Prob. 1-27: Plan C: $450

Prob. 1-31: (a) $650 (maximum profit) (b) Joy's boss's statement makes no sense! He means "maximize profit".

Prob. 1-32: (a) $6014 (b) 20619 mi

Prob. 1-33: Total score=191 for M-4,P-6,EE-5 and M-5,P-6,EE-4

Prob. 1-34: Each company saves $586.

Prob. 1-37: (maximize profit) If you don't discard packages: $144. If you discard packages can get: $161!

Prob. 2-2: (a) $483 per unit (b) $497.70 per unit

Prob. 2-4: (a) $1000 (b) $5000 (c) $0.90 (d) $0.10 (e) 5000 (f) 0-5000 (g) 5000-10000 (h) $1.23 and $1.77

Prob. 2-6: (a) Total Cost = 48000 + 960*N, Total Revenue = 1440*N (b) 100 (c) $28800

Prob. 2-13: 208333 units

Prob. 2-21: Paint: $412.50, Labor: $1968.75, Fixed: $200; Total = $2581.25

Prob. 2-26: Bath: $4316, Power Scrapper: $254, Paint Booth: $6442; Total = $11012

Prob. 2-27: Bath: $4850, Power Scrapper: $298.50, Paint Booth: $10240

Prob. 2-32: N=10: 676 person-hrs, N=20: 195 person-hrs

Prob. 2-33: 55.1% reduction in cost (i.e. 100% - 44.9%)

Prob. 2-37: -$20000, -$2500, -$2500, -$2500, -$7500, -$2500, -$2500, -$500

Prob. 2-38: Cash flow diagram: +$190000 (years 1 thru 10), +$100000 at year 10, -$225000 at year 0, -$85000 (years 1 thru 10), -$75000 at year 6

Prob. 3-3: $2600

Prob. 3-5: $136.60

Prob. 3-6: $4758

Prob. 3-7: $945

Prob. 3-8: $7052

Prob. 3-9: $3313.46-$3307.50 = $5.96 (There would be a significant difference on very large amounts only!)

Prob. 3-10: 17.5 years

Prob. 3-11: $394.28 and $385.00 : Choose $385

Prob. 3-12: $896.3 million

Prob. 3-13: $1126.825-$1120.00 = $6.825 (Again, a significant difference on very large amounts only!)

Prob. 3-14: $97.73

Prob. 3-15: 12.45%

Prob. 3-16: (a) Past year: 11.1%, Next year: 10% (b) 10.55%

Prob. 3-17: $1454

Prob. 3-18: $93138

Prob. 3-19: $36000

Prob. 3-20: -$2000, -$4000, -$3625, -$3250, -$2875 (Total paid is $15,750!)

Prob. 4-1: (a) $464.10 (b) $218.91 (c) $54.30

Prob. 4-2: (a) $228.13 (b) 10% (c) $51.05 (d) $66.24

Prob. 4-3: (a) $109.45 (b) 17.23% (c) $276.28 (d) $60.78

Prob. 4.4: (a) $188.71 (b) $398 (c) $513.15 (d) $207.37

Prob. 4-5: $589.49

Prob. 4-6: $1438.54

Prob. 4-32: $33.95

Prob. 4-34: First 3 years = $648.90; Last 3 years = $637.28

Prob. 4-36: $7778.35

Prob. 4-37: $2544.61

Prob. 4-52: (a) $13849.57 (b) $13223.95

Prob. 4-56: 12.92%

Prob. 4-57: Nominal rate = 11.975%; Effective rate = 12.65%

Prob. 4-75: $1128.34

Prob. 4-96: $122.14

Prob. 4-112: Compounded annually: $41844, Compounded continuously: $42512; Use annual compounding.

Prob. 4-115: 1.5%

Prob. 5-1: $377.40

Prob. 5-2: $82.24

Prob. 5-3: $498.49

Prob. 5-4: $257.76

Prob. 5-5: $272.67

Prob. 5-6: $324.71

Prob. 5-12: $68155.50

Prob. 5-13: $1637.70

Prob. 5-14: $8156.26

Prob. 5-17: NPW = $657.09

Prob. 5-20: (a) $117183 (b) $122401 (c) $122,898 (d) b & c make earlier payments than a so PW of Costs are greater.

Prob. 5-22: $802.09

Prob. 5-32: At 6% PW = $1231.20 and at 10% PW = $828.36

Prob. 5-34: $389146

Prob. 5-37: Capitolized cost = $219812.50 (Add $150000 for total cost.)

