Chapter 8, Problem 2OTN

Consider a situation where you are trying to sell your car, but there are several other cars of poor quality that look just like your car. The buyer doesn’t know if the car is a good quality car or a lemon. Briefly discuss whether this is an adverse selection or moral hazard problem? What can you, a seller of a good quality car, do to convince the potential buyer that your car is not a lemon?

Determine which computer you would recommend for a small business looking for an inexpensive laptop. Determine which computer you would recommend for a small business looking for an expensive laptop.  Find the most expensive and the least expensive that the vendor offers and create a table comparing the different computers based on the following: CPU, Memory, Hard Drive, Optical drive, Operating system, Utility Software, application Software, Support plan.

A car was rented from a driving rental agency, the agency states that the charges will depend on the car's gas tank when you returned it. If the tank was full, charge will be $3.50 per gallon, which is 50 cent less than local price for gasoline. In short, the choices are returned the car with a full tank or with an empty tank. Specified the best choice and state assumptions.

An automotive company is considering the introduction of a new model of sports car that will be available in four-cylinder and six-cylinder engine types. A sample of customers who were interested in this new model were asked to indicate their preference for an engine type for the new model of automobile. The customers were also asked to indicate their preference for exterior color from four choices: red, black, green, and white. Consider the following data regarding the customer responses: a. Construct a clustered-column chart with exterior color as the horizontal variable. b. What can we infer from the clustered-bar chart in part a?

Saurez Company, your client, manufactures paint. The company’s president, Maria Saurez, has decided to open a retail store to sell Saurez paint as well as wallpaper and other supplies that would be purchased from other suppliers. She has asked you for information about the conventional retail method of pricing inventories at the retail store. Instructions Prepare a report to the president explaining the retail method of pricing inventories. Your report should include the following points. a.    Description and accounting features of the method. b.    The conditions that may distort the results under the method. c.    A comparison of the advantages of using the retail method with those of using cost methods of inventory pricing. d.    The accounting theory underlying the treatment of net markdowns and net markups under the method.

A ‘concept car’ is a car made to showcase new styling and/or new technology. Such vehicles are often shown at motor shows to gauge customer reaction to new and radical designs, but they do not go on to be mass-produced themselves. The website above provides information about an example of a recent concept car, the F015, produced by Mercedes-Benz. This concept car was developed to demonstrate and explore the possibilities of a ‘driverless car’. The F015 represents Mercedes-Benz’s vision of luxury autonomous vehicles by the year 2030. It is estimated that it has cost more than $10 million to design and build the F015. Required Assume that you are the chief financial officer of Mercedes-Benz and that you are required to determine the fair value of the F015 for the company’s financial statements. Discuss the process for determining fair value. You must support your answer by reference to relevant paragraphs of IFRS 13 ‘Fair Value Measurement’.

Uber and Lyft are two popular ride-sharing services. Imagine that you are visiting New York City for a family vacation. You are trying to decide whether to use one of these ride-sharing services to get around the city or rent a car and drive yourself. Considering the perspectives of the passengers (your family), the drivers, and the company (Uber or Lyft), explain the following: A. why ride-sharing services have gained in popularity B. the financial considerations relevant to your decision C. the nonfinancial considerations relevant to your decision

The Paymore Rental Car Agency rents cars in a small town. It wants to determine how many rental cars it should maintain. Based on market projections and historical data, the manager has determined probability distributions for the number of rentals per day and rental duration (in days only) as shown in the following tables:  Number of customers per day Probability 0 .20 1 .20 2 .50 3 .10   Rental duration in days Probability 1 .10 2 .30 3 .40 4 .10 5 .10   Design a simulation experiment for the car agency and simulate using a fleet of four rental cars for 10 days. Compute the probability that the agency will not have a car available upon demand. Should the agency expand its fleet? Explain how a simulation experiment could be designed to determine the optimal fleet size for the Paymore Agency. Use the following random numbers in order (from left to right) for the simulation of number of customers per day: 0.62 0.48 0.96 0.86 0.86 0.29 0.79 0.22 0.08 0.62…

Conduct research on a real-world retailers trade discounts and policies, and discuss the following questions. Which company did you choose? What do they sell? What is a trade discount? What products are subject to a trade discount? Describe the discount terms/program in detail. Give examples. Are there any restrictions? What incentive does this company have to give a trade discount? How does this discount benefit the buyer? If the buyer had to choose between receiving a trade discount or regular cash purchase discount, which would benefit them more? Why?