1. A project costs $10 million today. Next year (year 1) the cash inflow will be either $10 million or $2 million with equal probability. If the year-1 cash inflow was $10 million, then the year-2 cash flow will also be $10 million. If the year-1 cash inflow was $2 million, then the year-2 cash flow will also be $2 million. If the firm can abandon the project ONLY after year 1 for a known amount of $3 million at that time, what is the abandonment value if the appropriate discount rate is 5%?

2. Project 1, that the firm is already doing, currently has an expected NPV of $120,000 and a standard deviation of $200,000. Project 2, that the firm is going to undertake, has an expected NPV of $100,000 and a standard deviation of $150,000. The correlation between these two projects is 0.80. What is the coefficient of variation for the portfolio of projects?

3. You have just agreed to a new loan and have purchased a $3,000 computer today. The loan has a 19.6% annual interest rate, compounded monthly. The minimum monthly payment is $58 and you do not expect to ever pay more than the minimum payment. Assuming no additional charges or costs will occur with this loan, approximately what will you owe on the loan at the end of 3 years (36 months) when you expect to need another new computer?

Canyon Tours showed the following components of working capital last year:

a. What was the change in net working capital during the year? (A negative amount should be indicated by a minus sign.)

b. If sales were $37,800 and costs were $25,800, what was cash flow for the year? Ignore taxes.

A 45 year old woman had a double mastectomy performed a year ago for cancer. Breast augmentation is being considered.

1. How should the nurse answer the patient’s question about the time frame of breast implants?
2. What possible complications of breast augmentation surgery should be considered?

Consider this statement: “Women should rethink their child-rearing options in light of the recent risk factors for breast cancer involving delayed childbearing or the decision not to have children.”

1. What do you think about this statement?
2. How would you respond?

Imagine that while showering one day, you find a lump in your breast.

1. What do you think would be your initial reaction?
2. What would you do first?
3. Why did you choose to do this action first instead of another action?

Whatcom Co. issued a 19-year bond a year ago at a coupon rate of 6 percent. The bond makes semiannual coupon payments. If the YTM on these bonds is 8 percent now, what is the current bond price? (Note: when bond face value is not given, assume the common choice of $1,000 for face value.)

1. Ron Remy enters into a three-year lease to rent his property. In the first year, in addition to $9,600 for the year's rent, he received $1,600 in advance as rent for the last two months of the lease and $800 as a security deposit which he plans to return to the tenant at the end of the lease. What amount must be reported as income by Ron?

2. B received a salary of $27,000 before he retired in October of this year. After he retired, he received Social Security benefits of $3,000 during the year. What amount, if any, of his Social Security benefit is taxable.

3. Art Aubrey owns and operates an apartment building. During 2018, he received the following:

What is Art's gross rental income?

Powell’s fiscal year-end is December 31, and it prepares financial statements just once a year, at year-end. The company has already recorded mostof its transaction and adjusting entries for the year ended December 31, 2018. The resulting trial balance follows:

Omitted Transactions

T1.       Powell purchased equipment on December 31, 2018. The company gave a down payment of $9,500 and signed a 4-year promissory note for the balance due. The note requires Powell to make annual payments of $10,485 with the first payment due on December 31, 2019. The prevailing market rate of interest for comparable notes is 9%.

T2.       On December 31, 2018, Powell engaged in an exchange of buildings with ABC Co. The following information pertains to the building each company owned immediately before the exchange:

In addition, Powell received $13,320 cash from ABC. Assume the exchange of buildings hascommercial substance.

T3.       On the same date (December 31, 2018), Powell engaged in another exchange of buildings, this one with XYZ Co. The following information pertains to the building each company owned immediately before the exchange:

In addition, Powell received $15,525 cash from XYZ. Assume the exchange of buildings lackscommercial substance.

– Instructions –

Prepare the journal entries to record the omitted transactions (T1 through T3).

Given the following information, which of the following is most correct?

Historical Year Projected Year

Sales. 350,000. 420,000

EBIT 200,000 250,000

EBT 180,000 236,000

Net Income 117,000 153,400

EPS   1.19 1.56

A.Fixed cost and interest expense increasing proportionately with sales.

B. The degree of financial leverage is 1.325

C. The degree of operating leverage is 0.669

D. None of these choices are correct

E.The degree of operating leverage is 1.555

Grohl Co. issued 16-year bonds a year ago at a coupon rate of 6 percent. The bonds make semiannual payments. If the YTM on these bonds is 8 percent, what is the current bond price?

Awesome Cookie Company had total credit sales for the past year of $800,000. As of year-end, but before estimating bad debts, the company had a $70,000 debit balance in accounts receivable and a $600 debit balance in the Allowance for Uncollectible Accounts. The company provided the following aging of accounts receivable schedule and estimates of the bad debts percentages:

Which journal entry will the company need to make to estimate bad debts using the aging method?

The file CD Rate contains yields for a one-year certificate of deposit (CD) and a five-year CD for 39 banks listed for West Palm Beach, Florida on January 9, 2017. For each type of investment, decide whether the data appear to be approximately normally distributed by:

a. comparing data characteristics to theoretical properties.

b. constructing a normal probability plot