Geico is considering expanding an existing plant on a piece of land it already owns. the land was purchased 15 years ago for $325,000 and its current market appraisal is $820,000. a capital budgeting analysis shows that the plant expansion has a net present value of $130,000. the expansion will cost $1.73 million, and the discounted cash inflows are $1.86 million. the expansion cost of $1.73 million does not include any provision for the cost of the land. the manager preparing the analysis argues that the historical cost of the land is a sunk cost, and, since the firm intends to keep the land whether or not the expansion project is accepted, the current appraisal value is irrelevant. should the land be included in the analysis? if so, how?

Examine the following book-value balance sheet for university products inc. the preferred stock currently sells for $30 per share and pays a dividend of $3 a share. the common stock sells for $16 per share and has a beta of 0.9. there are 2 million common shares outstanding. the market risk premium is 9%, the risk-free rate is 5%, and the firm’s tax rate is 40%. book-value balance sheet (figures in $ millions) assets liabilities and net worth cash and short-term securities $ 2.0 bonds, coupon = 6%, paid annually (maturity = 10 years, current yield to maturity = 8%) $ 5.0 accounts receivable 3.0 preferred stock (par value $15 per share) 3.0 inventories 7.0 common stock (par value $0.20) 0.4 plant and equipment 21.0 additional paid-in stockholders’ equity 13.6 retained earnings 11.0 total $ 33.0 total $ 33.0 a. what is the market debt-to-value ratio of the firm? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.) b. what is university’s wacc? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.)

Consider an economy where government expenditures are 10 and total tax revenues are 10. the supply of labor is fixed at 125 and the supply of capital is fixed at 8. the economy is described by the following equations. y k to the power of 1 divided by 3 end exponent l to the power of 2 divided by 3 end exponent c 2.5 + 0.75 ( y - t ) i 10 - 0.5 r the level of private savings is

What do you recommend adam do to increase production in a business setting that does not seem to value high productivity?