East Corp. manufactures stereo systems that carry a two-year warranty against defects. Based on past experience, warranty costs are estimated at 4% of sales for the warranty period. During Year 5, stereo system sales totaled $3,000,000, and warranty costs of $67,500 were incurred. In its income statement for the year ended December 31, Year 5, East should report warranty expense of:

Brandt enterprises is considering a new project that has a cost of $1,000,000, and the cfo set up the following simple decision tree to show its three most likely scenarios. the firm could arrange with its work force and suppliers to cease operations at the end of year 1 should it choose to do so, but to obtain this abandonment option, it would have to make a payment to those parties. how much is the option to abandon worth to the firm?