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Principles of Mathematical Economics

Determining Freed Up Cash Amount: William & Sons

Williams & Sons last year reported sales of $10 million and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 5 while maintaining the same level of sales, how much cash will be fr

What is the Price Elasticity of Demand?

The price of a firm's product increases from $5 to $6. As a result, the quantity demanded of the product declines from 600,000 to 500,000. The price elasticity of demand for the good is equal to (Use the arc price elasticity of demand).

Demand Analysis and Pricing File

Problem 2:Demand Analysis and Pricing The Tamashiro market is the only supplier of fresh salmon flown directly from Alaska. It buys fresh salmon at wholesale in Anchorage. The wholesale demand for fresh salmon in Alaska is shown in the scheduled below which can be defined mathematically as a power (Cobb-Douglas

Present Value of Money for Investment Projects

Determine which of two investment projects a manager should choose if the discount rate of the firm is 20 percent. The first project promises a profit of $100,000 in each of the next four years, while the second project promises a profit of $75,000 in each of the next six years. Please explain work and show any mathematical e

Economic game theory

When Mcdonald's Corp. reduced the price of its Big Mac by 75 percent if customers also purchased french fries and a soft drink, The Wall Street Journal reported that the company was hoping the novel promotion would revive its U.S. sales growth. It didn't. Within two weeks, sales had fallen. Using your knowledge of game theory, w

EPS and P/E of a company

If a company had 1,000,000 shares outstanding, earnings of $15,000,000 and a stock price of $18 a share, what would its P/E ratio be. How would its EPS and P/E ratio compare to competitor's EPS and P/E/ and would you consider their stock to be undervalued. Why and Why not?

Stock Brokers Linear Programming Problem

The stock brokerage firm has analyzed and recommended two stocks to an investors' club of college professors. The professors were interested in factors such as short-term growth, intermediate growth, and dividend rates. These data on each stock are as follows: Factor Louisana Gas & Power Trimex Insulation C

Graphically analyze the following

Graphically analyze the following: Maximize profit = $4X + $6Y X + 2Y < 8 hours 6X + 4Y < 24 hours a. What is the optimal solution? b. If the first constraint is altered to X + 3Y < 8 does the feasible region or optimal solution change? 7-29

Four Firm Concentration Ratio

Ten firms complete in a market to sell product X. The total sales of all firms selling the product are $1 million. ranking the firms' sales from highest to lowest, we find the top four firms' sales to be $175,000, $150,000, $125,000, and $100,000, respectively. Calculate the four-firm concentration ratio in the market for produc

Economics: Capital Structure

A firm operates in perfect capital markets. The required return on its outstanding debt is 6 percent, the required return on its shares is 14 percent, and its WACC is 10 percent. What is the firm's debt-to-equity ratio?

How to Find Value of Arbitrage

See the attached file. If there is a stock with current price of 50 SR and there are only 2 possibilities where the stock can go up to 60 SR or 40 SR within 1 year time. Assume that the free risk interest rate is 10%. Please answer the following questions and explain each step you take: A)What is the expected call optio

Economics: What is the profit-maximizing price for a new product?

A manufacturer of electronic products has just developed a handheld computer. Following is the cost schedule for producing these computers on a monthly babsis. Also included is a schedule of prices and quantities that the firm believes it will be able to sell (baseed on previous market research). Q Pr

Economics - Microeconomics.

1. A major cereal manufacturer decides to lower prices from $3.60 to $3.00 per 15-ounce box. If quantity demanded increases by 18%, what is the price elasticity of demand? We need percentages change in quantity and the percentage and the percentage change in price. Need to use the average of the two end values to cal

Value added

Sam's Semiconductors produces computer chips, which it sells for $10 million to Carl's Computer Company (CCC). CCC's computers are sold for a total of $16 million. What is the value added of CCC? Multiple Choice $6 million $10 million $16 million $26 million

Simulation

Seventy-five percent of calls arriving at a help line can be handled by the person who answers the phone, but the remaining 25% of them will need to be referred to someone else. Assume that every call requires one minute of attention by the person who answers the phone (either to answer the question or to figure out how the ref

Relation between GNP and GDP

Problem: GDP differs from GNP because: GDP = GNP - net factor payments from abroad. GNP = GDP - net factor payments from abroad. GDP = GNP - capital consumption allowances. GNP = GDP - capital consumption allowance

Black-Scholes call option.

Show that Black-Scholes call option hedge ratios also increase as the stock price increases. Consider a one-year option with exercise price $50 on a stock with annual standard deviation 20%. The T-bill rate is 8% per year. Find N(d1) for stock prices $45, $50, and $55.

Cost Of Capital: Acetate, Inc., has equity with a market value of $20 million and debt with a market value of $10 million. Treasury bills that mature in one year yield 8% per year, and the expected return on the market portfolio over the nex year is 18%. The beta of Acetate's equity is .90. The firm pays no taxes. a. What is Acetate's debt-equity ratio? b. What is the firm's weighted average cost of capital? c. What is the cost of capital for an otherwise identical all-equity firm?

Acetate, Inc., has equity with a market value of $20 million and debt with a market value of $10 million. Treasury bills that mature in one year yield 8% per year, and the expected return on the market portfolio over the nex year is 18%. The beta of Acetate's equity is .90. The firm pays no taxes. a. What is Acetate's debt-equi

Comparing GDP and National Income

Could you explain the similarities and differences between GDP and national income? Would you define Gross Domestic Product and Gross National Product. Then answer the following question: Why would a Honda manufactured in Ohio be included in U.S. GDP, while a General Motors vehicle manufactured in Mexico would not? Finall

Preference Map for Buy Quantities

Bob buys milkshakes and hamburgers. The price of a milkshake is 5 dollars, and the price of a hamburger is 1 dollar a burger. Each month, Bob spends all of his income and buys 10 milkshakes and 20 hamburgers. Next month the price of a milkshake will fall to three dollars and the price of a hamburger will rise to 2 dollars. U

Consider an industry in which two firms are producing a product.

Consider an industry in which two firms are producing a product. Assume that the two firms are current "colluding together" to set price so to maximize the industry profit. At this collusive price, the industry profit is $100 million - and that profit is split evenly between the two firms. Assume also that if one firm were to

Emission Levels

2. The table below presents estimates of the benefits and costs arising from a program to restrict emissions of sulfur dioxide in Virginia. Current emissions are 10 tons per month. Emissions (tons/month) Benefits (million $) Costs (million $) 10 0 0 9 6 12 8 10 14 7 20 16 6 34 19 5 46 24 4 56 31 3 64 42 2 70 55 1

Mergers and P/E Ratios.

Mergers and P/E Ratios. Castles in the Sand currently sells at a price-earnings multiple of 10. The firm has 2 million shares outstanding, and sells at a price per share of $40. Firm Foundation has a P/E multiple of 8, has 1 million shares outstanding, and sells at a price per share of $20. a. If Castles acquires the oth

Long-run supply curve

Suppose that a competitive firm long-run supply curve is given by the expression QF= -500 + 10P. Does this mean that the firm will supply -500 units of output at a zero price? If so, what does output of -500 units mean?

Maximizing Total Profits and Revenue

A Monopolist's Demand and Total Cost functions are: P= 1624 -4Q TC= 22,000 + 24Q -4Q(squared) + 1/3Q (to the third power) Where Q is output produced and sold a. At what level of output and sales (Q) and price (P) will Total Profits be maximized? b. At What level of output and sales (Q) and price (P) will Total Rev