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# Finance Problems (Fixed costs, Net present value, yield to m

Below is a wide range of Finance problems. There are a total of 8 problems. Please show all work so I can get an understanding of how you solved each problem.

1.) Dominic's Italian Cafe sells pizzas at \$18.00 each. Fixed costs total \$12,000 per month and Dominic's variable costs total \$6.00 per pizza. Calculate the breakeven point in pizzas per month for Dominic's.

2.) At the end of January, your company had an inventory of 825 units, which cost \$12 per unit to produce. During February the company produced 75 units at a cost of \$16.00 per unit. If your firm sold 1,050 units in February, what is your cost of goods sold: A. assuming LIFO inventory accounting and B. assuming FIFO inventory accounting?

3.) Your company decides to issue \$1,000 par value 12% bonds. Compute the current price of the bonds if the percent yield to maturity is A. 8% or B. 18%.

4.) If you save \$1,500 per year how much will you have in A. 7 years at 10% annual interest and B. 15 years at 12% annual interest?

5.) What is the present value of lottery prize of \$1,000,000 payable in 20 annual installments of \$50,000 each assuming a discount rate of 12%?

6.) You accepts a job and the company is willing to pay you a sign on bonus and you must choose between 3 alternative payment plans: Plan A - \$30,000 payable today, Plan B- \$4,000 payable 3 years from today or Plan C, annual payments of \$1,225 each with the 1st payments 1 year from today. Assuming a discount rate of 8%. Which bonus should you accept?

7.) You are considering the purchase of a new machine that would increase the speed of manufacturing and save money. The net cost of this machine is \$66,000. The annual cash flows have the following projections: Year 1: \$21,000, Year 2: \$29,000, Year 3: \$36,000, Year 4: \$16,000 and Year 5 \$8,000. A. What is the payback period? B. If the cost of capital is 10%, what is the net present value?

8.) You must choose between two bonds. Bond A pays \$90 annual interest and has a market value of \$850. It has 10 years to maturity. Bond B pays \$80 annual interest and has a market value of \$900. It has 2 years to maturity. A. Computer the current yield on both bonds. B. Compute the yield to maturity on both bonds.

Please show all work so I can understand how you solved the problem. Answers on an Excel worksheet is fine. Thank you.