This problem is based on the modified Blue Ridge Hot Tub problem: Blue-Ridge Hot Tubs manufacturers and sells two models of hot tubs: the Aqua-Spa and the Hydro-Lux. The owner needs to decide how many of each type of hot tub to produce during his next production cycle. He will have 200 pumps, 1,520 labor hours, and 2,650 feet of tubing available. Each Aqua-Spa tub requires 1 pump, 9 hours of labor, and 12 feet of tubing. Each Hydro-Lux tub requires 1 pump, 6 hours of labor, and 16 feet of tubing. The company earns a profit of $350 on each Aqua-Spa it sells and $300 on each Hydro-Lux it sells. Half-assembled hot tubs have no value. Assuming all hot tubs produced can be sold, how many of each should Blue Ridge produce to maximize the total profit?
Suppose the owner now must purchase a piece of equipment that costs $900 in order to produce any Aqua-Spas, and a different piece of equipment that costs $800 in order to produce any Hydro-Luxes Answer the following questions:
a. Formulate an ILP for this problem. Highlight the newly added constraints for the initial cost to produce the first tub of each kind.
b. Implement your model in a spreadsheet and solve it. What is the optimal solution?

Afirm's before-tax cost of debt, rd, is the interest rate that the firm must pay on debt. because interest is tax deductible, the relevant cost of debt used to calculate a firm's wacc is the cost of debt, rd (1 – t). the cost of debt is used in calculating the wacc because we are interested in maximizing the value of the firm's stock, and the stock price depends on cash flows. it is important to emphasize that the cost of debt is the interest rate on debt, not debt because our primary concern with the cost of capital is its use in capital budgeting decisions. the rate at which the firm has borrowed in the past is because we need to know the cost of capital. for these reasons, the on outstanding debt (which reflects current market conditions) is a better measure of the cost of debt than the . the on the company's -term debt is generally used to calculate the cost of debt because more often than not, the capital is being raised to fund -term projects. quantitative problem: 5 years ago, barton industries issued 25-year noncallable, semiannual bonds with a $1,600 face value and a 8% coupon, semiannual payment ($64 payment every 6 months). the bonds currently sell for $845.87. if the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt? round your answer to 2 decimal places. do not round intermediate calcu

Ursus, inc., is considering a project that would have a five-year life and would require a $1,650,000 investment in equipment. at the end of five years, the project would terminate and the equipment would have no salvage value. the project would provide net operating income each year as follows (ignore income taxes.):

Security a has a higher standard deviation of returns than security b. we would expect that: (i) security a would have a risk premium equal to security b. (ii) the likely range of returns for security a in any given year would be higher than the likely range of returns for security b. (iii) the sharpe ratio of a will be higher than the sharpe ratio of b. (a) i only (b) i and ii only (c) ii and iii only (d) i, ii and iii