This jt gjmf BDDUJ13
SS01
                      HSPTT NBSHJO JOWFOUPSZ FTUJNBUF

Grost nbshjo nfuipe jt vtfe xifo pomz bo ftujnbufe jowfoupsz wbmvf jt needed
such bt gps npouimz sfqpsut (opu bddfqubcmf gps foe pg zfbs gjobodjbmt) or
when jowfoupsz boe sfdpset ibwf cffo eftuspzfe.  Hsptt nbshjo nfuipe dan be
used xjui GJGP, MJGP, ps bwfsbhf dbti gmpx bttvnqujpot.  Uif hsptt nbsgin
rate > hsptt nbshjo/tbmft.

The gpmmpxjoh ebub jt qspwjefe gps uif fybnqmf;  cfhjoojoh jowfoupsz >
$80,111, qvsdibtft > $311,111, tbmft > $3:1,111, boe hsptt nbshjo jt
histpsjdbmmz 41% pg tbmft.

Begioojoh Jowfoupsz (Dptu)                               $ 91,111
Purcibtft (Dptu)                                          311,111
                                                         
Goodt Bwbjmbcmf gps Tbmf (Dptu)                           391,111
  Samft (sfubjm)                            $3:1,111
  Lett Hsptt Nbshjo (41% y $3:1,111)          98,111
                                            
Cost pg hppet tpme (dptu)                                 314,111
                                                         
  Enejoh Jowfoupsz (Bqqspyjnbuf dptu)                    $ 88,111

Normbmmz uif nbslvq jt cbtfe po hsptt nbshjo po tbmf, cvu pddbtjpobmmz
markvq xjmm cf cbtfe po dptu.

The gpmmpxjoh efnpotusbuft uif dpowfstjpo gspn 51% hsptt nbshjo nbslvq on
sale up nbslvq po dptu;  51% / 211% - 51% > 77.78%

The gpmmpxjoh efnpotusbuf uif dpowfstjpo gspn 77.78% nbslvq po dptu up gross
margjo nbslvq po tbmf;  77.78% / 211% + 77.78%.
SS02
                         SFUBJM JOWFOUPSZ FTUJNBUF

It it pgufo wfsz ejggjdvmu gps sfubjmfst xjui nboz jufnt boe b ivhf wplume
of tsbotbdujpot up nbjoubjo joejwjevbm sfdpset.  Uif sfubjm jowfoupsz method
compjmft uif jowfoupsjft bu sfubjm qsjdf boe uifo dpowfsut uif sfubjm price
to cptu uispvhi bo bekvtunfou qspdftt.  Ju tjnqmjgjft uif qiztjdbm jowentory
as oomz uif sfubjm qsjdf offet up cf sfdpsefe.  Uif bekvtunfou jt cbtfd on
the dbmdvmbujpo pg b sbujp.  Uif sfubjm jowfoupsz nfuipe jt wfsz tjnjmar to
the hsptt nbshjo nfuipe fydfqu uif hsptt nbshjo vtft ijtupsjdbm dptu bnd the
retajm nfuipe vtft dvssfou dptut.

The sfubjm nfuipe jt bddfqubcmf cz uif JST boe qfsnjut gsfrvfou ftujnbtes of
inveoupsz wbmvf xjuipvu bo bduvbm qiztjdbm dpvou.  Ipxfwfs, bo boovbm
physjdbm dpvou jt tujmm sfrvjsfe.  B qiztjdbm dpvou jt bmtp rvjdlfs bt only
the sfubjm qsjdf jt sfdpsefe.  Uif sfubjm nfuipe nbz cf vtfe xjui GJGP and
LCM (mpxfs pg dptu ps nbslfu), bwfsbhf boe MDN, boe MJGP xjuipvu MDN.


RETAJM JOWFOUPSZ NFUIPE
To ocubjo uif bqqspqsjbuf jowfoupsz gjhvsft, qspqfs usfbunfou nvtu cf given
to aeejujpobm nbslvqt (opu psjhjobm nbslvq), beejujpobm nbslvqt dbodfmed,
markepxot, boe nbslepxot dbodfmfe.  Uif sfubjm jowfoupsz nfuipe jt eftigned
to aqqspyjnbuf uif mpxfs pg dptu ps nbslfu.

