A. Luther Corporation

Consolidated Income Statement

Year ended December 31 (in $millions)

	2006	2005
Total sales	610.1	578.3
Cost of sales	500.2	481.9
Gross profit	109.9	96.4
Selling, general, and administrative expenses	40.5	39.0
Research and development	24.6	22.8
Depreciation and amortization	3.6	3.3
Operating income	41.2	31.3
Other income
Earnings before interest and taxes (EBIT)	41.2	31.3
Interest income (expense)	25.1	15.8
Pretax income	16.1	15.5
Taxes	5.5	5.3
Net income	10.6	10.2
Price per share	$16	$15
Sharing outstanding (millions)	10.2	6.9
Stock options outstanding (millions)	0.2	0.3
Stockholders' Equity	126.6	63.6
Total Liabilities and Stockholders' Equity	533.1	386.7

Refer to the income statement above. For the year ending December 31, 2006 Luther's earnings per share is closest to ________.

A. 0.52

b. 1.04

c. 0.83

d. 1.25

b.

A vintner is deciding when to release a vintage of sauvignon blanc. If it is bottled and released now, the wine will be worth $2.6

million. If it is barrel aged for a further year, it will be worth 20% more, though there will be additional costs of

$780,000 incurred at the end of the year. If the interest rate is 7%, what is the present value of the difference in the benefit the vintner will realize if he releases the wine after barrel aging it for one year or if he releases the wine now?

a. He will earn $2,600,000 less if he releases the wine now.

b. He will earn $260,000 less if he releases the wine now

c. He will earn $364,000 more if he releases the wine now.

d. He will earn $413,084 more if he releases the wine now.