Elliott’s hardware reported cost of goods sold as follows.

2016

2017

beginning inventory
$ 20,000

$ 30,000

cost of goods purchased
150,000

175,000

cost of goods available for sale
170,000

205,000

ending inventory
30,000

35,000

cost of goods sold
$140,000

$170,000

elliott’s made two errors: (1) 2016 ending inventory was overstated $3,000, and (2) 2017 ending inventory was understated $5,000.

Suppose that a major city’s main thoroughfare, which is also an interstate highway, will be completely closed to traffic for two years, from january 2014 to december 2015, for reconstruction at a cost of $535 million. if the construction company were to keep the highway open for traffic during construction, the highway reconstruction project would take much longer and be more expensive. suppose that construction would take four years if the highway were kept open, at a total cost of $800 million. the state department of transportation had to make its decision in 2014, one year before the start of construction (so that the first payment was one year away). so the department of transportation had the following choices: (i) close the highway during construction, at an annual cost of $267.5 million per year for two years. (ii) keep the highway open during construction, at an annual cost of $200 million per year for four years. now suppose the interest rate is 80%. calculate the present value of the costs incurred under each plan.