1.

United Snack Company sells 50-pound bags of peanuts to university dormitories for $38 a bag. The fixed costs of this operation are $390,000, while the variable costs of peanuts are $0.24 per pound.

a. What is the break-even point in bags?
  

b. Calculate the profit or loss (EBIT) on 6,000 bags and on 19,000 bags.
  

c. What is the degree of operating leverage at 18,000 bags and at 23,000 bags? (Round your answers to 2 decimal places.)
  

d. If United Snack Company has an annual interest expense of $24,000, calculate the degree of financial leverage at both 18,000 and 23,000 bags. (Round your answers to 2 decimal places.)

e. What is the degree of combined leverage at both a sales level of 18,000 bags and 23,000 bags? (Round your answers to 2 decimal places.)
  

) Suppose you work for Meijer, a large grocer headquartered in Michigan. 20 years ago, Meijer bought a parcel of land on the outskirts of Lafayette, Indiana. It is currently being rented to a farmer. They intended to build a new store on the lot after a proposed new highway was complete. However, when the new highway was built it went in a different direction and now they must decide whether to build the new store. You ask around and find the following information from the following departments (all numbers are in thousands of dollars):
The sales department tells you: Annual Revenue: $2400
The operations department tells you: Inventory Required on Shelves: $140 Annual Cost of Goods Sold: $1500 Annual Cost of Running Store: $500 Annual Allocated Overhead from HQ: $80
The forecasting department tells you: Loan to fund construction: $300 Interest Rate: 4%, loan is interest only (no principle payments) Weighted Average Cost of Capital: 13% Depreciation Schedule: Straight-line depreciation over 40 years Tax Rate: 30%
The construction department tells you: Cost of environmental review (already completed): $65 Purchase Price of Land 20 years ago: $1000 (hint: land is not depreciated) Current Market Value of Land: $1100 (hint: land is not depreciated) Current Pre-Tax Income from renting land out: $75/year Cost of Construction (Labor & Materials): $1800

1a) Your boss tells you to find the unleveraged incremental cash flow of the project for the next four years. Write your answer in the form of a pro forma statement on the next page.
1b) Should you approve this project? Why or why not?

1. Find the present values of the following cash flow streams at a 10% discount rate. Do not round intermediate calculations. Round your answers to the nearest cent.

   0

   1

   2

   3

   4

   5

   Stream A	$0	$100	$350	$350	$350	$300
   Stream B	$0	$300	$350	$350	$350	$100

   Stream A: $  

   Stream B: $  

2. What are the PVs of the streams at a 0% discount rate? Round your answers to the nearest dollar.

   Stream A: $  

   Stream B: $  

Your client is 23 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $12,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 7% in the future.

1. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

2. How much will she have at 70? Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

3. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round intermediate calculations. Round your answers to the nearest cent.

   Annual withdrawals if she retires at 65: $

   Annual withdrawals if she retires at 70: $

Economics question. Please answer Asap! Will provide thumbs up!

The Shell Corporation has a 34% tax rate and owns a piece of petroleum-drilling equipment that costs $130,300 and will be depreciated at a CCA rate of 30%. Shell will lease the equipment to others and each year receive $41,300 in rent. At the end of five years, the firm will sell the equipment for $29,700. All values are presented in today's dollars.

Calculate the overall present worth of these cash flows with tax effects if market interest rate is 10% and annual inflation rate is 2%.

(Note: Don't use the $ sign in your answer and round it up to 2 decimal places)

Economics Question. Please answer ASAP! Will provide thumbs up!

Car's annual operating and maintenance (O&M) costs are given by the following schedule:

If MARR = 10%, and it is known that the value of O&M costs in the first year is the base annuity, define the value of parameter G in the equivalent arithmetic gradient series.

(Note: Don't use the $ sign in your answer and keep 2 decimal places)

13. Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $3,200,000.

Mortgage A has a 4.38% interest rate and requires Ann to pay 1.5 points upfront.

