Phoenix Industries has pulled off a miraculous recovery. Four years ago it was near bankruptcy. Today, it announced a $1.50 per share dividend to be paid a year from now, the first dividend since the crisis. Analysts expect dividends to increase by 50 percent a year for 3 years. Dividends are expected to grow at a rate of 20 percent for another 2 years. After the sixth year, dividend growth is expected to settle down to a more moderate long-term growth rate of 8 percent. If the firm’s investors expect to earn a return of 20 percent on this stock, what must be its price?

In this scenario you will decide how the best method for entering the local market for a small business venture. The business will be creating 3D real estate listings for realtors your local area. The industry standard for 3D listings is dominated by a company called Matteport. First research the company Matteport and the service it provides. Then research how many Matteport service providers serve the area that you are in. What is there price points? What services do they offer? How would you attack the local market to create your own Matteport business? What would you do to defend your market share once you established yourself?

14,       A residential property is acquired on the first day of the tax year for a purchase price of $300,000 plus acquisition costs of $15,000. The property is held for five years and sold on the last day of the tax year.

a. What is the cost-recovery deduction for each full year of acquisition?                                      

b. What is the annual cost-recovery deduction for each full year of ownership?                           

c. What is the cost-recovery deduction for the year of disposition?                                               

d. What is the total cost recovery taken during the recovery period?                     

Suppose a business firm faces the following demand equation: Q = 40 – 0.5P. Marginal cost is MC = $20. Now suppose the firm decides to offer quantity discount by selling the product in bundles of 10 units.

a. What is the maximum price that the firm can charge for the first 10 units, for the second 10 units, and for the third 10 units? Now compute the revenue and cost of selling the three bundles (a total 30 units) .

b. Which pricing strategy (quantity discount or two-part) is more beneficial to the business? Why?

b. Which pricing strategy (quantity discount or two-part) is more beneficial to the business? Why?

This is a closed economy. Wages are unable to adjust in the short run. At first, the economy equilibrium is at Y=Original, and P=Pe (the expected price level when managers signed contracts for nominal wages. This is a horizontal short-run aggregate supply curve.

Consider this: The government increased spending (G) by 215.

A) How will Investment (I) change in the short-run?

B) How will Consumption (C) change in the short-run?

C) How will Output (Y) change in the short-run?

D)How will Y change in the long-run?

E) How Will C change in the long-run?

F) How will I change in the long-run?

Bryant leased equipment that had a retail cash selling price of $620,000 and a useful life of five years with no residual value. The lessor paid $540,000 to acquire the equipment and used an implicit rate of 8% when calculating annual lease payments of $143,780 beginning January 1, the beginning of the lease. Lease payments will be made January 1 each year of the lease. Incremental costs of consummating the lease transaction incurred by the lessor were $16,000. What is the effect of the lease on the lessor's earnings during the first year (ignore taxes)? (Input decreases to income as negative amounts. Round Interest revenue to the nearest whole dollar.)

2. Which of the following terms refers to an owner’s right to redeem a property before foreclosure sale?

A)        Equity of redemption

B)        Statutory redemption

C)        Attachment

D)        Execution

4. Given the following information, calculate the loan-to-value (LTV) ratio of this loan:
   1. Monthly payment in the first year: $3,688
   2. Loan amount: $1,000,000
   3. Purchase price: $1,300,000

1. 1.75
2. 1.30
3. 0.77  
4. 0.50

5. Suppose you just signed a $50,000, 20-year mortgage with a 15% fixed interest rate with monthly repayments.  What proportion of the loan will have been paid off at the end of year 5?

1. 79.88%
2. 5.92%
3. 93.42%
4. 20.12%

The following transactions pertain to 2018, the first-year operations of Gibson Company. All inventory was started and completed during 2018. Assume that all transactions are cash transactions. Acquired $12,000 cash by issuing common stock. Paid $4,700 for materials used to produce inventory. Paid $2,400 to production workers. Paid $900 rental fee for production equipment. Paid $350 to administrative employees. Paid $400 rental fee for administrative office equipment. Produced 400 units of inventory of which 360 units were sold at a price of $25 each.

Required Prepare an income statement and a balance sheet in accordance with GAAP.

Bob is worried about his job security, and has started to venture into a new startup. Perhaps surprisingly, he is able to take his startup to IPO within a 5-year period (please allow me to dream). The firm has just announced its first dividend of $3/share and the firm’s dividend is expected to grow extremely fast for 4 years in a row at 30% each year. However, Bob expects that the company will only grow at 5% after that forever. Expected return (discount rate) for stocks is 12%. Please use the dividend discount model to price the stock at t=0.