Barbour Electric is considering the introduction of a new product. This product can be produced in one of several ways: (a) using the present assembly line at a cost of $20 per unit, (b) using the current assembly line after it has been overhauled (at a cost of $5,000) with a cost of $18 per unit; and (c) on an entirely new assembly line (costing $30,000) designed especially for the new product with a per unit cost of $15. Barbour is worried, however, about the impact of competition. If no competition occurs, they expect to sell 10,000 units the first year. With competition, the number of units sold is expected to drop to 6,000. At the moment, their best estimate is that there is a 40% chance of competition. They have decided to make their decision based on the first-year sales. (a) Develop a decision table showing the payoffs. (b) What decision should they make? Hint: develop an EOL table and make a decision based on this table.

The president's executive jet is not fully utilized. You judge that its use by other officers would increase direct operating costs by only $37,000 a year and would save $100,000 a year in airline bills. On the other hand, you believe that with the increased use the company will need to replace the jet at the end of three years rather than four. A new jet costs $1.27 million and (at its current low rate of use) has a life of Five years. Assume that the company does not pay taxes. All cash flows are forecasted in real terms. The real opportunity cost of capital is 10%. a. Calculate the equivalent annual cost of a new jet. Note: Do not round intermediate calculations. Enter your answer in dollars not in millions. Round your answer to 2 decimal places. Enter your answer as a positive value. b. Calculate the present value of the additional cost of replacing the jet one year earlier than under its current usage. Note: Do not round intermediate calculations. Enter your answer in dollars not…

Air Alberta is considering replacing the firm's regional jets with a new model, which has a total purchase price of $15 million. The new jets will generate additional revenue of $3.5 million per year for the 20 years of the useful life of the jets. Expected added operational costs of the jets are 25% of revenues. Air Alberta expects to use the new jets for 20 years, at which time, they would be replaced. The company estimates that all the new planes could be sold for a total of $4.7 million (salvage value). The new regional jets have a CCA rate of 25% (d = .25). Air Alberta has a corporate tax rate of 35%. The purchase would require a $2,000,000 increase in net working capital, which would be returned to Air Alberta when it sold the jets after 20 years. Required: Using a discount rate of 15%, calculate the NPV of the new jet purchase. Prepare a short memo and discuss your recommendation on the purchase of the regional jets.

E-Education is a new startup that develops and markets MBA courses offered over the Internet. The company is currently located in Chicago and employs 150 people. Due to strong growth, the company needs additional office space. The company has the option of leasing additional space at its current location in Chicago for the next two years, but after that will need to move to a new building. Another option the company is considering is moving the entire operation to a small Midwest town immediately. A third option is for the company to lease a new building in Chicago immediately. If the company chooses the first option and leases new space at its current location, it can, at the end of two years, either lease a new building in Chicago or move to the small Midwest town. The following are some additional facts about the alternatives and current situation. What should E-Education do? • The company has a 75 percent chance of surviving the next two years. • Leasing the additional space for…