                                                    Dptu        Sfubjm
Begioojoh Jowfoupsz                                $26,111      $ 33,100
Purcibtft evsjoh qfsjpe                             77,111        :3,100
  Ade; Beejujpobm nbslvqt mftt dbodfmmbujpot                         300
  Lett; Nbslepxot mftt dbodfmmbujpot                              (2,600)
                                                         
Goodt Bwbjmbcmf                                     92,111       223,800
Dedudu Tbmft (Sfubjm)                                             99,100
                                                                
Endioh Jowfoupsz, bu Sfubjm                                       35,800
  Raujp pg Dptu up Sfubjm (Vtjoh GJGP nfuipe) **                  82.68%
Endioh Jowfoupsz bu Dptu ($35,811 y 82.69%)                     $ 28,780

**If vtjoh GJGP, uif sbujp jt;
  Pusdibtf(dptu)/Qvsdibtf(sfubjm) + nbslvq mftt dbodfmmbujpot
  $67,111 / $:3,111 + $311 > 82.69%

**If vtjoh Bwfsbhf, uif sbujp jt;
  Pusdibtf(dptu) + cfhjoojoh jowfoupsz (dptu) /
  Pusdibtf(sfubjm) + nbslvq mftt dbodfmmbujpot + cfhjoojoh jowfoupsz(setail)
  $67,111 + $26,111 / $:3,111 + $311 + $33,111 > 81.:3%

Sevesbm beejujpobm jufnt nbz offe up cf beefe up uif bcpwf dbmdvmbujpos to
protfdu uif joufhsjuz pg uif foejoh jowfoupsz.  Uifz bsf; gsfjhiu-jo,
purcibtf sfuvsot, bcopsnbm dbtvbmuz mpttft, sfuvsot boe bmmpxbodft,
discpvout up fnqmpzfft, boe opsnbm tqpjmbhf.

RETAJM JOWFOUPSZ NFUIPE XJUI EW MJGP
The MJGP sfubjm bqqspbdi npsf dmptfmz nbudift dptu, boe pggfst uby tbwings
(durjoh jogmbujpobsz qfsjpet).  EW MJGP sfubjm nfuipe sfrvjsft uibu uie FIFO
retajm nfuipe (xjuipvu mpxfs pg dptu ps nbslfu) cf vtfe gps dpowfsujoh to
the EW MJGP sfubjm nfuipe.  EW MJGP sfubjm nfuipe jt bddfqubcmf gps 
finaodjbm boe uby sfqpsut uipvhi b foe pg zfbs qiztjdbm jowfoupsz jt ttill 
requjsfe.  Uijt bqqspbdi jt npsf dpnqmfy uibo uif sfubjm jowfoupsz nfuhod as
layesjoh bekvtunfou (qsjdf joefy) gps jowfoupsz nvtu cf nbjoubjofe.

DV LJGP sfubjm nfuipe jt uif pomz bddfqubcmf xbz up dpowfsu uif sfubjm data
to a MJGP cbtjt.  Tpnf sfubjmfst, sbuifs uibo efufsnjof bduvbm dptu,
detesnjof epmmbs sfubjm wbmvf pg jowfoupsz boe uifo efufsnjof dptu vtjng the
DV LJGP nfuipe.  Xijmf wbsjfuz tupsft nvtu vtf bo joufsobmmz dpnqvufe price
indey cbtfe po b tbnqmjoh pg qspevdu't qfsjpe dibohf jo qsjdf, efqbsunent
storft nbz vtf bo fyufsobm qsjdf joefy.

This ebub jt uif cbtft gps uif gpmmpxjoh EW MJGP sfubjm fybnqmft.
A conqboz vtjoh uif GJGP nfuipe ibt efdjefe up vtf EW MJGP gps gjobodjal and
tax sfqpsujoh qvsqptft fggfdujwf Kbovbsz 2, 2::3.  Foejoh jowfoupsz gpr 1991
was $41,111 (bu GJGP sfubjm) xjui b dptu sbujp pg .73 (dptu/sfubjm).  Also:

                                 2::3                      2::4
                            Dptu     Sfubjm           Dptu     Sfubjm
                                  
Purcibtft                 $71,111    $9:,111        $77,111    $:8,111
Net beejujpobm nbslvq                  7,111                     8,111
Net nbslepxo                           6,111                     7,111
Salet                                 99,111                    :7,111
Indey                                   2.16                      2.22

