Privott, Inc., manufactures and sells two products: Product 29 and Product NO. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures expected activity Estimated Expected Activity Activity Overhead Activity Cost Pools Measures Cost $ 333,018 se, 247 Product 29 Product N0 7,300 Total Labor-related DLHS 3,900 11,200 1,800 10,100 Product testing tests 850 950 Order size MHs 475,608 4,900 5, 200 $ 858,873 The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to Multiple Choice

two questions

How do I do number 2 ?

Problem 9-25 Fudge factors An oil company executive is considering investing $10.1 million in one or both of two wells: well 1 is expected to produce oil worth $3.01 million a year for 10 years; well 2 is expected to produce $2.01 million for 15 years. These are real (inflation-adjusted) cash flows. The beta for producing wells is 0.91. The market risk premium is 9%, the nominal risk-free interest rate is 7%, and expected inflation is 3%. The two wells are intended to develop a previously discovered oil field. Unfortunately there is still a 21% chance of a dry hole in each case. A dry hole means zero cash flows and a complete loss of the $10.1 million investment. Ignore taxes and make further assumptions as necessary. a. What is the correct real discount rate for cash flows from developed wells? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real discount rate b. The oil company executive proposes to add 20 percentage points to the…