Baron Art Mart, Inc. Student Coaching Notes

Concepts Covered Statistics Macroeconomics Financial Accounting Business Law

Question 1: Determining Mrs. Kim’s Real Income Divide Price Index by 100 to Obtain Adjusted Price Index Divide Gross Income by Adjusted Price Index to Obtain Real Income Example, For 1991: Adjusted Price Index = 136.2/100 = 1.362 Real Income = $50,599/1.362 = $37,150.51

Question 1: Descriptive Statistics Find the Value of and Know the Meaning of: Mean Median Sample Variance Standard Deviation

Question 2: What is a Price Index? Shows Relationship between Price Level in Given Year and Price Level in Base Year. The Base Year in Case is 1982-1984. Price Index for Base Year is Always 100. Index of 136.2 for 1991 Means General Level of Prices Has Risen 36.2% since 1982-1984 for Bundle of Goods Purchased in 1982-1984.

Question 2: Regression Results Show the Value of and Know the Meaning of: Coefficient of Determination (R Square) p-Value for Year Regression Coefficient for Year Regression Equation: Price Index = Intercept + (Coefficient) x (Year)

Question 3: Present Value Present value is a technique that considers the time value of money. PV allows cash amounts expected to be paid or received at different times in the future to be brought to present day values. Then the amounts can be combined. If amounts differ over time, calculate the present value of each and add. If amounts are equal each period, calculate the present value of an annuity. In Finance 303, you’ll learn about net present value and it’s corresponding function on your spreadsheet.

Question 3: Projection of income Do your calculations for question 3 in the following order: 1. Use mean real income from question 1 to determine projected real income for 2006 – 2015. 2. Use regression equation from question 2 to determine projected adjusted price indices. 3. Use projected real income, adjusted price indices, and tax to estimate Mrs. Kim’s net actual income for 2006 – 2015. 4. Determine the present value of the future net cash flow.

Question 4: False Imprisonment Reasonable Cause: Articulable knowledge of particular facts sufficiently reasonable to suspect the detained person of shoplifting Reasonable Manner Reasonable Time

Question 4: Reasonable Manner No Use of threats Coercion of customer Intimidation of customer Use of abusive language towards the customer Use of force against the customer Failure to promptly inform the customer of the reasons for the detention Detention takes place in public next others

Question 5: Future Income Compensation Goal of compensatory damages: Make the injured party whole again Lost future incomes are recoverable: Nature and occurrence of lost future income must be shown by evidence of reasonable reliability, not mere speculation. Evidence of reasonable reliability may include reliance on specific statistical models based on past earning records. Proper measurement of damages is the present value of net future income after taxes.