(Calculating project cash flows and​ NPV)  ​Weir's Trucking, Inc. is considering the purchase of a new production machine for $115,000.

The purchase of this new machine will result in an increase in earnings before interest and taxes of $21,000 per year. To operate this machine​ properly, workers would have to go through a brief training session that would cost

$4,250 after tax. In​ addition, it would cost ​$5,500 after tax to install this machine correctly. ​ Also, because this machine is extremely​ efficient, its purchase would necessitate an increase in inventory of ​$20,000 This machine has an expected life of 10 ​years, after which it will have no salvage value. ​ Finally, to purchase the new​ machine, it appears that the firm would have to borrow ​$90,000 at 10 percent interest from its local​ bank, resulting in additional interest payments of $9,000 per year. Assume simplified​ straight-line depreciation, that this machine is being depreciated down to​ zero, a 32

percent marginal tax​ rate, and a required rate of return of 11 percent.

a.  What is the initial outlay associated with this​ project?

b.  What are the annual​ after-tax cash flows associated with this project for years 1 through 9​?

c.  What is the terminal cash flow in year 10 ​(that is, the annual​ after-tax cash flow in year 10 plus any additional cash flows associated with termination of the​ project)?

d.  Should this machine be​ purchased?

Example 6:

Technology Tools

is evaluating the purchase of a new type of technology that would cost $1.5 million to

purchase, ship, and install. Still, investment in this machine is expected to increase sales revenues by $400,000, and

reduce operating expenses before depreciation and taxes by $125,000 per year. To operate this machine properly,

workers would have to go through a brief training session that would cost $14,000 on an after tax basis. Also, because

this machine is extremely efficient, its purchase would necessitate an increase in inventories of $80,000, which will be

partially offset by a $25,000 increase in accounts payable. This machine has an expected life of 10 years, after which

the after tax market (salvage) value of the machine will just equal the cost to remove and sell the equipment. Assume

simplified straight-line depreciation and that this machine is being depreciated down to zero. The firm has a 40%

marginal tax rate, and a cost of capital for this very risk project is 22.0% for this type of investment.

a.

What is the initial cost associated with this project?

b.

What are the annual after-tax cash flows associated with this project, for years 1 through 9?

c.

What is the terminal cash flow in Year 10 (i.e., what is the annual after-tax cash flow in Year 10 plus any

additional cash flows associated with termination of the project)?

(Calculating project cash flows and NPV)?? Weir's Trucking, Inc. is considering the purchase of a new production machine for $115,000. The purchase of this new machine will result in an increase in earnings before interest and taxes of $27,000 per year. To operate this machine properly, workers would have to go through a brief training session that would cost $5500 after tax. In addition, it would cost 5500 after tax to install this machine correctly. Also, because this machine is extremely efficient, its purchase would necessitate an increase in inventory of $27,000. This machine has an expected life of 10 years, after which it will have no salvage value. Finally, to purchase the new machine, it appears that the firm would have to borrow $90,000 at 10 percent interest from its local bank, resulting in additional interest payments of $9,000 per year. Assume simplified straight-line depreciation, that this machine is being depreciated down to zero, a 32 percent marginal tax rate, and a required rate of return of 15 percent.

a.??What is the initial outlay associated with this project?

b.??What are the annual after-tax cash flows associated with this project for years 1 through 9 ?

c.??What is the terminal cash flow in year 10 (that is, the annual after-tax cash flow in year 10

plus any additional cash flows associated with termination of the project)?

d.??Should this machine be purchased?

A newly issued bond pays its coupons once a year. Its coupon rate is 6%, its maturity is 15 years, and its yield to maturity is 9%.

a. Find the holding-period return for a one-year investment period if the bond is selling at a yield to maturity of 8% by the end of the year.

b. If you sell the bond after one year when its yield is 8%, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? The bond is subject to original-issue discount (OID) tax treatment. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

c. What is the after-tax holding-period return on the bond?

d. Find the realized compound yield before taxes for a two-year holding period, assuming that (i) you sell the bond after two years, (ii) the bond yield is 8% at the end of the second year, and (iii) the coupon can be reinvested for one year at a 4% interest rate.

e. Use the tax rates in part (b) to compute the after-tax two-year realized compound yield. Remember to take account of OID tax rules.

1. A 7130-kg car is travelling at 24.8 m/s when the driver decides to exit the freeway by going up a ramp. After coasting 418 m along the exit ramp the car\'s speed is 12.4 m/s, and it is h = 12.5 m above the freeway. What is the magnitude of the average drag force exerted on the car?