Mortgage B has a 6% interest rate and requires Ann to pay zero fees upfront.

Assuming Ann makes payments for 2 years before she sells the house and pays the bank the balance, what is Ann’s annualized IRR from mortgage A?

14. Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $3,200,000.

Mortgage A has a 4.38% interest rate and requires Ann to pay 1.5 points upfront.

Mortgage B has a 6% interest rate and requires Ann to pay zero fees upfront.

Assuming Ann makes payments for 2 years before she sells the house and pays the bank the balance, what is Ann’s annualized IRR from mortgage B?

15. Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $3,200,000.

Mortgage A has a 4.38% interest rate and requires Ann to pay 1.5 points upfront.

Mortgage B has a 6% interest rate and requires Ann to pay zero fees upfront.

Assuming Ann makes payments for 2 years before she sells the house and pays the bank the balance, which mortgage has the lowest cost of borrowing (ie lowest annualized IRR)? Type 1 for A, type 2 for B.

You own a 10-acre vineyard and earn income by selling your grapes to wineries. Your vineyard is currently planted to Merlot grapes, but you are thinking of replanting with Syrah grapes because they are commanding a higher market price per ton. Merlot fetches $1800 per ton but Syrah sells for $2500 per ton, those prices are expected to remain stable, and you produce 5 tons per year per acre (so 50 tons per year total). Either way, you plan to sell the vineyard 5 years from now (at the end of the year) for 5-times (5x) the annual income (in year 5) from the sale of grapes (that is, you'll get the income from grape sales and then sell the vineyard for 5 times that amount at the end of year 5). However, if you switch to Syrah, it will cost you $91,000 immediately and the vines won’t produce any grapes until year 4 (that is, years 1-3 will have no sales if you plant Syrah, but years 4 and 5 will). The applicable discount rate is 12% per year. What is the NPV of switching? Round to the nearest cent. ​[Hint: Create a timeline showing the incremental annual cash flows from switching and find their NPV. Some cash flows will be negative (first 3 years) and some (years 4 and 5) will be positive.]

Explain how Lean Systems provide benefit or detriment to Operations Management globally.

David Murphy observes that a stock, Twin Inc., which is not expected to pay dividends in the next year,
is currently trading at $38.56/share. A put option with a strike price of 40 and 6-month expiration date
costs $5.15 and a call option with the same strike and expiration date is priced at $4.32 for each share
Twin's stock. The current risk-free rate is 0.2% per month. After checking the prices with the put-call
parity, David decides to take an arbitrage opportunity by

A. Taking short positions in the call option and the underlying stock and holding long
positions in the risk-free zero-coupon bond with a par of $40 and in the put option.
B. Taking short positions in the put option and the underlying stock and holding long
positions in the risk-free zero-coupon bond with a par of $40 and in the call option.
C. Taking long positions in the call option and the underlying stock and holding short
positions in the risk-free zero-coupon bond with a par of $40 and in the put option.
D. Taking long positions in the put option and the underlying stock and holding short
positions in the risk-free zero-coupon bond with a par of $40 and in the call option.

Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 7.5%, a YTM of 6%, and 13 years to maturity. Bond Y is a discounted bond making semiannual payments. This bond has a coupon rate of 6%, a YTM of 7.5%, and also 13 years to maturity. What are the prices of these bonds today assuming both bonds have a $1,000 par value? If interest rates remain unchanged, what do you expect the prices of these bonds to be in 1 year? In 3 years? In 8 years? In 12 years? In 13 years? What's going on here? Illustrate your answers by graphing bond prices versus time to maturity.

You consider a new piece of equipment that will cost $400,000, and will require $20,000 for shipping and installation. NWC will increase immediately by $25,000. The project will last 3 years and the equipment has a 5 year class life. Revenues will increase by $220,000/year, and defect costs will decrease by $220,000/year. Operating costs will increase by $30,000/year. The market value of the equipment after year 3 is $200,000. The cost of capital is 12%; marginal tax rate is 30%. What is the NPV?