Will Jones, LLP is a small CPA firm that focuses primarily on preparing tax returns for small businesses. The company pays a $500 annual fee plus $10 per tax return for a license to use Mega Tax software.

(a) What is the company’s total annual cost for the Mega Tax software if 300 returns are filed? If 400 returns are filed? If 500 returns are filed?

Total cost for 300 returns:

Total cost for 400 returns:

Total cost for 500 returns:

(b) What is the company’s cost per return for the Mega Tax software if 300 returns are filed? If 400 returns are filed? If 500 returns are filed? (Round answers to 2 decimal places, e.g. 52.75.)

Cost per unit (300):

Cost per unit (400):

Cost per unit (500):

​Beryl's Iced Tea currently rents a bottling machine for $ 53,000 per​ year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two​ options: a. Purchase the machine it is currently renting for $ 165,000. This machine will require $ 23,000 per year in ongoing maintenance expenses. b. Purchase a​ new, more advanced machine for $ 260,000. This machine will require $ 17,000 per year in ongoing maintenance expenses and will lower bottling costs by $ 13,000 per year.​ Also, $ 35,000 will be spent up front to train the new operators of the machine. Suppose the appropriate discount rate is 8 % per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each​ year, as is the cost of the rental machine. Assume also that the machines will be depreciated via the​ straight-line method over seven years and that they have a​ 10-year life with a negligible salvage value. The marginal corporate tax rate is 40 %. Should​ Beryl's Iced Tea continue to​ rent, purchase its current​ machine, or purchase the advanced​ machine? To make this​ decision, calculate the NPV of the FCF associated with each alternative.

Rate of​ return, standard​ deviation, coefficient of variation  Personal Finance Problem   Mike is searching for a stock to include in his current stock portfolio. He is interested in​ Hi-Tech Inc.; he has been impressed with the​ company's computer products and believes​ Hi-Tech is an innovative market player. ​ However, Mike realizes that any time you consider a technology​ stock, risk is a major concern. The rule he follows is to include only securities with a coefficient of variation of returns below

1.12.

Mike has obtained the following price information for the period

2015

through

2018​:

LOADING...

. ​ Hi-Tech stock, being​ growth-oriented, did not pay any dividends during these 4 years.a.  Calculate the rate of return for each​ year,

2015

through

2018​,

for​ Hi-Tech stock.

b.  Assume that each​ year's return is equally probable and calculate the average return over this time period.

c.  Calculate the standard deviation of returns over the past 4 years.  

​(Hint​:

Treat this data as a​ sample.)

d.  Based on b and c determine the coefficient of variation of returns for the security.

e.  Given the calculation in d what should be​ Mike's decision regarding the inclusion of​ Hi-Tech stock in his​ portfolio?

a.  The rate of return for year

2015

is

nothing​%.

​(Round to two decimal​ places.)

STOCK PRICE

YEAR BEGINNING END

2015   $14.94   $20.99
2016   $20.99   $63.49
2017   $63.49   $71.47
2018   $71.47   $91.95

Can an action result in both a crime and a tort? Why?

Suppose that a stock price is $10.00 per share at current time and at the end of three months the stock price may either move up to $11.00 per share or down to $9.00 per share. Consider a European call option which allows you to buy the stocks at $10.50 per share at the end of three months. The risk free rate is 12% per year.

Find the fair price for the option.

Problem 11-06 New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $880,000, and it would cost another $19,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $566,000. The machine would require an increase in net working capital (inventory) of $20,000. The sprayer would not change revenues, but it is expected to save the firm $366,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 35%.

a. What is the Year 0 net cash flow? $

b. What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar.

Year 1 $

Year 2 $

Year 3 $

c. What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar. $

d. If the project's cost of capital is 15 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar. $ Should the machine be purchased?

You own a 10​-year, ​$1 comma 000 par value bond paying 7 percent interest annually. The market price of the bond is ​$900​, and your required rate of return is 10 percent.

a. Compute the​ bond's expected rate of return.

b. Determine the value of the bond to​ you, given your required rate of return.

c. Should you sell the bond or continue to own​ it?

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.0 and 3.0 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: –$8,900 $1,070 $2,270 $1,470 $1,470 $1,270 $1,070 Use the IRR decision rule to evaluate this project. (