2. The superheroine Xanaxa, with a mass of 66.3 kg, is in a hair-raising chase after the 74.3-kg arch-villain Lexlax. She leaps from the ground to the top of a 195-m-high building, then dives off and comes to rest at the bottom of a 16.7-m-deep excavation, where she finds Lexlax and neutralizes him. Does all this bring about a net gain or a net loss of gravitational potential energy? Loss or Gain

By how much? Answer with a positive number. Take g = 9.81 m/s2.

3.Tom has built a large slingshot, but it is not working quite right. He thinks he can model the slingshot like an ideal spring, with a spring constant of 75.0 N/m. When he pulls the slingshot back 0.305 m from a non-stretched position, it just doesn\'t launch its payload as far as he wants. His physics professor \"helps\" by telling him to aim for an elastic potential energy of 14.5 Joules. Tom decides he just needs elastic bands with a higher spring constant. By what factor does Tom need to increase the spring constant to hit his potential energy goal?

During a followup conversation, Tom\'s physics professor suggests that he should leave the slingshot alone and try pulling the slingshot back further without changing the spring constant. How many times further than before must Tom pull the slingshot back to hit the potential energy goal with the original spring constant?

4. An adult dolphin weighs around 1610 N. How fast must he be moving as he leaves the water vertically in order to jump to a height of 3.50 m? Ignore air resistance.

5. Nate the Skate was an avid physics student whose main non-physics interest in life was high-speed skateboarding. In particular, Nate would often don a protective suit of Bounce-Tex, which he invented, and after working up a high speed on his skateboard, would collide with some object. In this way, he got a gut feel for the physical properties of collisions and succeeded in combining his two passions.* On one occasion, the Skate, with a mass of 119 kg, including his armor, hurled himself against a 801-kg stationary statue of Isaac Newton in a perfectly elastic linear collision. As a result, Isaac started moving at 1.37 m/s and Nate bounced backward. What were Nate\'s speeds immediately before and after the collision? (Enter positive numbers.) Ignore friction with the ground. Before:_______m/s, After:_______m/s

*By the way, this brief bio of Nate the Skate is written in the past tense, because not long ago he forgot to put on his Bounce-Tex before colliding with the Washington Monument in a perfectly inelastic collision. We will miss him.

Mary Sue Timmons, RN, was working the 3 to 11 PM shift in the medical-surgical unit at Memorial Hospital when one of her patients began complaining of a headache. The patient also appeared to be very anxious and his blood pressure was 184/110. Mary Sue immediately called the physician and reported the patient's symptoms and vital signs. The physician ordered Valium 5 mg IV and said he would be there to see the patient very soon. Mary Sue repeated the verbal medication order and received confirmation from the physician before hanging up the phone. She then immediately wrote the verbal order in the chart and ordered the medication from the pharmacy. Mary Sue also requested a package insert for the Valium because she had never given that medication IV before. Just as Mary Sue received the medication from the pharmacy and began to read the package insert, the physician arrived and asked if the medication had been given. When Mary Sue began to explain that she had just received the medication and had to read the package insert, the physician exploded and said, "I am the doctor and I am the only one who needs to know anything about the medication. You are here to follow my orders!"

1. How should Mary Sue respond to this physician? Select all that apply.
   1. Maintain eye contact (conveys confidence)
   2. Refuse to give the medication
   3. State that the primary goal is the patient’s safety
   4. Tell him to give it himself

2. What positive, assertive communication techniques should Mary Sue use in responding to this physician?
   1. Be defensive
   2. Use “I” messages
   3. Maintain closed body stance
   4. Speak loudly so he can hear you

3. What negative techniques must Mary Sue avoid when responding to the physician? Select all that apply.
   1. Be assertive
   2. Apologize
   3. Give the medication
   4. Stay calm

