Chapter 5, Problem 63SE

Suppose a paint manufacturer has a daily production, x, that is normally distributed with a mean of 100,000 gallons and a standard deviation of 10,000 gallons. Management wants to create an incentive bonus for the production crew when the daily production exceeds the 90th percentile of the distribution, in hopes that the crew will, in turn, become more productive. At what level of production should management pay the incentive bonus?

investors commonly use the standard deviation of the monthly percentage return for a mutualfund as a measure of the risk for the fund; in such cases, a fund that has a larger standard deviation is considered more risky than a fund with a lower standard deviation. the standard deviation for the american century equity growth fund and the standard deviation for the fidelitygrowth Discovery fund were recently reported to be 15.0% and 18.9%, respectively. assumethat each of these standard deviations is based on a sample of 60 months of returns. Do thesample results support the conclusion that the fidelity fund has a larger population variancethan the american century fund? which fund is more risky?

Consider the following information:   Net working capital/total assets = 0.9 Retained earnings/total earnings = 0.15 EBIT/total assets = 1.1 MV of equity/BV of total liabilities = 2 Sales/total assets = 2.5     Required: Compute the Z-score. Based on the calculation, explain whether there is a likelihood of financial distress?