1. An uncle of yours who is about to retire wants to sell some of his stock and buy an annuity that will provide him with income of $19,000 per year for 30 years, beginning a year from today. The going rate on such annuities is 7.25%. How much would it cost him to buy such an annuity today?
a. $229,964.19
b. $229,953.39
c. $229,958.79
d. $229,974.99
e. $229,969.59
2. Suppose that Baldwin will increase its automation to 6.5 this year. Each new unit of automation costs $4 per unit of capacity. An additional $4 per point of automation applies to any new capacity. How much will this investment in automation cost? Capacity is currently at 3,500 and automation is currently at 4.5.
$56,000,000
$28,000,000
$24,500,000
$49,000,000