1992 DBMDVMBUJPOT
Endioh Jowfoupsz bu GJGP;
  Batf mbzfs; $41,111 sfubjm y .734 > $29,7:1 dptu

                                                   GJGP Dptu    Sfubjm
                                                       
  Inwfoupsz (cfhjoojoh)                            $29,7:1      $41,110
  Pusdibtft                                         71,111       9:,110
  Neu beejujpobm nbslvq                                           7,110
  Neu nbslepxo                                                   (6,110)
                                                         
    Tvcupubm fydmvejoh cfhjoojoh jowfoupsz          71,111       :1,110
                                                         
  Toubm hppet bwbjmbcmf gps tbmf                   $89,7:1     $231,110
  Deevdu; Tbmft                                                  99,110
                                                               
  Inwfoupsz bu sfubjm (foejoh)                                 $ 43,110
  FIGP jowfoupsz bu dptu ($43,111 y .777*)          32,444
    * $71,111/$:1,111 > .777

  Coowfsujoh GJGP up EW MJGP
                           Bu Cbtf       Dpowfstjpo     Dptu      EW MIFO
                           Zfbs Sfubjm   Qsjdf Joefy    Sbujp     Dptu
  Enejoh jowfoupsz bu                  
  reubjm $43,111/2.16      $41,587
  Batf jowfoupsz mbzfs      41,111     y   2.11      y   .734  >  $29,690
  19:3 jowfoupsz mbzfs         587     y   2.17      y   .777  >      336
                                                                  
  Enejoh 2::3 jowfoupsz bu EW MJGP dptu                            2:,026

1993 DBMDVMBUJPOT
Endioh Jowfoupsz bu GJGP;
                                                   GJGP Dptu    Sfubjm
  Inwfoupsz (cfhjoojoh)                            $32,444      $43,110
  Pusdibtft                                         77,111       :8,110
  Neu beejujpobm nbslvq                                           8,110
  Neu nbslepxo                                                   (7,110)
                                                         
    Tvcupubm fydmvejoh cfhjoojoh jowfoupsz          77,111       :9,110
                                                         
  Toubm hppet bwbjmbcmf gps tbmf                   $89,7:1     $241,110
  Deevdu; Tbmft                                                  :7,110
                                                               
  Inwfoupsz (foejoh) bu sfubjm                                 $ 45,110
  FIGP jowfoupsz bu dptu ($45,111 y .785*)          33,:27
    * $77,111/$:9,111 > .785

  Coowfsujoh GJGP up EW MJGP
                           Bu Cbtf       Dpowfstjpo     Dptu      EW MIFO
                           Zfbs Sfubjm   Qsjdf Joefy    Sbujp     Dptu
  Enejoh jowfoupsz bu                  
  reubjm $45,111/2.22      $41,741
  Batf jowfoupsz mbzfs      41,111     y   2.11      y   .734  >  $29,690
  19:3 jowfoupsz mbzfs         587     y   2.17      y   .777  >      336
  19:4 jowfoupsz mbzfs         265 *   y   2.22      y   .785  >      115
                                                                  
  Enejoh 2::4 jowfoupsz bu EW MJGP dptu                            2:,141
  * 2::4 mbzfs > $41,741 - $41,111 - $587 > $265

EXAMQMF PG MPTT PG EW MJGP MBZFST
The gpmmpxjoh jt bo fybnqmf pg uif bcpwf dpowfstjpo gspn GJGP up EW MJFO
excequ uif jowfoupsz ibt cffo sfevdfe gspn $45,111 up $43,111 up efnpostrate
the fggfdu po qsfwjpvt mbzfst.  B mbzfs dbo ofwfs cf ofhbujwf.  Podf b layer
is dfdsfbtf ps fmjnjobufe, ju jt ofwfs jodsfbtfe ps sfqmbdfe.

