1)Last year, a barbershop generated $100,000 in profit. Assume that the shop's profits grow at 5% per year and that cash flows are discounted at 10% per year. If profits are received at the end of each year, what is the present value of all of the shop's future profits? 2) Suppose that next year the U.S. will be in one of the following economic conditions: Boom, Moderate Growth, Recession, or Depression. The probability that each economic condition will occur and that a jewelry store will earn profits within that broader economic condition are listed below: Economic Condition Probability Jewelry Store Profits Boom 0.40 $400,000 Moderate Growth 0.30 $300,000 Recession 0.20 $100,000 Depression 0.10 - $500,000 The expected profit of the jewelry store during the next year is A) $250,000 B) $220,000 C) $190,000 D) $170,000 E) None of the above The standard deviation of the jewelry store's profits next year (rounded to the nearest dollar) is A)$102,442 B)$125,483 C)$149,873 D)$125,264 E)$263,818 3.) Suppose that the number of grapes sold by the Smalltown Co-op grocery store in a day is equally likely to be anywhere between 0 and 100 pounds (fractional values are possible). If you use a probability density function to describe the number of pounds of grapes sold daily by the store, the height of the function for any number of pounds between 0 and 100 is: A) 0.01 B) 0.02 C) 0.005 D) 0.10 E) None of the above 4) A drug company believes that the annual demand for a drug will follow a normal random variable with a mean of 900 pounds and a standard deviation of 60 pounds. If the company produces 1000 pounds of the drug, what is the chance (rounded to the nearest hundredth) that it will run out of the drug? Assume that the only way to meet the demand for the drug is to use this year's production number. A) 0.062 B)0.054 C)0.048 D)0.033 E)0.073 5) Smalltown Elevator produces elevator rails. To meet specifications, an elevator rail must be between 0.995 inches and 1.005 inches in diameter. Suppose that the diameter of an elevator rail follows a normal random variable with mean of i inch and standard deviation of 0.003 inches. Rounded to the nearest one tenth of one percent, what fraction of all elevator rails will meet specifications? A) 90.4% B) 95.2% C)93.4% D)97.3% E) None of the Above 5) The annual revenue-growth rates for a new tech startup during its first 4 years of operation were as follows: Year 1 Year 2 Year 3 Year 4 50% 50% -50% -50% Rounded to the nearest tenth of one percent, the startup's 4-year Compound Annual Growth Rate was: A) -13.4% B)0.0% C)-25.0% D)-10.5% E) None of the above 6) During the last 4 months, the return on a stock and the return on the S&P market index was as follows: Stock S&P 10.00% 12.00% -20.00% -12.00% 6.00% 2.00% 4.00% -2.00% Rounded to the nearest hundredth, the correlation between the monthly return on the stock and the S&P market index is? A) 0.60 B) 0.70 C) 0.80 D) 0.90 E) None of these