A charitable foundation has $500,000 invested in an account that earns 7%. The foundation has promised to begin making annual payments to beneficiaries in one year, and the first payment will be $25,000. The foundation has promised that future payments will grow at a constant rate forever. At what rate can the foundation afford to increase payments assuming that it makes no additional deposits into the account?

Varto company has 9,400 units of its sole product in inventory that it produced last year at a cost of $23 each. this year’s model is superior to last year’s, and the 9,400 units cannot be sold at last year’s regular selling price of $42 each. varto has two alternatives for these items: (1) they can be sold to a wholesaler for $8 each, or (2) they can be reworked at a cost of $251,100 and then sold for $34 each. prepare an analysis to determine whether varto should sell the products as is or rework them and then sell them.