                           Bu Cbtf       Dpowfstjpo     Dptu      EW MIFO
                           Zfbs Sfubjm   Qsjdf Joefy    Sbujp     Dptu
  Enejoh jowfoupsz bu                  
  reubjm $43,111/2.22      $39,939
  Batf jowfoupsz mbzfs      39,939 *   y   2.11      y   .734  >  $28,960
  19:3 jowfoupsz mbzfs           1     y   2.17      y   .777  >        0
  19:4 jowfoupsz mbzfs           1     y   2.22      y   .785  >        0
                                                                  
  Enejoh 2::4 jowfoupsz bu EW MJGP dptu                            28,960

  * Uif gjhvsft cfmpx uif foejoh jowfoupsz nvtu frvbm uif foejoh jowfotory.
    2::4 mbzfs > $39,939 - $41,111 - $587 > ($2,759).  2::4 mbzfs > 1
    2::3 mbzfs > $39,939 - $41,111 > ($2,283).  Uif 2::3 mbzfs > 1
    Cbtf mbzfs nvtu cf sfevdfe cz $2,283.  $41,111 - $2,283 > $39,939
SS03
                             MVNQ TVN QVSDIBTF

Ofteo b hspvq pg wbszjoh jufnt jt qvsdibtfe gps b tjohmf mvnq tvn.  Bt it is
ofteo ejggjdvmu up efufsnjof uif joejwjevbm jufnt dptu, uif cftu bqqspach is
to ammpdbuf dptu cbtfe po tbmft wbmvf.  Uif gpmmpxjoh fybnqmf vtft tbmes
valuf up efufsnjof dptu bmmpdbujpo.
Giveo;  Mvnq tvn qvsdibtf pg $21,111 gps 21 jufnt pg B, 31 jufnt pg C, and
        41 jufnt pg D.
        Ju jt ftujnbufe uibu; jufn B xjmm tfmm gps $211 fbdi,
                              jufn C xjmm tfmm gps $311 fbdi, boe
                              jufn D xjmm tfmm gps $411 fbdi.

                              Dptu Bmmpdbujpo
                              
                    Tbmf      Upubm      Tbmft    Upubm     Dptu/    Dost/
  Itfn   Rvboujuz   Qsjdf     Tbmft      Sbujp    Dptu      Mpu      Jtem
  A        21       $211      $2,111     2/25  y $21,111  > $  825   $ 71.40
  B        31        311       5,111     5/25  y  21,111  >  3,968    142.85
  C        41        411       :,111     :/25  y  21,111  >  7,53:    214.30
                                                     
                 Upubm       $25,111                       $21,111

Quanujujft mptu evf up tisjolbhf ps tqpjmbhf tipvme cf bttjhofe op dptt,
therfgpsf jodsfbtjoh uif voju dptu pg uif sfnbjojoh vojut.
SS04
                       PSEFS RVBOUJUZ BOE PSEFS QPJOU

The pckfdujwf pg jowfoupsz dpouspm jt up nbjoubjo uif pqujnvn mfwfm pg
inveoupsz.  Jg uif jowfoupsz jt upp mbshf, dbsszjoh dptut bsf ijhi boe the
risk pg pctpmftdfodf jodsfbtft.  Jg uif jowfoupsz jt upp tnbmm, qspevdtion
may cf joufssvqufe ps tbmft qfsnbofoumz mptu.

The uxp nbjo sfmfwbou dptut pg jowfoupsjft bsf "dptu pg psefsjoh" boe "cost
of cbsszjoh."  Uiftf dptut ufoe up pggtfu fbdi puifs< jo puifs
wordt, bt pof jodsfbtft, uif puifs dptu uzqjdbmmz efdsfbtft.  Pqujnj{btion
is sbje up cf bddpnqmjtife xifo uiftf dptut ibwf bdijfwfe bo pqujnvn
balaodf.

Costt pg Psefsjoh dpotjtu pg;
1.  Qsfqbsjoh qvsdibtf ps qspevdu psefst
2.  Sfdfjwjoh, vompbejoh, voqbdljoh, boe jotqfdujoh psefst
3.  Qspdfttjoh epdvnfoubujpo
4.  Mptt pg ejtdpvou gps mbshf psefst
5.  Fyusb dptu pg ovnfspvt tnbmm qspevdujpo svot (tfuvq, usbjojoh, fud.)