Prob. 5-39: Susan will get $200000

Prob. 5-47: Best deal is muffler 2 with Present Worth of Costs (PWC) = $65 (Muffler 1 $84.72)

Prob. 5-48: Best deal is Two Stages PWC = $20097910 (One Stage $23962200)

Prob. 5-56: Best deal is Almaden PWC = $84109 (Foxhill Instrument $93396, Quicksilver $90851)

Prob. 5-61: Best deal is Treated PWC = $7.60 per tie (Untreated $8.45, Treated then Untreated $7.69, Untreated then Treated $7.81)

Prob. 5-67: A: NPW = $957886 and B: NPW = $1008907 so best choice is A

Prob. 5-69: Use lowest common multiple of 30 years. Best deal is Itis PWC = $92459 (Westinghome $92713)

Prob. 5-72: Best deal is "Do nothing" at NPW = $0 (B: -$4.51, C: -$2.35, D: -$3.13)

Prob. 6-1: $35.72

Prob. 6-2: $40.77

Prob. 6-3: $39.61

Prob. 6-4: $52.32

Prob. 6-5: $89.86

Prob. 6-6: $30.97

Prob. 6-7: $27.30

Prob. 6-9: $35.69

Prob. 6-10: $9287.63

Prob. 6-11: Annual benefit needed to justify cost is $4135.50.

Prob. 6-12: $756.42

Prob. 6-13: EUAB = -$460 so purchase of equipment was NOT desirable.

Prob. 6-17: $25.13

Prob. 6-25: Initial deposit = $350.38; Monthly deposit = $69.03

Prob. 6-26: (a) $338.80 (Best Deal!) (b) $350.00 (c) $348.40

Prob. 6-28: Payments on original loan A = $8816, Balance due after 10 years = $67054.50, Payments after refinancing = $8612, so refinance!

Prob. 6-31: EUAC(new machine) = $115.13 and EUAC(old machine) = $301.90; Buy new machine!

Prob. 6-32: EUAC(around lake) = $18444 and EUAC(under lake) = $19730; Go around lake.

Prob. 6-33: EUAC(Hydro-Clean) = $15000 and EUAC(in plant) = $18382; Hire Hydro-Clean.

Prob. 6-34: (a) $423.90 (b) $355.80 (c) Interest is due on the loan so payments will exceed $9000. Interest is earned on savings so payments will be less than $9000.

Prob. 6-37: EUAC(Mach.X) = $1252.50 and EUAC(Mach.Y) = $1106.20; Best deal is machine Y.

Prob. 6-48: 12-mo $43.95, 24-mo $34.54, 36-mo $28.13 (Best Deal!), 48-mo $28.40

Prob. 7-1: 13.23%

Prob. 7-2: 50%

Prob. 7-17: 4.97%

Prob. 7-18: 6.6%

Prob. 7-19: 14.73%

Prob. 7-24: 8.51%

Prob. 7-29: i = 10%

Prob. 7-32: Nominal annual interest rate = 15.0%; Effective annual interest rate = 15.6%

Prob. 7-45: 0.75%

Prob. 7-46: DeltaROR = 4.22% < MARR = 6% so choose the lower-cost alternative (Gas Station)

Prob. 7-47: DeltaROR = 6.13% > MARR = 5% so choose the higher-cost alternative (B)

Prob. 7-48: DeltaROR = 17.8% > MARR = 10% so choose the higher-cost alternative (X)

Prob. 7-57: DeltaROR = 8.32% > MARR = 7% so choose the higher-cost alternative (A)

Prob. 7-58: DeltaROR = 11.6% > MARR = 10% so choose the higher-cost alternative (A)

Prob. 7A-2: Get two interest rates: i = 8.2% and 25%. If external i = 6% then get internal i = 6.75%

Prob. 7A-6: Internal i = 17.8%

Prob. 7A-7: Internal i = 21.0% (if use external rate of 10%)

Prob. 7A-8: Internal i = 15.12%

Prob. 7A-9: Internal i = 11.6%

Prob. 7A-15: Internal i = 2.67%

Prob. 8-1: Den 7.8%, Dallas 18.5%, San Antonio 19.9%, LA 15.0%, Cleve small, Atl 18.0%: Recommend Dallas

Prob. 8-5: Recommend B

Prob. 8-6: Recommend B

Prob. 8-12: (a) Recommend B (b) Recommend B (c) Recommend A

Prob. 8-18: A: 3.6%, B: very small, C: no i, A-B: no i but clearly A is better than B, A-C: deltaROR = 1.35% and r = 16.2% and ia = 17.5%

Prob. 8-21: Recommend B

Prob. 8-24: RJR-GenDev = 30% > MARR but GenDev = 21.1% < MARR and RJR = 23.1% < MARR so DO NOTHING!

