A firm is considering a 2-year project with an initial outlay of $12,000. The costs of operating in years1 and 2 are known with certainty to be $30,000. However, the revenues are uncertain. There is a50% chance that year 1 revenues will be $42,000 and a 50% chance that year 1 revenues will be$30,000. Second year revenues are also uncertain, but depend to some extent on the state realizedin year 1. If the good state is realized in year 1 (i. e., revenue of $42,000), there will be a 50% chanceof an upturn to $60,000 in year 2, and a 50% chance of a downturn to $36,000 in year 2. Similarly, ifthe bad state (i. e., revenue of $30,000) is realized in year 1, there will be a 50% chance of an upturnto $36,000 in year 2, and a 50% chance of a downturn to $12,000 in year 2.a. Use DCF analysis to find the expected NPV of this project, ignoring the option to abandon, assuming a 10% cost of capital. b. What is the project’s correct NPV, considering the abandonment option, and what then is the value of the option to abandon?

Alandowner entered into a written agreement with a real estate broker whereby the broker would receive a commission of 10% of the sale price if he procured a "ready, willing, and able buyer" for the landowner's property and if the sale actually proceeded through closing. the broker found a buyer who agreed in writing to buy the property from the landowner for $100,000, the landowner's asking price. the buyer put up $6,000 as a down payment. the agreement between the landowner and the buyer contained a liquidated damages clause providing that, if the buyer defaulted by failing to tender the balance due of $94,000 at the closing date, damages would be 10% of the purchase price. the landowner included that clause because she was counting on using the proceeds of the sale for a business venture that would likely net her at least $10,000. the buyer became seriously ill and defaulted. when he recovered, he demanded that the landowner return his $6,000, and the landowner refused. the broker also demanded the $6,000 from the landowner and was refused. the broker and the buyer filed separate suits against the landowner, with the buyer pleading impossibility of performance. the two cases are consolidated into a single case. how should the court rule as to the disposition of the $6,000?

Grant, inc., acquired 30% of south co.’s voting stock for $200,000 on january 2, year 1, and did not elect the fair value option. the price equaled the carrying amount and the fair value of the interest purchased in south’s net assets. grant’s 30% interest in south gave grant the ability to exercise significant influence over south’s operating and financial policies. during year 1, south earned $80,000 and paid dividends of $50,000. south reported earnings of $100,000 for the 6 months ended june 30, year 2, and $200,000 for the year ended december 31, year 2. on july 1, year 2, grant sold half of its stock in south for $150,000 cash. south paid dividends of $60,000 on october 1, year 2. before income taxes, what amount should grant include in its year 1 income statement as a result of the investment?

Schonhardt corporation's relevant range of activity is 2,500 units to 5,500 units. when it produces and sells 4,000 units, its average costs per unit are as follows: averagecost per unitdirect materials $ 7.60direct labor $ 2.90variable manufacturing overhead $ 1.65fixed manufacturing overhead $ 2.90fixed selling expense $ 0.95fixed administrative expense $ 0.65sales commissions $ 0.75variable administrative expense $ 0.65if 4,500 units are produced, the total amount of fixed manufacturing cost incurred is closest to: multiple choicea $16,800b $11,400c $11,600d $15,400