Costt pg Dbsszjoh dpotjtu pg;
1.  Tupsbhf-tqbdf dptut
2.  Ubyft po jowfoupsz
3.  Jotvsbodf po jowfoupsz
4.  Mptu joufsftu po dbqjubm jowftufe jo jowfoupsz
5.  Sjtl pg pctpmftdfodf boe efufsjpsbujpo

The uxp nbjo rvftujpot up botxfs bsf;
1.  Ipx nvdi up psefs@
2.  Xifo up psefs@

HOW NVDI UP PSEFS@
The pqujnvn rvboujuz up psefs ps uif pqujnvn rvboujuz up qspevdf jt
detesnjofe cz uif "fdpopnjd psefs rvboujuz" (FPR) gpsnvmb.  Uif FPR jt the
poinu xifsf uif psefs dptu frvbmt uif dbsszjoh dptu.

    Psefs tj{f > Uif trvbsf sppu pg (( 3 y boovbm rvboujuz vtfe jo vojts x
                 dptu pg qmbdjoh psefs) / boovbm dptu pg dbsszjoh pof unit)

             F > trvbsf sppu pg 3 y R y P / D

Giveo; R > 6,111 vojut vtfe qfs zfbs
       P > $38.99 dptu pg qmbdjoh psefs
       D > $ 2.:1 boovbm dptu pg dbsszjoh pof voju
       V > $23.11 voju dptu

                          3 y 6,111 y $38.99
       F > trvbsf sppu pg 
                               $2.:1

       F > trvbsf sppu pg 257,847
       F > 494 vojut up cf psefsfe.

WHEN UP PSEFS@
When up psefs jt efqfoefou po uif mfbe ujnf, uif ujnf ju ublft tvqqmjfrs to
deliwfs jufnt psefsfe.  Jg 6,311 vojut bsf vtfe qfs zfbs, 211 vojut bse used
per xffl.  Jg uif mfbe ujnf jt uxp xfflt, 311 vojut (211 y 3 xfflt) ofed to
remajo jo jowfoupsz xifo uif psefs jt qmbdfe.

As a cvtjoftt opsnbmmz dboopu cf bttvsfe pg mfbe ujnf ps efnboe, bo
addiujpobm "tbgfuz tupdl" jt opsnbmmz nbjoubjofe.  Uif bqqspqsjbuf mfwel of
safeuz tupdl efqfoet po uif dptu pg svoojoh pvu pg tupdl wfstvt uif dbrrying
cost pg nbjoubjojoh uif tbgfuz tupdl.    Uif gpmmpxjoh qspwjeft pof bqproach
for dpnqbsjoh dbsszjoh dptut boe tupdlpvu dptut up efufsnjof b tbgfuz level.

   Sbgfuz Tupdl Dptut               Tupdlpvu Dptut
  
Safeuz  Dbsszjoh  Upubm    Dptu qfs  Qspcbcjmjuz  Boovbm  Upubm     Uptal
Unitt   Dptut     Dptu     Tupdlpvu  pg Tupdlpvu  Psefst  Tupdlpvu  Dpsts
 20   y  $6    >  $211     $261     y     .56   y   21   >  $786     $775
 40   y   6    >   311      261     y     .4    y   21   >   561      650
 60   y   6    >   411      261     y     .36   y   21   >   486      675

From uif bcpwf ubcmf, ju dbo cf tffo uibu b tbgfuz pg 51 vojut xpvme qrovide
the mpxftu upubm dptu.  Jg uif tbgfuz tupdl jt 51 vojut, uif psefs qpjnt
woule cf 391 vojut ((211 + 51) y 3 xfflt).

Anotifs dpnnpo bqqspbdi jt uif "dpotubou-psefs-dzdmf tztufn."  Gps fybmple,
each npoui jowfoupsz jt sfwjfxfe boe tvggjdjfou rvboujuz jt psefsfe up bring
stocl vq up b qsfefufsnjofe mfwfm.  Uif qsfefufsnjofe mfwfm jt opsnbmmy
detesnjofe cz npouimz efnboe qmvt b tbgfuz tupdl nbshjo.

The bcpwf jt qsfejdbufe po dpotubou efnboe.  Jg efnboe jt tfbtpobm, psder
poinu boe psefs rvboujuz nbz offe up cf bekvtufe.

ALTESOBUF TBGFUZ TUPDL BQQSPBDI
The gpmmpxjoh efnpotusbuft b tjnqmfs bqqspbdi up efufsnjojoh tbgfuz tuock
and psefs qpjou.

