1. If X is $5,000, R = 15% and BV is $50,000, what is AE? = 5000-(15%*50000) -2500 2. 3. If X is $25,000, R=18% and BV is $125,000, what is AE? = 25000 ( 18 %*125000) 2500 Assume the firm in requirement 2 can increase x to $30,000 by instituting some cost-cutting measures. What is the new AE? = 30000 - ( 18 %*125000) 7500 4. Assume the firm in requirement 2 can divest $25,000 of unproductive capital with X falling by only $2,000. What is the new AE? = 25000-2000-(18% *( 125000-25000)) = 5000 5. Assume the firm in requirement 2 can add a new division at a cost of $40,000, which will increase X by $7,600 per year. Would adding the new division increase AE? = 25000+7600-(18% *( 125000+40000)) 2900 FALSE 6. Assume the firm in requirement 1 can add a new division at a cost of $25,000, which will increase X by $3,500 per year. Would adding the new division increase AE? = 5000+3500-( 15%*50000+25000) -2750 FALSE

1. If X is $5,000, n =15% and 80 is $50,000, whar is AE? 5000( is 350000) 2500 2. If x is $25,000,R=1SS and EV is $125,000, whyt is AT ? =25000-(1)2+125000)2500 3. Avume the firm in requirement 2cm increase x to $30,000 by intituting some cost-cutting me asures. Whit h the new AC? 30000+(1+x+12s000)7500 4. Astume the firm in requlrement 2cm diven $25,000 of uspreductive capital with x Eiline by only $2,000. What is the eew A2? =250002000(t8+(12500025000)]5009 25000.7600-(13K(1)25000+40000)2900 FALSE 50003500(1585000025000) 2750 FA.SE 1. If X is $5,000, n =15% and 80 is $50,000, whar is AE? 5000( is 350000) 2500 2. If x is $25,000,R=1SS and EV is $125,000, whyt is AT ? =25000-(1)2+125000)2500 3. Avume the firm in requirement 2cm increase x to $30,000 by intituting some cost-cutting me asures. Whit h the new AC? 30000+(1+x+12s000)7500 4. Astume the firm in requlrement 2cm diven $25,000 of uspreductive capital with x Eiline by only $2,000. What is the eew A2? =250002000(t8+(12500025000)]5009 25000.7600-(13K(1)25000+40000)2900 FALSE 50003500(1585000025000) 2750 FA.SE