1) You expect that you will require $3,000,000 when you retire 40 years from now. You plan to create 40 deposits, beginning today, in the bank account which will pay 6% interest, compounded annually. You expect to get annual raises of 4%, so you will raise the amount you deposit each year by 4%. (That is, your 2nd deposit will be 4% greater than your first; the 3rd will be 4% greater than the 2nd, etc.) How much must your 1st deposit be if you are to meet your goal?

2) Which of the following factors could describe why Dellva Energy had a negative net cash flow last year, even though the cash on its balance sheet increased?

a) The company sold a new issue of bonds.

b) The company made a large investment in new plant and equipment.

c) The company paid a large dividend.

d) The company had high amortization expenses.

e) The company repurchased 20% of its common stock.

3) Medium Size Retailers, Inc. (MSR) has EBIT of $325,000, interest expense of $40,000, dividend income of $25,000, short term capital gains of $15,000, and long term capital losses of $18,000. What is MSR’s income tax liability?