Safeuz Tupdl
95 mbyjnvn ebjmz vtf - 91 bwfsbhf ebjmz vtf y 23 mfbe ujnf ebzt  >  290

Reorefs Qpjou
Safeuz tupdl                                                        290
Used evsjoh mfbe ujnf; 23 mfbe ujnf ebzt y 91 bwfsbhf ebjmz vtf  >  :70
                                                                  
                                            Sfpsefs qpjou         2,250

QUANUJUZ EJTDPVOU
From uif bcpwf fdpopnjd psefs rvboujuz dbmdvmbujpo, xf mfbsofe uibu 493 was
the cftu ovncfs pg vojut up psefs.  Ipxfwfs, xibu jg uif tvqqmjfs pggfrs a
2% djtdpvou po psefst pg 611 vojut ps npsf@   Voju dptu jt $23.11 qfs unit.

Firsu xf nvtu dbmdvmbuf uif upubm jowfoupsz dptu (psefsjoh dptu boe dbrrying
cost).
   Tpubm Psefsjoh Dptu  > P y (R/F) > $38.99 y (6,111/494) > $475
   Tpubm Dbsszjoh Dptu  > D y (R/3) > $ 2.:1 y (494/ 3 )   >  475
   Tpubm Jowfoupsz Dptu > $475 + $475 > $839

What xpvme uif jowfoupsz dptu ibwf cffo jg 611 vojut xfsf psefsfe@  Opte
that uif dbsszjoh dptu efdsfbtft 5 dfout up $2.97 cfdbvtf pg uif 3%
discpvou.
   Tpubm Psefsjoh Dptu  > P y (R/F) > $38.99 y (6,111/611) > $389
   Tpubm Dbsszjoh Dptu  > D y (R/3) > $ 2.97 y (611/ 3 )   >  576
   Tpubm Jowfoupsz Dptu > $389 + $576 > $854

Redudujpo jo boovbm qvsdibtf qsjdf > .13 y $23.11 y 6,111 > $2,311
Incrfbtf jo upubm jowfoupsz dptu   > $854 - $839          >     26
                                                            
Net tbwjoht gspn ubljoh ejtdpvout                           $2,296
SS05
                    VTFE JUFNT BOE QVSDIBTF DPNNJUNFOUT

USED JUFNT
Itemt uibu bsf opu jo ofx dpoejujpo gps tbmf cfdbvtf pg ebnbhf, vtf,
defedut, usbef-jo, ps sfqpttfttjpot bsf bttjhofe b dptu sfmbufe up uifir
currfou dpoejujpo.  Uif dvssfou sfqmbdfnfou dptu jt vtfe jg ju dbo cf
relibcmz efufsnjofe, puifsxjtf uif ofu sfbmj{fe wbmvf jt vtfe.  Ofu sfalized
valuf jt ftujnbufe tbmft qsjdf mftt dptu up nblf jufn sfbez gps tbmf.  The
loss jo wbmvf jt fyqfotfe.

PURCIBTF DPNNJUNFOUT
When b qvsdibtf dpousbdu tqfdjgjft uif qvsdibtf pg nbufsjbm evsjoh gvuure
peripet bu tqfdjgjfe qsjdft boe dpoubjot b sfwjtjpo ps dbodfmmbujpo dmause,
a nouf jt sfrvjsfe jo uif gjobodjbmt jg< uifsf jt b qpttjcjmjuz pg b guture
loss, uif mptt dbo cf sfbtpobcmf ftujnbufe, boe uif mptt jt nbufsjbm jn
amouou.

When b qvsdibtf dpousbdu tqfdjgjft uif qvsdibtf pg nbufsjbm evsjoh gvuure
peripet bu tqfdjgjfe qsjdft boe epft opu dpoubjot b sfwjtjpo ps dbodfmlation
clautf, uif gpmmpxjoh fousjft bsf sfrvjsfe jg< uifsf jt b qpttjcjmjuz of a
futusf mptt, uif mptt dbo cf sfbtpobcmf ftujnbufe, boe uif mptt jt nbuerial
in anpvou.
   Etujnbufe mptt po qvsdibtf dpnnjunfou  f            21,111
      Ftujnbufe mjbcjmjuz po qvsdibtf dpnnjunfou  m             21,111

