(Solution) An executive's employment contract calls for a salary of $400,000 per year, a bonus equal to 2 percent of profits in excess of $10,000,000, and an > Snapessays.com


(Solution) An executive's employment contract calls for a salary of $400,000 per year, a bonus equal to 2 percent of profits in excess of $10,000,000, and an


Andrew construction borrows the entire cost of a new dump truck. The loan has an annual interest rate of 12 percent and calls for monthly payments of $1,000 over a five-year period. What is the cost of the truck?An executive's employment contract calls for a salary of $400,000 per year, a bonus equal to 2

 

percent of profits in excess of $10,000,000, and an option to buy 5,000 shares of common stock

 

at a price of $50 per share. the market price of the stock is $70 per share, and the firm's profits

 

for the current year are $12,000,000. Assuming the executive exercises the stock option and

 

then sells the stock, what is the total compensation for the year?

 

a manufacturer of personal computers Chas an inventory of 10,000 back-up storage prices that

 

solved for $100 per unit last year. The current market price of these driven is now @70 per unit.

 

By adding one of these drives to their stock of personal computers, the price of each computer

 

is increased by $80 per unit. Should the driver be added? What is the opportunity cost of these

 

drivers? Explain?

 

Mighty-lite inc., a manufacturer of plastic tables for institutional use is considering a capital

 

spending program involving annual expenditures of $100,000 for each of the next five years. the

 

firm estimates that its annual profit of $100,000 would increase by 50 percent when the capital

 

program was completed. assuming the firm has a 20-year life and the appropriate interest rate

 

is 12 percent, should the capital spending program be implemented?

 

Andrew construction borrows the entire cost of a new dump truck. The loan has an annual

 

interest rate of 12 percent and calls for monthly payments of $1,000 over a five-year period.

 

What is the cost of the truck?

 

A couple borrows $10,000 to buy a car. The loan agreement specifies that monthly payments

 

are to be made for four years. The annul interest rate is 12 percent. Determine the monthly

 

payment.

 

It is estimated that the annual after-tax profits of the Microwave Corporatior will be $500,000 per

 

year for each of the next 30 years. Given a discount rate of 14 percent, what is the value of this

 

firm?

 


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