Journal and Poem Write at least one paragraph comparing Dorothy Wordsworth's journal entry (see Connections on page 512 ) with "I Wandered Lonely as a Cloud." Before you write, identify the similarities and differences between the two accounts. For your comparison, consider the details and the figurative language in the poem and in the journal entry.

Explain how each of the following actions will affect the level of planned investment spending and unplanned inventory investment. Assume the economy is initially in income-expenditure equilibrium.

a. The Federal Reserve raises the interest rate.

b. There is a rise in the expected growth rate of real GDP.

c. A sizable inflow of foreign funds into the country lowers the interest rate.

The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online.

Instructions Use the companies’ financial information to answer the following questions.

• a. Compute the debt to assets and the times interest earned ratios for these two companies. Comment on the quality of these two ratios for both Coca-Cola and PepsiCo.
• b. What is the difference between the fair value and the historical cost (carrying amount) of each company’s debt at year-end 2014? Why might a difference exist in these two amounts?
• c. Both companies have debt issued in foreign countries. Speculate as to why these companies may use foreign debt to finance their operations. What risks are involved in this strategy, and how might they adjust for this risk?

Below are amounts (in millions) for Glasco Company and Sullivan Company.

$$\underline{GLASCO\ COMPANY}\\ \begin{matrix} \text{Year} & \text{Operating Cash Flows} & \text{Foreign Revenues}\\ \hline \text{1} & \text{\$450} & \text{\$700}\\ \text{2} & \text{\$130} & \text{\$750}\\ \text{3} & \text{\$320} & \text{\$800}\\ \end{matrix}$$

$$\underline{SULLIVAN\ COMPANY}\\ \begin{matrix} \text{Operating Cash Flows} & \text{Foreign Revenues}\\ \hline \text{\$280} & \text{\$0}\\ \text{\$300} & \text{\$0}\\ \text{\$320} & \text{\$0}\\ \end{matrix}$$

Both companies have total revenues of $2,500,$3,000, and $3,500 in each year. Make a prediction as to which firm will have the higher ratio of cash to noncash assets at the end of year 3.

Use the given Minitab display, which results from the head injury measurements from car crash dummies listed below. The measurements are in hic (head injury criterion) units, and they are from the same cars used for Table. Use a 0.05 significance level to test the given claim.

Assume that head injury measurements are not affected by an interaction between the type of car (foreign, domestic) and the size of the car (small, medium, large). Is there sufficient evidence to support the claim that the size of the car (small, medium, large) has an effect on head injury measurements?

Julie Lindstrom is the bookkeeper for a small company that imports handcrafted items from foreign countries. Most of its suppliers are individuals who sell handmade crafts. All purchases are stated in the currency of the supplier’s country but paid in U.S. dollars. When Julie pays the suppliers for their goods, she must look up the exchange rate in effect at the time and convert the foreign currency into U.S. dollars. Most of the suppliers are not knowledgeable about the current exchange rates. Julie calculates the amount of U.S. dollars owed to each supplier, but she then rounds down to the lower whole dollar. She reasons that this saves time for both parties by eliminating “cents” from all transactions. Is this the correct procedure? What would you say to Julie about her policy?

The number of foreign students $F$ (in thousands) enrolled in colleges in the United States from 1992 to 2002 can be approximated by the model.

$$F=0.004 t^4+0.46 t^2+431.6, \quad 2 \leq t \leq 12$$

where $t$ represents the year, with $t=2$ corresponding to 1992. Use a graphing utility to graph the model.

A manufacturer with exclusive rights to a sophisticated new industrial machine is planning to sell a limited number of the machines to both foreign and domestic firms. The price the manufacturer can expect to receive for the machines will depend on the number of machines made available. (For example, if only a few of the machines are placed on the market, competitive bidding among prospective purchasers will tend to drive the price up.) It is estimated that if the manufacturer supplies x machines to the domestic market and y machines to the foreign market, the machines will sell for $60-\frac{x}{5}+\frac{y}{20}$ thousand dollars each domestically and for $50-\frac{y}{10}+\frac{x}{20}$ thousand dollars each abroad. If the manufacturer can produce the machines at the cost of $10,000 each, how many should be supplied to each market to generate the largest possible profit?

