Worksheet for Honesty Pledge; Three Analytical Problems Including Sullivan Ironworks Equipment Decis

Problem 1: Sullivan Ironworks Equipment Decision

Create a new worksheet positioned in the beginning of your file named Honour. In the worksheet, includeyour full name, student number, section name and the following honour pledge.Include a picture of your signature. NOTE:The assignment will not be marked if this honour pledge is missing

SullivanIronworksoffers avariety of iron products toindividual and commercial construction clients. The companyexpects to retire all its productionequipment in the new year. At that point, Sullivan Ironworksis considering threeoptions:Option 1) Itrents its productionequipment at an annual cost of $950,000per year, paid at the beginningof the year. There are no maintenance costs.Option 2) Itrents state-of-the-artproductionequipment at an annual cost of $1,300,000per year, paid mid-year. The company will save $325,000 annually on production costs. There are no maintenance costs.Option 3) Itpurchases new equipment for $9,650,000. The equipment will require maintenance of $150,000 per year andis expected to have a life span of 15years with no salvage value at the end. SullivanIronworksuses the straight-line depreciation method.Suppose the discount rateis 2.9%, the company’s tax rate is 20%, and all maintenance costs are paid at year's end, which is a better option for SullivanIronworks?A political candidatehas an advertising budget of $250,000. The candidatewishes to allocate the advertising money among four media outlined in the table below. The candidate’sgoal is to reach the largest possible audience. Toensurethecandidate reaches a diverse audience,the table also displaysaminimum and maximumlevel ofadsthat should be placed.Use Excel’s solver to assist the candidatein spending its advertising budget by selecting an effective media mix.103.A companyhasa liability of $450,000due in 25years. The cost of capital is 2.5percent per year. What amount of money do you need to set aside at the beginningof each month for the next 25years to meet this liability?54.Broadway Financial Managersare investment brokers and manage a wide range of portfolios. The BushelPortfolio is one of Broadway’s best long-term performer with an average rate of return of 7.25%. Suppose a client invests $50,000 in the BushelPortfolio, what would the return be in 1-10 years?55.Today,you retirewith $2 millionin the bank. Starting today, and for each of the next 30years, you withdraw $100,000. If you earn 4percent per year on your investments, how much money will you have after the last withdrawal?56.You are considering buyinga food truck. Consider the following cash flows over a five-year periodfor the food truck. Should youmake the purchase given a required cost of capital for this investment of 15%?What would your annualreturn be?What if the cash flows occur on the following dates?Should youpurchase the food truck?What would your annualreturn

7.You are comparing two internet providers. Both plans give you the same download/upload speeds. Which is a better option?Option 1: You pay $85plus taxmonthly plusequipment rental. You need to rent two wi-fi pods to extend connection in dead zones in your home. Therental cost of eachpod is$5per month plus tax.Option 2: You pay $80plus taxmonthly. You need to purchase your own wi-fi router and extender. The router costs $169.99plus tax.The extendercosts$137.15 plus tax.Assume for both options a tax rate of 12%, anannualcost of capital of 4%, commitment to a two-year contract and monthly payments to bemade at the beginning of the month.108.Yummy Berry Farmhas10 acres it planstodevoteto growing blueberries, strawberries and raspberries.Information on itsfarming requirements, yield, cost and price are in the table below. Yummy Berryhas contracts with grocery stores to supply strawberries. To fill these orders, the farm needsto allocate a minimum of 2 acres togrowingstrawberries. Since raspberries are labour intensive, Yummy Berrydoes not want to cultivatemore than 5 acres of raspberries. Assuming that Yummy Berrywillgrow only one type of berry on an acre, how should the farm allocate itsland amongthe three berries to maximize its profits