Barnes & Noble Education Provides COVID-19 Update Mar 17, 2020 Update on Full-Year 2020 Outlook BASKING RIDGE, N.J.--(BUSINESS WIRE)-- Barnes & Noble Education, Inc. (NYSE: BNED), a leading solutions provider for the education industry, today announced various steps it is taking to help address some of the challenges that the schools and students it serves are facing due to the disruptions caused by the COVID-19 virus. Yesterday, the Company announced that it has joined VitalSource® and other leading publishers in providing free access to eTextbooks for students at BNED campuses that have closed due to COVID-19 through the remainder of the Spring 2020 term. Given the continued transition to online and distance learning programs by colleges and universities nationwide, to help students, BNED is also offering targeted free self-tutoring and writing services through its bartleby® suite of services, which will continue to provide students with 24/7 on-demand access to academic assistance. Michael P. Huseby, Chief Executive Officer and Chairman, BNED, said, “Our top priority remains providing schools and students with solutions during this time of unprecedented disruption, while simultaneously protecting the health and safety of our employees and customers. As an organization, we are closely monitoring the continuing developments and following the guidance of the World Health Organization, Center for Disease Control (CDC) and local health authorities. While we cannot predict how long this situation will last, BNED remains committed to actively supporting our students, faculty and the educational institutions we serve during this time. Given the economic uncertainty associated with the ongoing COVID-19 outbreak, including the continued closures of educational institutions nationwide, we are limited in our ability to accurately predict what the negative financial impact to BNED will be in fiscal 2020, and therefore believe it is appropriate to withdraw financial guidance for fiscal 2020.” BNED’s fiscal fourth quarter is historically a lower revenue quarter for the company because it does not include the fall and spring back-to-school rush periods; nonetheless, due to the uncertainty regarding the duration and extent of the disruptions caused by COVID-19, BNED is withdrawing its fiscal 2020 outlook. The Company does not intend to provide further updates to its fiscal year 2020 outlook unless deemed appropriate. ABOUT BARNES & NOBLE EDUCATION, INC. Barnes & Noble Education, Inc. (NYSE: BNED) is a leading solutions provider for the education industry, driving affordability, access and achievement at hundreds of academic institutions nationwide and ensuring millions of students are equipped for success in the classroom and beyond. Through its family of brands, BNED offers campus retail services and academic solutions, a digital direct-to-student learning ecosystem, wholesale capabilities and more. BNED is a company serving all who work to elevate their lives through education, supporting students, faculty and institutions as they make tomorrow a better, more inclusive and smarter world. For more information, visit www.bned.com. Forward-Looking Statements This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and information relating to us and our business that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this communication, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,” “projections,” and similar expressions, as they relate to us or our management, identify forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Such statements reflect our current views with respect to future events, the outcome of which is subject to certain risks, including, among others: general competitive conditions, including actions our competitors and content providers may take to grow their businesses; a decline in college enrollment or decreased funding available for students; decisions by colleges and universities to outsource their physical and/or online bookstore operations or change the operation of their bookstores; implementation of our digital strategy may not result in the expected growth in our digital sales and/or profitability; risk that digital sales growth does not exceed the rate of investment spend; the performance of our online, digital and other initiatives, integration of and deployment of, additional products and services including new digital channels, and enhancements to higher education digital products, and the inability to achieve the expected cost savings; the risk of price reduction or change in format of course materials by publishers, which could negatively impact revenues and margin; the general economic environment and consumer spending patterns; decreased consumer demand for our products, low growth or declining sales; the strategic objectives, successful integration, anticipated synergies, and/or other expected potential benefits of various acquisitions may not be fully realized or may take longer than expected; the integration of the operations of various acquisitions into our own may also increase the risk of our internal controls being found ineffective; changes to purchase or rental terms, payment terms, return policies, the discount or margin on products or other terms with our suppliers; our ability to successfully implement our strategic initiatives including our ability to identify, compete for and execute upon additional acquisitions and strategic investments; risks associated with operation or performance of MBS Textbook Exchange, LLC’s point-of-sales systems that are sold to college bookstore customers; technological changes; risks associated with counterfeit and piracy of digital and print materials; our international operations could result in additional risks; our ability to attract and retain employees; risks associated with data privacy, information security and intellectual property; trends and challenges to our business and in the locations in which we have stores; non-renewal of managed bookstore, physical and/or online store contracts and higher-than-anticipated store closings; disruptions to our information technology systems, infrastructure and data due to computer malware, viruses, hacking and phishing attacks, resulting in harm to our business and results of operations; disruption of or interference with third party web service providers and our own proprietary technology; work stoppages or increases in labor costs; possible increases in shipping rates or interruptions in shipping service; product shortages, including decreases in the used textbook inventory supply associated with the implementation of publishers’ digital offerings and direct to student textbook consignment rental programs, as well as the risks associated with the impacts that public health crises may have on the ability of our suppliers to manufacture or source products, particularly from outside of the United States; changes in domestic and international laws or regulations, including U.S. tax reform, changes in tax rates, laws and regulations, as well as related guidance; enactment of laws or changes in enforcement practices which may restrict or prohibit our use of texts, emails, interest based online advertising, recurring billing or similar marketing and sales activities; the amount of our indebtedness and ability to comply with covenants applicable to any future debt financing; our ability to satisfy future capital and liquidity requirements; our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; adverse results from litigation, governmental investigations, tax-related proceedings, or audits; changes in accounting standards; and the other risks and uncertainties detailed in the section titled “Risk Factors” in Part I - Item 1A in our Annual Report on Form 10-K for the year ended April 27, 2019. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this press release.

Please summarize this to one or two paragraph.

