1. Famed gamer Tyler Ninja' Blevins is considering whether to replace his aging game console or to spend money on updating it. The replacement console would cost $7,300 now and would need software updates of $900 to be paid at the end of every year for 7 years. At the end of 7 years, the replacement console can be salvaged for $3,100. The existing game console needs increasing amounts of software updates each year, and its salvage value is falling, as shown below.

Year	Maintenance	Salvage
Now	$0	$2,400
1	$1,700	$1,000

(The existing console can be sold for $2,400 now. If it is sold in 1 year, the price will be $1,000. If the existing console is used between t = 0 and t = 1, a software update costing $1,700 must be paid at t=1.)

Tyler Blevins faces an opportunity cost of capital of 19%.

Expressed in Year 1 dollars, operating the old game console from t = 0 to t =1 would cost Tyler Blevins _______ more than operating the new game console from t = 0 to t = 1 .

multiple choice

• $1,307

• $579

• $336

• $1,727

• $934

2. From his luxury food truck, Chef Timon Balloo plans to sell small Poke bowls for $10.50 and large Poke bowls for $23.50. The variable cost per unit is $5.05 for the small Poke bowls and $11.10 for the large bowls. Chef Balloo envisions annual sales of 2,600 small bowls and 1,700 large Poke bowls. What is the annual operating cash flow if annual fixed costs will be $2,100 and the depreciation expense $900? Note: Timon Balloos tax rate is 34%.

Multiple Choice

• $23,571

• $21,879

• $22,185

• $11,577

• $24,514