For Dec L1 Candidates: How to... useful, machine, expected, technology, calculator

water2012

How to use your BA II Plus calculator to calculate Depreciation, Standard Deviation & Correlation Coefficient.

------------------------------------------------------------------------------------------------------

Depreciation Question:

Gabriel Health Enterprises purchased a new MRI machine for $4,250,000 at year-end. Due to changing healthcare technology, the MRI machine is expected to have a useful life of 4 years and an estimated salvage value of $300,000. Calculate the amount of depreciation expense that Gabriel Health Enterprises would record for year 3 assuming the company uses the double-declining balance method of depreciation.

a) 493,750
b) 531,250
c) 790,000
d) 987,500


Answer is B. --- $531,250

---------------

How to calculate it on the BA II Plus Calculator


[2nd] DEPR (key 4)

[2nd] SET until you see DB, screen will automatically show "DB = 200.0000". <<leave as

Scroll Down and you will be prompted for lifetime (life of machine) (LIF =)

Key in 4 [ENTER]

Scroll down again and you will see MO = 1 <<< leave as

Scroll down again and you will be prompted to enter cost (CST=)

Key in $4,250,000 [ENTER]

Scroll down again and you will be prompted to enter salvage value (SAL=)

Key in $300,000 [ENTER]

Scroll down again and you will be prompted for year (YR=)

Key in year you want to calculate depreciation amount for (for this question, it's year 3)

Key in 3 [ENTER]

All the relevant variables have now been entered. Scroll down and you will be shown in succession the values for Year 3 depreciation of $531,250 (represented by DEP),....

scroll down again and you will be shown the remaining book value of $531,250 (represented by RBV), ....

scroll down again and you will be shown remaining depreciable value of $231,250 (represented by RDV).

Scroll back to YR (changing the year will give different DEP amounts...etc)

---------------------------------------------------------------------------------------------------

Correlation Coefficient Question:


The following are the monthly rates of return for Madison Corp. and General Electric during a six-month period.

Month Madison Corp General Electric

1 -0.04 0.07
2 0.06 -0.02
3 -0.07 -0.10
4 0.12 0.15
5 -0.02 -0.06
6 0.05 0.02

Compute the correlation coefficient between the rates of return.

A) 0.676
B) 0.522
C) 0.065


How to calculate it on the BA II Plus Calculator
(originally posted by jkrecords - May 18, 2009 11:56AM):

Step 1:

2nd Key
DATA (7 Key)
Enter in each value; the Xs being one column and the Ys being the other
2nd Key Again
STAT(8 Key)
Scroll down the list of summary statistics until you get to "r" which is the correlation coefficient

Also helpful to note that Sx is the sample standard deviation for x. This simple function saves a ton of time and prevents calculation errors. Just make sure the inputs are accurate and that you're looking at the right output.

---------------------------

Example >> (originally posted by adel - May 28, 2009 06:11AM) :

Enter the data: [2nd] - [DATA] – make sure to [2nd] - [CLR WORK] first!!

X (01): {15} - [ENTER] - [down arrow]
Y (01) {12} - [ENTER] - [down arrow]
X (02) {4} - [ENTER] - [down arrow]
Y (02) {8} - [ENTER] - [down arrow]
X (03) {12} - [ENTER] - [down arrow]
Y (03) {9} - [ENTER] - [down arrow]
X (04) {14} - [ENTER] - [down arrow]
Y (04) {10} - [ENTER] - [down arrow]

Step 2:

Calculate the statistics: [2nd] - [STAT] - [down arrow] :
Mean of X = X = 11.25
Sample standard deviation X = S X = 4.992
Population standard deviation X = [sigma] x = 4.323
Mean of Y = Y = 9.75
Sample standard deviation Y =S Y = 1.708
Population standard deviation Y = [sigma] Y = 1.479
Intercept term = a = 6.55
Slope coefficient = b = .284
Correlation X, Y = r = .831

--------------------------------

Hope it helps. Good luck in December.



Edited 1 time(s). Last edit at Sunday, August 2, 2009 at 12:32AM by Damil4real.

JPSem

Thank you Sir!!

Especially for the Depreciation one, I had no clue about that one!!

PS...

I saw most of your posts when you were preparing for level 1, and followed all the Qs you posted diligently!! Pass on any tips and whatever you may have....

Good luck in L2.

ajpheif16

thanks for the tip on the depreciation thingy...never knew that...congrats too...

lc26mizzou

awesome, that will save a heckuva lot on time on calculating the correlation coefficient

eagles_dare13

Post37 Wrote:
-------------------------------------------------------
> awesome, that will save a heckuva lot on time on
> calculating the correlation coefficient


More than likely you will NOT be given data like that on the exam. Know how to do it by hand!

agulani

Damil I'll be happy to see you in L2 forum soon

mnieman

thanks man, i had no idea how to do that depreciation one. I still want to know how to do it by hand but come test time that will be a big time saver. Thanks!