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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

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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

  • 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


  • 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.

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