Prob. 9-8: $1,160,732

Prob. 9-9: $144,373

Prob. 9-10: $357,525

Prob. 9-29: 1.45

Prob. 9-32: All choices have B/C ratio > 1 so consider them all. For 5stories-2stories: B/C = 0.91 < 1 so reject 5stories. For 10stories-2stories: B/C = 1.1 > 1 so choose 10 stories

Prob. 9-33: All choices have B/C ratio > 1 so consider them all. For B-C Ben/Cost = 1.2 > 1 so reject C. For A-B Ben/Cost = 0.88 < 1 so reject A and choose B

Prob. 9-39: 8 years

Prob. 9-45: (a) NFW: (A) -$18.94, (B) $75.30, (C) $81.77 so choose C, (b) Recommend C, (c) Payback Period: (A) 1.74 yrs, (B) 3.79 yrs, (C) 2.78 yrs so choose A

Prob. 9-50: $176

Prob. 9-53: $303.43

Prob. 9-59: 206 hrs

Prob. 9-62: (a) 8 years (Hint: Find (A/P,10%,n) then search for "n" in 10% Table.), (b) 5.33 years (Note: Reciprocal of (A/P,10%,n) in part (a)!)

Prob. 11-5: MACRS depreciation schedule for $50000 of office furnature: $7145, $12245, $8745, $6245, $4465, $4460, $4465, $2230, $0, $0

Prob. 11-9: MACRS depreciation schedule for $1.5M small jet plane: $300k, $480k, $288k, $172.8k, $172.8, $86.4k

Prob. 11-21: (1) (a) 5yrs, (b) 7yrs, (c) 15yrs, (2) (a) $3264, (b) $5247, (c) $11115, (3) (a) $0, (b) $4017, (c) $72917

Prob. 11-23: MACRS depreciation schedule for $850,000 hotel: $11823.50, $21794.00, $21794.00, $10004.50; BV(building at sale)=$784,584, BV(land at sale)=$150,000, Recaptured depreciation (building) = $35,416, Capital gain (building) = $0, Capital gain (land) = $0

Chapter 11 handout problem: Cost depletion allowance = $100,000; Percentage depletion allowance = $101,200, Percentage depletion allowance limitation = $155,000, therefore depletion allowance = $101,200

Prob. 12-1: (a) $7146, (b) $11,466, i.e. the $4320 increase is at the incremental rate of 27%

Prob. 12-2: (a) Unmarried filing separately: Adams $7618.5, Eve $6336, (b) Married filing jointly: $15562.50

Prob. 12-4: $10,162.50

Prob. 12-12: 36.51%

Prob. 12-14: (a) After-tax ROR = 3.78%, (b) After-tax ROR = 6.60%

Prob. 12-28: After-tax PW @10% = -$10713. Actual after-tax ROR = 7.54%

Prob. 12-29: After tax ROR = 5.60% (Use MACRS Table 11-4 and assume Gerald gets one months rent but only a half month of depreciation in the first January but ignor the small amount of rent and depreciation in January of the 5th year when the sale occurs!)

Prob. 12-33: After-tax ROR = 12.5%

Prob. 12-34: ROR=8.40% < 15% = MARR so don't do project! Note: The end of the first three months is considered to be "the first year", so the calculation extends over 6 years! Also, there will be one year with "positive income tax." Here it's assumed that there will be net positve cash flow elsewhere in the company to be offset!

Prob. 12-41: After-tax cash flow: -$20000, $6200, $7280, $6128+$8092, NPW(12%) = $1462, After-tax ROR = 15.66%

Prob. 12-42a: ROR=25.32%. Also, in this problem there will be one year with positive income tax. (See explanation in Prob. 11.29.)

Prob. 12-51: Southern Coal Corp. Bonds ROR = 7.32% and Ann Arbor Municiple Bonds ROR = 8.23%, so choose Ann Arbor

Prob. 14-7: $19.67

Prob. 14-8: 2.941%

Prob. 14-9: $29670

Prob. 14-11: 8.45%

Prob. 14-12: 32.63 cruzados per dollar in 5 years

Prob. 14-23: $95188

Prob. 14-50: (a) 12%, (b) 6.96% (Note: Income tax must be paid every year on interest. Also, assume gain is NOT reinvested!), (c) -0.0374%, i.e. effectively zero!

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*** Ignor answers below for now! ***

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Prob. 12-12: Old Fork Lift: First year after-tax EUAC = $240, second year after-tax EUAC = $297.6 and steadily increases thereafter. New Fork Lift: 10-year cost life EUAC = $738.5. Keep old fork lift one more year!

Prob. 12-22: Old Machinery: Total marginal cost (yearly costs + loss in market value + lost interest at 8%) starting at year 1: $6407, $6642, $6903, $7187, $7494. New machinery: 5-year cost life EUAC = $6989. Keep old machine for 3 more years.