1)

The following details are provided by Doppler? Company:

Initial investment	$ 2 comma 000 comma 000$2,000,000
Discount rate	?12%
Yearly cash flows
1	$ 812 comma 000$812,000
2	$ 616 comma 000$616,000
3	$ 616 comma 000$616,000
4	$ 616 comma 000$616,000
5	$ 812 comma 000$812,000

Present Value of? $1:

	?10%	?11%	?12%	?13%
1	0.909	0.901	0.893	0.885
2	0.826	0.812	0.797	0.783
3	0.751	0.731	0.712	0.693
4	0.683	0.659	0.636	0.613
5	0.621	0.593	0.567	0.543

Calculate the NPV of the project.

A.

?$950 comma 000950,000

B.

?$506 comma 840506,840

C.

$ 1 comma 005 comma 000$1,005,000

D.

$ 250 comma 000$250,000

2)

Steve Coleman has just won the state lottery and has the following three payout options for

afterminus?tax

prize? money:1.

$ 152 comma 000$152,000

per year at the end of each of the next six years2.

$ 318 comma 000$318,000

?(lump sum) now3.

$ 500 comma 000$500,000

?(lump sum) six years from now

The annual discount rate is? 9%. Compute the present value of the second option.? (Round to nearest whole? dollar.)

Present value of? $1:

	?8%	?9%	?10%
1	0.926	0.917	0.909
2	0.857	0.842	0.826
3	0.794	0.772	0.751
4	0.735	0.708	0.683
5	0.681	0.650	0.621
6	0.630	0.596	0.564
7	0.583	0.547	0.513

A.

$ 100 comma 000$100,000

B.

$ 400 comma 000$400,000

C.

$ 652 comma 000$652,000

D.

$ 318 comma 000$318,000

3)

Smash Company has? 4,000 machine hours available annually to manufacture badminton racquets. The following information is available for the two different racquets produced by? Smash:

Pro
Unit sales price	?$400
Unit variable costs	?$100
Annual demand	?2,000 units
Machine time	1.5 hours per unit
Mid
Unit sales price	?$100
Unit variable costs	?$70
Annual demand	?5,000 units
	2 hours per unit

How many units of each racquet should be manufactured for the company to maximize its operating? income?

A.

?2,000 units of Pro and 500 units of Mid

B.

?2,000 units of Pro and? 5,000 units of Mid

C.

?2,000 units of Pro and? 1,500 units of Mid

D.

?5,000 units of Mid and 500 units of Pro