Maryann and Don want to open their own deli. To do so, Maryann must give up her job, at which she earns $20000 per year, and Don must give up his part-time job, at which he earns $10000 per year. They must liquidate their money market fund, which earns $1000 interest annually. The rent on the building is $10000 per year, and expenses for such necessities as utilities, corned beef, and pickles are $35000 annually. What is the explicit cost per year of operating the deli?
a. $31,000
b. $76,000
c. $35,000
d. $45,000
e. $10,000

You are head of the schwartz family endowment for the arts. you have decided to fund an arts school in the san francisco bay area in perpetuity. every 5 years, you will give the school $ 1 comma 000 comma 000. the first payment will occur 5 years from today. if the interest rate is 5.9 % per year, what is the present value of your gift?

Problem 9-5. net present value and taxes [lo 1, 2] penguin productions is evaluating a film project. the president of penguin estimates that the film will cost $20,000,000 to produce. in its first year, the film is expected to generate $16,500,000 in net revenue, after which the film will be released to video. video is expected to generate $10,000,000 in net revenue in its first year, $2,500,000 in its second year, and $1,000,000 in its third year. for tax purposes, amortization of the cost of the film will be $12,000,000 in year 1 and $8,000,000 in year 2. the company’s tax rate is 35 percent, and the company requires a 12 percent rate of return on its films. required what is the net present value of the film project? to simplify, assume that all outlays to produce the film occur at time 0. should the company produce the film?

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