X Company is planning to drop a department that has shown a $10,000 loss in each of the last 3 years. If the department is dropped, three things will happen: 1) the annual loss will be avoided, 2) some equipment will be sold immediately for $19,000, and 3) sales of another product will be increased, contributing $1,000 to annual profits. Assuming a 6-year time horizon and a discount rate of 4%, what is the net present value of dropping the department?
In four years, Allan Chu plans to enroll in the masters program at York University. He estimates that tuition will be $40,000 and living expenses will be the same amount. His best investment opportunity is paying 6% compounded semi-annually. How much must Allan invest now to have sufficient funds to cover his education?
a. $37,770.22
b. $63,152.80
c. $36,590.30
d. None of the above.
e. $66,128.44
ABC Inc. agrees with Home Renovations Inc. to pay $30,000 in five years for a lawnmower. Interest rates are 8% compounded semi-annually. How much should ABC Inc. debit to capital assets upon making this purchase?
a. $13,896
b. $24,657
c. $36,501
d. $30,000
e. $20,267
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