If the date of an entity's financial statements is december 31, the date of the auditor's report is february 20, and the audit report release date is february 22, which of the following is considered a subsequent event?

a) a significant acquisition that was announced on february 1 and will be finalized on october 1.
b) a court settlement on march 3 related to a case that was pending on december 31.
c) losses from the devaluation of a foreign currency that became finalized on february 21.
d) the entity's announcement of a major restructuring plan on december 30 that will be implemented during the upcoming year.

You are the manager of a large crude-oil refinery. as part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. the replacement and downtime cost in the first year is $165 comma 000. this cost is expected to increase due to inflation at a rate of 7% per year for six years (i.e. until the eoy 7), at which time this particular heat exchanger will no longer be needed. if the company's cost of capital is 15% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated?