Your firm currently sells 2000 units a month at a price of $30 a unit. You think you can increase your sales by an additional 20 units if you switch to a net 30 credit policy. The monthly interest rate is 0.5 percent and your variable cost per unit is $18. What is the net present value of the proposed credit policy switch? What is the necessary increase in unit sales to breakeven?

A 2000-kg car is traveling at 20 m/s on a horizontal road and the engine suddenly is broken down. The brakes immediately are applied and the car skids to a stop in 4.0 s with a constant acceleration because of kinetic friction. What is the coefficient of kinetic friction between the tires and road?

Martin Seligman and Mihaly Csikszentmihalyi (2000) contend that if the study of human development turns towards a “positive psychology” then: …the social and behavioral sciences can play an enormously important role. They can articulate a vision of the good life that is empirically sound while being understandable and attractive. They can show what actions lead to well-being, to positive individuals, and to thriving communities. Psychology should be able to help document what kinds of families result in children who flourish, what work settings support the greatest satisfaction among workers, what policies result in the strongest civic engagement, and how people’s lives can be most worth living (44-45) One goal of positive psychology is to move beyond just describing our social reality to prescribing social policies that can transform society. Read Seligman and Csikszentmihalyi (Selction 8 of Classic Editions). What three ideas do they present in contrast to ‘psychology as pathology’? What are the implications of their ideas for social policy and/or your life?

You plan to invest Rs. 2000 in a fixed deposit today that pays a stated annual interest rate of 8 percent which is expected to apply to all future years.

a) How much will you have in the account at the end of 10 years if interest is compounded as follows

i) Annually ii) Semiannually iii)Monthly

b) What is the effective annual rate (EAR) for each compounding frequency in part a ?

1. You deposit $2000, $3000, and $4000 respectively at the end of years 1,2, and 3 from today in a mutual fund providing 10% return. Draw a timeline and compute how much your savings will be worth in 3 years.

2. Patricia starts college in 5 years for which she will need $15,000 payable at the end of each of the 4 years. Suppose she can buy an annuity in 5 yrs. that will enable her to make the four $15,000 annual payments. Draw a timeline for all cash flows. What will be the cost of the annuity 5 years from today? What is the most she should be willing to pay for it if purchased today? Assume an interest (discount) rate of 6% during these 9 years.

In the United States during the early 2000's there were a plethora of accounting scandals. Many times, the CEO was the cause of the problem. Congress passed the Sarbanes-Oxley Act in 2002. A large portion of the act was devoted to making CEO's more responsible for control over accounting. How do the actions of CEOs and upper management affect accounting and financial reporting?

A 2000-pound, couterbalanced, electric forklift can be purchased for $25,000 plus $3000 for the charger and $3000 for a battery. The forklift's market value is 15% less for each of its first 6 years of service. After this period the market value declines at a rate of 7.5% for the next 6 years.

The battery has a life of 12 years and a salvage value of $300. The charger has a 12-year life and a $100 salvage value. The charger's market value declines 20% per year of use. The battery's market value declines by 15% of its purchase price each year. Maintenance of the charger and battery are minimal. The battery will most likely not work with a replacement forklift.

Maintenance of the forklift is $400 per year during Year 1 and 2 while the warranty is in place. In year 3 it jumps to $800 and increases $500 per year thereafter. What is the optimal ownership policy using i =10%?

You want to buy a $2000 corporate bond maturing in 3 years with a coupon rate of 9%. The current market rate is of 7%. Answer the following questions:
1) How much is the bond going to cost you today?
2) Will the coupon rate change if the market rate rises to 8%?
3) What will the price be of the bond if market rate is 6%?

Under the leadership of President Bill Clinton, in 2000 the U.S. government normalized trade relations with China. This paved the way for China’s becoming a member of the World Trade Organization in 2001. Clinton maintained that this was good for America since China would become a major customer for American-made products and political relations would improve for the governments of China and the United states. However, American labor unions worried about additional competition coming from poorly paid Chinese workers. Do you feel that China’s entry into the WTO was a mistake? Form an argument that supports your view on this matter.