The State of New Jersey fined Uber $100MM--about $335/driver involved (see related Media for this week) --for underreporting unemployment and other firm-side tax obligations to its drivers for the years 2014-2018. Of this, $78MM is to cover the payments, and $22MM is penalties and interest. Assume the obligation accrued equally over each of the five years (See attached spreadsheet, Cash Flows tab). Choose, as a proxy, either one of the risk-free seven-year interest rates available in 2014 (attached spreadsheet; Tab DGS7) or one of the risk-free ten-year interest rates available in 2014 (attached spreadsheet; Tab DGS10)

1. Explain why you chose the rate you did (two sentences: [1] why you chose either DGS7 or DGS10 and then [2] why you chose the rate you did).
2. For the discount rate you choose, what would be the break-even value (to the nearest $1,000) for each of the years 2014-2018 that would make $78MM today equivalent to those cash flows
3. Assume that the agreed penalties and interest are of equal size ($11MM each). What value would X (those 2014-2018 payments) need to have to be equivalent to $89MM ($78MM in obligations, $11MM in interest)?
4. Assume Uber's Cost of Funds is the Risk-free Rate plus 175 basis points (1.75%). How much money did they save/lose by paying $100MM now instead of the the X values you derived in (C) above in 2014 through 2018?
5. Given your answer in D, was Uber rewarded economically for being a scofflaw during those years? Explain your "Yes" or "No" answer.