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Baron Art Mart, Inc. Student Coaching Notes

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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  1. Baron Art Mart, Inc.Student Coaching Notes

  2. Concepts Covered • Statistics • Macroeconomics • Financial Accounting • Business Law

  3. 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

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

  5. 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.

  6. 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)

  7. 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.

  8. 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.

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

  10. 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

  11. 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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