Many larger U.S. companies have significant investments in foreign operations. For example, McDonald's Corporation, the food service company, obtains 47 percent of its consolidated revenues and 44 percent of its operating income from, and has 45 percent of its invested assets in, non-U.S. locations. Unisys, the information systems company, obtains 51 percent of its consolidated revenues and 65 percent of its operating income from, and has 40 percent of its invested assets in, non-U.S. locations. Foreign operations impose additional types of operating risks to companies, including the risks from changes in the exchange rates for currencies, statutory acts by the foreign governments, and producing and marketing goods in an environment outside the United States.

With the passage of the North American Free Trade Agreement (NAFTA), more companies are confronted with the decision of whether or not to expand their production and marketing investments to Canada and Mexico.

Required

Using NAFTA as a discussion focus, address the question below:

• What conclusion can you draw from the attempts of the U.S. government to decrease barriers to international trade and investment? In your opinion, is this a good effort on the part of the government, or do you feel this effort should be changed?

Many larger U.S. companies have significant investments in foreign operations. For example, McDonald's Corporation, the food service company, obtains 47 percent of its consolidated revenues and 44 percent of its operating income from, and has 45 percent of its invested assets in, non-U.S. locations. Unisys, the information systems company, obtains 51 percent of its consolidated revenues and 65 percent of its operating income from, and has 40 percent of its invested assets in, non-U.S. locations. Foreign operations impose additional types of operating risks to companies, including the risks from changes in the exchange rates for currencies, statutory acts by the foreign governments, and producing and marketing goods in an environment outside the United States.

With the passage of the North American Free Trade Agreement (NAFTA), more companies are confronted with the decision of whether or not to expand their production and marketing investments to Canada and Mexico.

Required

Using NAFTA as a discussion focus, address the question below:

What are some possible solutions to the potential problem of an increase in the U.S. unemployment rate if U.S. companies shift their production facilities to non-U.S. locations? Select one and discuss the pros and cons of that possible solution.

Dairy inspectors visit farms unannounced and take samples of the milk to test for contamination. If the milk is found to contain dirt, antibiotics, or other foreign matter, the milk will be destroyed and the farm reinspected until purity is restored. Would simple random sampling be appropriate for selecting farms for inspection? If so, explain how it would be done. If not, explain why it is not appropriate.

Consider the arguments for restricting trade.

a. Assume you are a lobbyist for timber, an established industry suffering from low-priced foreign competition. Which two or three of the five arguments do you think would be most persuasive to the average member of Congress as to why he or she should support trade restrictions? Explain your reasoning.

The following data are the percents of foreign additives measured by 5 analysts for 3 similar brands of strawberry jam, A, B, and C:

$$\begin{matrix} \text{Analyst 1 } & \text{Analyst 2 } & \text{Analyst 3 } & \text{Analyst 4 } & \text{Analyst 5 }\\ \text{B: 2.7 } & \text{C: 7.5} & \text{B: 2.8} & \text{A: 1.7} & \text{C: 8.1}\\ \text{C: 3.6 } & \text{A: 1.6} & \text{A: 2.7} & \text{B: 1.9} & \text{A: 2.0}\\ \text{A: 3.8} & \text{B: 5.2} & \text{C: 6.4} & \text{C: 2.6} & \text{B: 4.8}\\ \end{matrix}$$

Perform a randomized complete block analysis of variance to test the hypothesis, at the 0.05 level of significance, that the percent of foreign additives is the same for all 3 brands of jam. Which brand of jam appears to have fewer additives?

Determine whether each statement makes sense or does not make sense, and explain your reasoning. Because the percentage of the U.S. population that was foreign-born decreased from 1910 through 1970 and then increased after that, a quadratic function of the form

$$f ( x ) = a x ^ { 2 } + b x + c,$$

rather than a linear function of the form

$$f ( x ) = m x + b,$$

should be used to model the data.