1. Assume that you invest 5 percent of your salary and receive the full 5 percent match from S&S Air. What EAR do you earn from the match? What conclusions do you draw about matching plans?
2. Your company currently sells oversized golf clubs. The Board of Directors wants you to look at replacing them with a line of super-sized clubs. Briefly explain whether the following are relevant cash flows to this analysis and if so, how those cash flows can affect any decision. Discuss each item individually.
a. $300,000 drop in sales from terminating the oversized line of clubs
b. $750,000 in land you own that may be used for the project
c. $200,000 spent on Research and Development last year on oversized clubs
d. $350,000 you will pay to Fred Singles to promote your new clubs
e. $125,000 you will receive by selling the existing production equipment which must be replaced