ANSWER IN BOLD 12

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Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell 5,900 pairs of sunglasses at a price of $154 each and a variable cost of $106 each. The equipment necessary for the project will cost $310,000 and will be depreciated on a straight-line basis over the 6-year life of the project. Fixed costs are $200,000 per year and the tax rate is 21 percent. How sensitive is the operating cash flow to a $1 increase in variable costs per pairs of sunglasses? When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former baseball player thought appropriate for the star cost about $6. Based on actuarial tables, "Joltin' Joe" could expect to live for 20 years after the actress died. Assume that the EAR is 10.4 percent. Also, assume that the price of the flowers will increase at 4 percent per year, when expressed as an EAR. Assuming that each year has exactly 52 weeks, what is the present value of this commitment? Joe began purchasing flowers the week after Marilyn died