1. ) A company wants to purchase a new machine. There two options Machine A and Machine B. The first costs of A and B are $9000 and $11,000 respectively. Machine A has net annual benefits of $1800 for the first year and will increase by $150 every year during its five year useful life, and the salvage value is $600. Machine B has net annual benefits of $3200 but will decrease by $150 every year during during each year of its four year useful life, and the salvage value is $1500. If the MARR is 12%, which machine should be selected?

Q) A firm has a WACC of 10.27% and is deciding between two mutually exclusive projects. Project A has an initial investment of $61.22. The additional cash flows for project A are: year 1 = $17.13, year 2 = $36.95, year 3 = $44.72. Project B has an initial investment of $72.28. The cash flows for project B are: year 1 = $52.10, year 2 = $45.47, year 3 = $39.43. Calculate the Following:

a. Payback Period for Project A:

b. Payback Period for Project B:

c. NPV for Project A:

d. NPV for Project B:

Assume you have developed a business over the past 20 years. You want to determine its worth if you sell it. The value of the property is $2 million and is paid off (no debt). Over the next 10 years, you expect to sell $200,000 worth of widgets per year, increasing at $20,000 worth of widgets each year.   Your costs are $120,000 per year, increasing at $10,000 per year. However, at year 5 you must spend $2,000,000 to upgrade equipment to keep up with production. Your costs thereafter are $150,000 per year. What is the present value of the business (i.e. total cost if sole today) assuming an interest rate of 4%/year).

Knowledge Check 01
At January 1, Year 1, Edwards Company issued 10,000 stock options permitting employees to buy 10,000 shares of stock for $50 per share. The vesting schedule (graded-vesting) and value of the options that vest over the 3-year period is estimated at January 1, Year 1, as set forth in the following table.

What is the compensation cost for Year 1 relating to these stock options? (Do not use the straight-line method.)

You're a contractor who needs to lease space for a field office during the five years of a construction project. The owner of the building where you want to rent space offers you three lease options. Each option assumes payment at the beginning of each year, and i=4% per year. which option would you chose?

A) First year annual rent of $12,000, with an increase of $2,500 per year for each of the next four years

B) First year annual rent of $12,000, with an increase of 18% per year for each of the next four years

C) Constant rent of $16,900 per year for five years.

*please solve arithmetically and not with excel*

14. A study has shown that a good model for the relationship between X and Y , the first and second year batting averages of a randomly chosen major league baseball player, is given by the equation Y = .159 + .4X + e, where e is a normal random variable with mean 0. That is, the model is a simple linear regression with a regression toward the mean.

(a) If a player’s batting average is .200 in his first year, what would you predict for the second year?

(b) If a player’s batting average is .265 in his first year, what would you predict for the second year?

(c) If a player’s batting average is .310 in his first year, what would you predict for the second year?

Anything in business - pathway

Locate the most recent balance sheet of a publicly-traded corporation in your pathway. You can find the balance sheet within the annual report (10-K). Answer the following questions:

1. What is the name of your company and your pathway?
2. What were the total current assets this year and last year for the company you chose?
3. What were the total current liabilities this year and last year for the company you chose?
4. Calculate the Current Ratio for this year and last year for the company you chose.
5. Analyze your company's current ratio (is it good/bad; how does it compare to the prior year, etc.)
6. Include a link to the URL for your company's annual report.

On July 1 of year 1, Elaine purchased a new home for $890,000. At the time of the purchase, it was estimated that the property tax bill on the home for the year would be $17,800 ($890,000 × 2%). On the settlement statement, Elaine was charged $8,900 for the year in property taxes and the seller was charged $8,900. On December 31, year 1 Elaine discovered that the real property taxes on the home for the year were actually $18,800. Elaine wrote a $18,800 check to the local government to pay the taxes for that calendar year (Elaine was liable for the taxes because she owned the property when they became due). What amount of real property taxes is Elaine allowed to deduct for year 1? (Assume not married filing separately.)

In Year 1, Citradoria Corporation is a regular corporation that contributes $35,000 cash to qualified charitable organizations during the current tax year. The corporation has net operating income of $145,000, before deducting the contributions, and dividends received from domestic corporations (ownership in all corporations is less than 20 percent) in the amount of $25,000. A. In Year 2, Citradoria contributes $5,000 to charitable organizations. The corporation has net operating income of $150,000 before deducting the contributions, and no dividend income. What is the amount of Citradoria’s allowable deduction for charitable contributions for Year 2? $ B. If there is any carryover of the charitable contribution deduction from Year 2, what year will it expire (e.g., Year 3)?