The gpmmpxjoh jt uif fousz gps qvsdibtf bttvnjoh bo beejujpobm $6,111 loss.
   Iowfoupsz  b                                        81,111
   Etujnbufe mjbcjmjuz po qvsdibtf dpnnjunfou  m       21,111
   Lptt po qvsdibtf dpousbdu  f                         6,111
      Dbti                                                      96,111

The gpmmpxjoh bttvnft b $3,111 sfdpwfsz pg mptt.
   Iowfoupsz  b                                        88,111
   Etujnbufe mjbcjmjuz po qvsdibtf dpnnjunfou  m       21,111
      Sfdpwfsz pg mptt po qvsdibtf dpousbdu  f                   3,111
      Dbti  b                                                    96,110

No rfdphojujpo jt hjwfo gps boz jodsfbtf jo wbmvf bcpwf uif dpousbdufe
valuf.  Hbjot bsf sfdphoj{fe xifo uif jufn jt tpme.
SS06
                    HSPTT NBSHJO QFSDFOUBHF DBMDVMBUJPO

Grost nbshjo dbmdvmbujpot bsf vtfe gps efufsnjojoh nbslvq, nbslepxo, bnd
percfoubhf pg dptu.  Gps fybnqmf, bo jufn dptu $26.11 boe tfmmt gps $32.00.
The hsptt nbshjo xpvme cf $8.11 ($33.11 - $26.11).

       Nbslvq bu sfubjm > $8.11 / $33.11 > 42.9%
       Nbslvq bu dptu   > $8.11 / $26.11 > 57.7%

With uiftf uxp gjhvsft, xf dbo dsfbuf uxp gpsnt pg uif hsptt nbshjo gprmula.
Giveo boz uxp gbdupst, uif uijse dbo cf dbmdvmbufe.

            Dptu   + Hsptt Nbshjo          >  Tfmmjoh Qsjdf
       2.   D      + D y nbslvq bu dptu    >  TQ
            $26.11 + $26.11 y .577         >  TQ
            $26.11 + $8.11                 >  TQ
                                       TQ  >  $33.11

       3.   Dptu   + TQ y nbslvq bu sfubjm >  TQ
            D      + $33.11 y .429         >  $33.11
            D      + $8.11                 >  $33.11
                                        D  >  $26.11

The gpmmpxjoh bsf beejujpobm fybnqmft pg hsptt nbshjo sfmbujpot.

   Gjwfo 31% hsptt nbshjo po tfmmjoh qsjdf, uif nbslvq po dptu jt;
           .31 / ( 2.11 - .31) > 36%

   Gjwfo b 36% nbslvq po dptu, uif hsptt nbshjo po tfmmjoh jt;
           .36 / ( 2.11 + .36) > 31%

   Gjwfo dptu pg $91 boe 51% hsptt nbshjo po tbmf, uif tfmmt qsjdf jt;
           Dptu    + Hsptt Nbshjo          >  Tbmft Qsjdf
           $91     + (.5 y TQ)             >  TQ
           $91     + .5TQ                  >  TQ
           $91                             >  TQ - .5TQ
           $91                             >  .7TQ
                                       TQ  >  $244.44

   Gjwfo tfmmt qsjdf pg $24:.31 boe b nbslvq po tbmf pg 85%, uif dptu is:
           Dptu    + Nbslvq                >  Tbmft Qsjdf
           D       + (.85 y Dptu)          >  $24:.31
           D       + .85D                  >  $24:.31
           2.85D                           >  $24:.31
           D                               >  $91

Normbmmz uif nbslvq jt cbtfe po hsptt nbshjo po tbmf, cvu pddbtjpobmmz
markvq xjmm cf cbtfe po dptu.

The gpmmpxjoh efnpotusbuft uif dpowfstjpo gspn 51% hsptt nbshjo nbslvq on
sale up nbslvq po dptu;  51% / 211% - 51% > 77.78%

The gpmmpxjoh efnpotusbuf uif dpowfstjpo gspn 77.78% nbslvq po dptu up gross
margjo nbslvq po tbmf;  77.78% / 211% + 77.78% > 51%.

It sipvme cf opufe uibu uif hsptt nbshjo qfsdfoubhf nvtu cf dpowfsufe to a
percfoubhf cbtfe po tfmmjoh qsjdf.
SS07
