Marian kirk wishes to select the better of two 10-year annuities, c and d. annuity c is an ordinary annuity of $2,500 per year for 10 years. annuity d is an annuity due of $2,200 per year for 10 years.
a. find the future value of both annuities at the end of year 10, assuming that marian can earn
(1) 10% annual interest and
(2) 20% annual interest.
b. use your findings in part a to indicate which annuity has the greater future value at the end of year 10 for both the
(1) 10% and
(2) 20% interest rates.

Michigan mattress company is considering the purchase of land and the construction of a new plant. the land, which would be bought immediately (at t = 0), has a cost of $100,000 and the building, which would be erected at the end of the first year (t = 1), would cost $500,000. it is estimated that the firm's afterminustax cash flow will increase by $100,000 starting at the end of the second year, and that this incremental flow would increase at a 10 percent rate annually over the next 10 years. what is the approximate payback period?

Pennewell publishing inc. (pp) is a zero growth company. it currently has zero debt and its earnings before interest and taxes (ebit) are $80,000. pp's current cost of equity is 10%, and its tax rate is 40%. the firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. refer to the data for pennewell publishing inc. (pp). pp is considering changing its capital structure to one with 30% debt and 70% equity, based on market values. the debt would have an interest rate of 8%. the new funds would be used to repurchase stock. it is estimated that the increase in risk resulting from the added leverage would cause the required rate of return on equity to rise to 12%. if this plan were carried out, what would be pp's new value of operations? a. $484,359 b. $521,173 c. $584,653 d. $560,748 e. $487,805

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