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i. Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 13 %. The following table summarizes the initial cost and the sale price in three years for each?property:

Cost today Sale price in 3 years

Parkside Acres $580,000 $1,080,000

Real Property Estates $810,000 $1,410,000

Lost Lake Properties $570,000 $970,000

Overlook $80,000 $280,000

a) Kartman has a total capital budget of $540,000 to invest in properties. Which properties should it?choose?

b) The profitability index for Parkside Acres is __________ ?? (two decimal)

ii Answer the question the image

Castle View Games would like to invest in a division to develop software for a soon-to-be-released video game console. To evaluate this decision, the rm rst attempts to project the working capital needs for this operation. Its chief nancial officer has developed the following estimates (in millions of dollars): (To copy the table below and use in Excel, click on icon in the upper right corner of table.) Year 1 Year 2 Year 3 Year 4 Year 5 1 Cash 4 12 14 15 14 2 Accounts receivable 22 25 26 24 26 3 Inventory 6 8 1O 13 13 4 Accounts payable 18 20 23 25 32 Assuming that Castle View currently does not have any working capital invested in this division, calculate the cash ows associated with changes in working capital for the rst ve years of this investment. (Note: Enter decreases as negative numbers.) The change in working capital for year 1 is $ million. (Round to the nearest integer.)