Baron Art Mart, Inc. Student Coaching Notes

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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

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### Baron Art Mart, Inc.Student Coaching Notes

Concepts Covered
• Statistics
• Macroeconomics
• Financial Accounting
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.
• It is easiest to use the net present value 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.