1. Riley Kavanaugh is a senior market analyst for PNK Brokers, a brokerage company based in Toronto. PNK markets itself to current and prospective clients in numerous ways, including the distribution of the 10-year average return for both its discretionary and non-discretionary accounts. One night after regular business hours, Riley looked through some past account dates for clients that had left the firm, and she was surprised to discover that PNK's 10-year return, as advertised to clients, did not include performance achieved by accounts that had left PNK. On top of this, the advertising materials did not include the performance of numerous accounts that had performed poorly. The company clearly states in its advertising materials that the performance measure includes all accounts. The omissions have led to a significantly inflated performance figure. Ryssa is directed by her manager to send promotional materials that include inaccurate performance numbers to prospective clients. What should Riley do? What are the ethical implications of the choices that she could make, in this situation?

2. A piece of equipment costs $5.8 million and qualifies for a 42 percent CCA rate. After four years the salvage value will be 50% of the original purchase price. A local company is in need of the equipment and has asked you to crunch the lease vs. purchase numbers for them. They can lease for $915,000 per year for four years, with payments at the beginning of each year. The asset pool will remain open, so PVCCATS is appropriate. The relevant tax rate is 25% and the pre-tax cost of debt is 7.3%. Should the company lease or buy?

3. If a company's compensation agreements are not constructed carefully it is possible for these to inadvertently create an incentive to lease, creating an agency problem. Discuss this statement, in addition to how the agency problem could be rectified.