Question 8 Which of the following is not a basic feature of a monopolistically competitive industry? a. There are many buyers and sellers in the industry b. Each firm in the industry produces a differentiated product c. There is free entry and exit into the industry d. Each firm owns a patent on its p
Need to discuss these questions in class. Waste Industries is evaluating a $70,000 project with the following cash flows. Year Cash Flows 1 $11,000 2 16,000 3 21,000 4 24,000 5 30,000 The coefficient of variation for the project is .847. Based on the following table of risk-adjusted discount rates, should
A farmer can grow wheat, or potatoes, or both. If the weather is good, an acre of land yields a profit of $2000 if devoted to wheat, and $1000 if devoted to potatoes. Should the weather be bad, an acre of wheat yields $1000 and potatoes $1750. Good and bad weather are equally likely. a. Assuming that the farmer's utility o
Budget line: Supposedly, indifference theory can explain all rational choices and behavior. Try the theory out on this situation. Suppose the only consideration for couples to have a baby or not was money. If a baby costs $5,000 a year, the price of "All other goods" is $1, and the couple has an annual income of $40,000: a.Construct the budget line for having a family. b.suppose the Smiths plan to have 3 children while the Jones decide against having any children at all. Draw the indifference maps and budget lines consistent with these decisions. (Hint: this question is easier if you have one graph for the Smiths and one for the Jones. c.For the Smiths, derive the trade off (marginal rate of substitution) between children and all other goods they could consume?
Supposedly, indifference theory can explain all rational choices and behavior. Try the theory out on this situation. Suppose the only consideration for couples to have a baby or not was money. If a baby costs $5,000 a year, the price of "All other goods" is $1, and the couple has an annual income of $40,000: a.Construct th
Mountain Fresh Water Company is considering two mutually exclusive machines. Machine A has an up-front cost of $100,000 (CF0 = -100,000), and it produces positive after-tax cash inflows of $40,000 a year at the end of each of the next 6 years. Machine B has an up-front cost of $50,000(CF0 = -50,000), and it produces after-ta
Malitz Inc. recently hired you as a consultant to estimate the company's WACC. You have obtained the following information. (1) Malitz's noncallable bonds mature in 25 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,075.00. (2) The company's tax rate is 40%. (3) The risk-free rate is 4.50%
1.Consider a project with the expected cash flows: Year Cash flow 0 - $615,000 1 + 141,000 2 + 300,000 3 + $300,000 What is this project's internal rate of return? If the discount rate is 0%, what is this project's net present va
Edgar Automobile Manufacturing Co [ EAM] produces cars for both American and Japanese car companies. It currently manufactures the transmission that go into the cars . X Corp [X] has offered to provide the transmissions to EAM for $400 each. EAM produces 5,000 cars per month and has the following costs for the manufacture of
Impact of Uninsured Population Project: Prepare a 1,050 - 1,400 word paper discussing the issues below (USE SAME Presbyterian Hospital of Denton) ? Evaluate the overall risk to the organization if the rates of uninsured and underinsured continue to rise at 2-3% over the next five years. ? Propose to the governing body of the
Firm Value Janetta Corp. has an EBIT rate of $750,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 15%, and the corporate tax rate is 35%. The company also has a perpetual bond issue outstanding with a market value of $1.5 million. a. What is the value of the company?
ROE and Leverage Money, Inc., has no dept outstanding and a total market value of $150,000. Earnings before interest and taxes, EBIT, are projected to be $14,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 30% higher. If there is a recession, than EBIT will be 60% lower
Please see attached file for the problem. A 12 month project is estimated to spend one million dollars over the life of the project. At Month 3, the following numbers have been recorded: Month PV EV AC 1 $10K $1K $5K 2 $25K
Capital Budgeting Practice Problems a. Consider the project with the following expected cash flows: Year Cash flow 0 - $550,000 1 $ 90,000 2 $100,000 3 $450,000 If the discount rate is 0%, what is the project's net present v
Mullineaux Corporation has a target capital structure of 55% common stock and 45% debt. Its cost of equity is 16%, and the cost of debt is 9%. The relevant tax rate is 35%. What is Mullineaux's WACC?