Complete the following problems: 1. For this problem, use the following randomly generated list of accounts, placing them in appropriate order to prepare an income statement. Accounts ($000,000) Depreciation 25 General and administrative expenses 22 Sales 345 Sales expenses 18 Cost of goods sold 255 Lease expense 4 Interest expense 3 The following randomly constructed table requires that as part of your Critical Thinking Assignment you arrange the accounts into a well-labeled income statement. Make sure you label and solve for gross profit, operating profit, and net profit before taxes. Using a 35% tax rate, calculate taxes paid and net profit after taxes. Assuming a dividend of $1.10 per share with 4.25 million shares outstanding, calculate EPS and additions to retained earnings. 2. Explain why the income statement can also be called a “profit-and-loss statement.” What exactly does the word balance mean in the title of the balance sheet? Why do we balance the two halves? 3. CS Industries, Inc. began 2016 with retained earnings of $25.32 million. During the year, it paid four quarterly dividends of $0.35 per share to 2.75 million common stockholders. Preferred stockholders, holding 500,000 shares, were paid two semiannual dividends of $0.75 per share. The firm had a net profit after taxes of $5.15 million. Prepare the statement of retained earnings for the year ended December 31, 2016. 4. Sky Metals, Inc. is a metal fabrication firm that manufactures prefabricated metal parts for customers in a variety of industries. The firm’s motto is “If you need it, we can make it.” The CEO of Sky Metals recently held a board meeting during which he extolled the virtues of the corporation. The company, he stated confidently, had the capability to build any product and could do so using a lean manufacturing model. The firm would soon be profitable, claimed the CEO, because the company used state-of-the-art technology to build a variety of products while keeping inventory levels low. As a business press reporter, you have calculated some ratios to analyze the financial health of the firm. Sky Metals' current ratios and quick ratios for the past 6 years are shown in the following table: 2010 2011 2012 2013 2014 2015 2015 Current ratio 1.2 1.4 1.3 1.6 1.8 2.2 2.2 Quick ratio 1.1 1.3 1.2 0.8 0.6 0.4 0.4 What do you think of the CEO’s claim that the firm is lean and soon to be profitable? 5. If we know that a firm has a net profit margin of 4.5%, total asset turnover of 0.72, and a financial leverage multiplier of 1.43, what is its ROE? What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity?

1. For this problem, use the following randomly generated list of accounts, placing them in appropriate order to prepare an income statement.

1. The following randomly constructed table requires that as part of your Critical Thinking Assignment you arrange the accounts into a well-labeled income statement. Make sure you label and solve for gross profit, operating profit, and net profit before taxes.
2. Using a 35% tax rate, calculate taxes paid and net profit after taxes.
3. Assuming a dividend of $1.10 per share with 4.25 million shares outstanding, calculate EPS and additions to retained earnings.

2. Explain why the income statement can also be called a “profit-and-loss statement.” What exactly does the word balance mean in the title of the balance sheet? Why do we balance the two halves?

3. CS Industries, Inc. began 2016 with retained earnings of $25.32 million. During the year, it paid four quarterly dividends of $0.35 per share to 2.75 million common stockholders. Preferred stockholders, holding 500,000 shares, were paid two semiannual dividends of $0.75 per share. The firm had a net profit after taxes of $5.15 million. Prepare the statement of retained earnings for the year ended December 31, 2016.

4. Sky Metals, Inc. is a metal fabrication firm that manufactures prefabricated metal parts for customers in a variety of industries. The firm’s motto is “If you need it, we can make it.” The CEO of Sky Metals recently held a board meeting during which he extolled the virtues of the corporation. The company, he stated confidently, had the capability to build any product and could do so using a lean manufacturing model. The firm would soon be profitable, claimed the CEO, because the company used state-of-the-art technology to build a variety of products while keeping inventory levels low. As a business press reporter, you have calculated some ratios to analyze the financial health of the firm. Sky Metals' current ratios and quick ratios for the past 6 years are shown in the following table:

What do you think of the CEO’s claim that the firm is lean and soon to be profitable?

5. If we know that a firm has a net profit margin of 4.5%, total asset turnover of 0.72, and a financial leverage multiplier of 1.43, what is its ROE? What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity?

Komiko Tanaka invests $17,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term.

a. How much cash will Komiko retain, after-taxes, if she holds the investment for five years and then she sells it when the long-term capital gains rate is 15 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar)

Cash Retained=

b. What is Komiko’s after-tax rate of return on her investment in part (a)? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.)

After tax rate of return=

c. How much cash will Komiko retain, after taxes, if she holds the investment for five years and then sells when the long-term capital gains rate is 25 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

Cash Retained=

d. What is Komiko’s after-tax rate of return on her investment in part (c)? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.)

After tax rate of return=

e. How much cash will Komiko retain, after taxes, if she holds the investment for 15 years and then she sells when the long-term capital gains rate is 15 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

Cash Retained=

f. What is Komiko’s after-tax rate of return on her investment in part (e)? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.)

After tax rate of return=