Dain’s Diamond Bit Drilling purchased the following assets this year.

Assume its taxable income for the year was $75,500 for purposes of computing the §179 expense (assume no bonus depreciation). (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

a. What is the maximum amount of §179 expense Dain's may deduct for the year?

b. What is Dain’s maximum depreciation deduction for the year (including §179 expense)?

c. If the January drill bits’ original basis was $2,520,000, what is the maximum amount of §179 expense Dain's may deduct for the year?

d. If the January drill bits’ original basis was $17,690,000, what is the maximum amount of §179 expense Dain's may deduct for the year?

Develop a simulation model for a 3-year financial analysis of total profit based on the following data and information.

Sales volume in the first year is estimated to be 100,000 units and is projected to grow at a rate that is normally distributed with a mean of 7% per year and a standard deviation of 4%. The selling price is $10, and the price increase is normally distributed with a mean of $0.50 and standard deviation of $0.05 each year. Per-unit variable costs are $3, and annual fixed costs are $200,000. Per-unit costs are expected to in- crease by an amount normally distributed with a mean of 5% per year and standard deviation of 2%. Fixed costs are expected to increase following a normal disribution with a mean of 10% per year and standard de- viation of 3%. Based on 10,000 simulation trials, find the average 3-year cumulative profit.

Generate and explain a trend chart showing net profit by year.

THANK YOU!

(Present value value of an annunity) What is the presnt value of the following annuities ?

a. $2,400 a year for 8 years discounted back to the presnet at 9 percent.

b. $90 a year for 5 years discounted back to the present at 8 percent.

c. 270$ a year for 12 years discounted back to the present at 12 percent.

d. 450$ a year for 6 years discounted back to the present at 5 percent

A.) What is the present value at $2,400 a year for 8 years discounted back to the present a 9 percent? $() round to nearest cent

B.)What is the present value at $90 a year for 5 years discounted back to the present at 8 perecent ? $() round to nearest cent

C.) What is the present value at $270 a year for 12 years discounted back to the present at 12 percent? () round to nearest cent

D.)What is presnt value at $450 a year for 6 years discounted back to the present at 5 perecent ? () round to nearest cent

A prospective MBA student earns $50,000 per year in her current job and expects that amount to increase by 12% per year. She is considering leaving her job to attend business school for two years at a cost of $45,000 per year. She has been told that her starting salary after business school is likely to be $85,000 and that amount will increase by 15% per year. Consider a time horizon of 10 years, use a discount rate of 11%, and ignore all considerations not explicitly mentioned here. Assume all cash flows occur at the start of each year (i.e., immediate, one year from now, two years from now,..., nine years from now). Also assume that the choice can be implemented immediately so that for the MBA alternative the current year is the first year of business school. What is the net present value of the more attractive choice?

Your firm is thinking of expanding. If you invest​ today, the expansion will generate $ 11 million in FCF at the end of the​ year, and will have a continuation value of either $ 147 million​ (if the economy​ improves) or $ 55 million​ (if the economy does not​ improve). If you wait until next year to​ invest, you will lose the opportunity to make $ 11 million in FCF but you will know the continuation value of the investment in the following year​ (that is, in a year from now you will know what the investment continuation value will be in the following​ year). Suppose the​ risk-free rate is 5 %​, and the​ risk-neutral probability that the economy improves is 42 %. Assume the cost of expanding is the same this year or next year.

a. If the cost of expanding is $ 78 ​million, should you do so​ today, or wait until next year to​ decide?

b. At what cost of expanding would there be no difference between expanding now and​ waiting? To what profitability index does this​ correspond?

Ron and Anne have taxable income of $400,000 (all ordinary) before considering the tax effect of their asset sales (shown below).  What is their tax liability for 2018 assuming they file a joint return?

$25,000 of the rental house gain is 25% gain

The couple also had a $10,000 long term capital loss carryforward from prior years.

Show your work/netting of gains and losses

Question 3/ Firm C is planning its first dividend in 4 years from now. Firm C retention ratio is 65%. Firm C current net income is $2millions with 500,000 shares outstanding. The net income is expected to grow by 1% during the next 4 years. The dividends are expected to grow during year 5 by 11.5% and during year 6 by 9.5%. From year 6 to year 14 they is no expected growth in dividends. However starting from year 15 there will be a constant dividend growth rate of 5% forever. The required rate of return on the stocks is 8%.

a/ Compute the intrinsic value of the stock now? (Show your steps)
b/ Compute the intrinsic value of the stock at the end of year 2? (Show your steps)

c/ Compute the intrinsic value of the stock at the end of year 8? (Show your steps)

d/ Compute the intrinsic value of the stock at the end of year 14? (Show your steps)

A state legislator wants to determine whether his voters' performance rating (0 - 100) has changed from last year to this year. The following table shows the legislator's performance from the same ten randomly selected voters for last year and this year. Use this data to find the 90% confidence interval for the true difference between the population means. Assume that the populations of voters' performance ratings are normally distributed for both this year and last year.

Step 3 of 4 :  

Calculate the margin of error to be used in constructing the confidence interval. Round your answer to six decimal places.

Step 4 of 4 :

Construct the 90% confidence interval. Round your answer to one decimal place.

1) A prospective MBA student earns $50,000 per year in her current job and expects that amount to increase by 9% per year. She is considering leaving her job to attend business school for two years at a cost of $50,000 per year. She has been told that her starting salary after business school is likely to be $105,000 and that amount will increase by 10% per year. Consider a time horizon of 10 years, use a discount rate of 10%, and ignore all considerations not explicitly mentioned here. Assume all cash flows occur at the start of each year (i.e., immediate, one year from now, two years from now,..., nine years from now). Also assume that the choice can be implemented immediately so that for the MBA alternative the current year is the first year of business school. What is the net present value of the more attractive choice?

a-1. Compute the gross profit percentage for both years. (Round your percentage answers to the nearest whole number. i.e. 0.1234 as 12%.)

a-2. Compute the inventory turnover for both years. (Round your answers to 1 decimal place.)

a-3. Compute the accounts receivable turnover for both years. (Round your answers to 1 decimal place.)

b. Which of the following show a positive or negative trend?

a-1. Gross profit percentage

Year 2%

Year 1%

a-2. Inventory turnover times times

Year 2

Year 1

a-3. Accounts receivable turnover times times

Year 2 ,

Year 1

Trend

b. Gross profit rate

Inventory turnover

Accounts receivable turnover

Growth in net sales