I need a brief biography of JP Morgan's life and times. I also need to discuss the contributions to economic thinking made by him, and also demonstrate how that person's life and times influenced his or her contributions.
The child and family government benefits seminar was such a success that Advocates for Children will conduct a second seminar in an adjoining community.
The child and family government benefits seminar was such a success that Advocates for Children will conduct a second seminar in an adjoining community. The executive director decides that this second seminar will attempt to maximize revenues. Consequently, no reduced fee schedule will be offered. All trainees will pay the fu
- The budget constraint facing an individual planning his or her consumption over two periods is an intertemporal one in which the present value of consumption expenditures must equal the present value of incomes in the two periods: C0 + C1/(1 + r) = Y0 + Y1/(1 + r) where Y and C represent income and consumption respectively a
John Piderit, the general manager of the Western Tool Company, is considering introducing some new tools to the company's product line. The top management of the firm has identified three types of tools (referred to as projects A, B, and C). The various divisions of the firm have provided the data given in the following table on
The management of West Valley Memorial Hospital needs to prepare a cash budget for July 2006. The following information is available: a. The cash balance on July 1, 2006, is $236,000. b. Actual services performed during May and June and projected services for July are: May June July Cash services (bills paid by individuals
Pro-Forma Income Statement Silver Company has asked you to prepare a pro-forma income statement for the coming year. The following information is available: Expected sales revenue . . $1,240,000 Manufacturing costs: Variable cost of goods sold . 625,000 Fixed overhead . . . . . . . .125,000 Selling expenses: Variable exp
Please see attached pdf
Education is an example of a positive externality: acquiring more education benefits the individual student and having a more highly educated work force is good for the economy as a whole
Education is an example of a positive externality: acquiring more education benefits the individual student and having a more highly educated work force is good for the economy as a whole. The accompanying table illustrates the marginal benefit to Sian per year of education and the marginal cost per year of education. Each year
You are advising the government on how to pay for national defense. There are two proposals for a tax system to fund national defense.
You are advising the government on how to pay for national defense. There are two proposals for a tax system to fund national defense. Under both proposals, the tax base is an individual's income. Under proposal A, all citizens pay exactly the same lump-sum tax, regardless of income. Under proposal B, individuals with higher inc
Capital budgeting projects include all of the following with the exception of the purchase of a six-month treasury bill. the expansion of a plant. the development of a new product. the replacement of a piece of equipment.
You are faced with the last days of a computer conversion and you are receiving calls that people have paid their bills, yet were not being credited for their payments. You later find no copies of receipts, yet patients set you copies of theirs. You know there was theft. How do you address it? How do you prove it? There were
Honda and GM are competing to sell a fleet of 25 cars to Hertz. Hertz fully depreciates all of its rental cars over five years using the straight-line method. The firm expects the fleet of 25 cars to generate $100,000 per year in earnings before taxes and depreciation for five years. Hertz is an all-equity firm in the 34-perc
2) Your firm has an opportunity to make an investment of $50,000. Its cost of capital (interest rate) is 12 percent. It expects after-tax cash flows (including the tax shield from depreciation) for the next 5 years to be as follows: Year 1 10,000 Year 2 2
The term "capital budgeting" refers to decisions a. which are made in the short run. b. which concern the spreading of expenditures over a period lasting less than one year. c. where expenditures and receipts for a particular undertaking will continue over a relatively long period of time. d. where a
Eisenhower Communications is trying to estimate the first-year operating cash flow (at T=1) for a proposed project. The financial staff has collected the following information: Sales revenues $10 million Operating costs (excluding depreciation) 7 million Depreciation 2 million Interest expense 2 million
Depreciation Methods - Kristin is evaluating a capital budgeting project that should last for 4 years.
Kristin is evaluating a capital budgeting project that should last for 4 years. The project requires $800,000 of equipment. She is unsure what depreciation method to use in her analysis, straight-line or the 3-year MACRS accelerated method. Under that straight-line depreciation, the cost of the equipment would be depreciated ove