreased costsAnnual cash savings (before tax effect)104,540$Less Depreciation(32...

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...Course Project B Clark Paints: The Production Department has been investigating possible ways to trim total production costs. One possibility currently being examined is to make the paint cans instead of purchasing them. The equipment needed would cost $200,000, with a disposal value of $40,000, and it would be able to produce 5,500,000 cans over the life of the machinery. The Production Department estimates that approximately 1,100,000 cans would be needed for each of the next five years. The company would hire three new employees. These three individuals would be full-time employees, working 2,000 hours per year and earning $12.00 per hour. They would also receive the same benefits as other production employees, 18% of wages, in addition to $2,500 of health benefits. It is estimated that the raw materials will cost 25¢ per can and that other variable costs would be 5¢ per can. Since there is currently unused space in the factory, no additional fixed costs would be incurred if this proposal is accepted. It is expected that cans would cost 45¢ each if purchased from the current supplier. The company's minimum rate of return (hurdle rate) has been determined to be 12% for all new projects, and the current tax rate of 35% is anticipated to remain unchanged. The pricing for a gallon of paint, as well as the number of units sold, will not be affected by this decision. The unit-of-production depreciation method would be used if the new equipment is purchased. Required: ......

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