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Home Guard has recently completed a $100,000, two-year study on its new pest control device. It can go into production for an initial investment in equipment of $5 million. The equipment will be depreciated straight line over the useful life of 5 years to a value of zero. The fully depreciated equipment is expected to sell for $800,000 at the end of its useful life. The project also requires investment in land value of $300,000 which is expected to have a realisable value of $500,000 at the end of the project. Investment of $400,000 in current assets will be recovered at the termination of the project.
The marketing department has estimated that 200,000 units of its new device could be sold annually over the next five years at a price of $7 each. Fixed costs of $500,000 per annum will be incurred. The firm is an ongoing profitable business and pays taxes at a 30% rate in the year of income. All capital gains will also be taxed at a rate of 30%. The company uses a 10% discount rate on the new project. Using the NPV approach, advise the firm whether the project should be undertaken.
What are the two methods the FDIC has of handling bank failures. Compare and contrast these two. Which tends to be the most costly and why? Explain the trade-off, in bank regulation, between stability and the absence of moral hazard. In what ways did..
Illustrate what evidence does GI present to support the view that Canada had entered a recession
Determine whether demand is elastic, inelastic, or unit elastic with respect to its own price and whether Good Y is a substitute or a complement with respect to Good X.
An entrepreneur needs funds for a project. He has funds of his own, but enough to cover the required investment of $100. If the entrepreneur doesn’t misbehave, the project will succeed with probability .9, yielding a gross return of 120 in one year.
Is the idea of demand useful in healthcare, given the important role of agents? Should medical services be free? Justify your answer. Why might a consumer be “rationally ignorant” about the proper therapy for gallstones? Why do demand curves slope do..
An engineering company is working in coal mining operation has installed an in-shaft monitoring system for oxygen tank and gear readiness for emergencies. Based on maintenance patterns for previous systems, costs are minimal for the first few years, ..
Which of the following affects demand for money?
Suppose your employer provides a health insurance policy that pays 80 percent of $1 over the first $100 spent. If you incur $1,000 in expenses, how much will you pay out of pocket? What percentage of your expenses will this be?
Analyze the challenges that companies face in entering global markets. Identify the potential impact to capital budgets in making the decision to move into a global market.
Would the monopolist charge a higher price in market 1 or in market 2? Why? Assume the price charged in market 2 was $10, what would be the price charged in market 1?
Draw a (standard) U-shaped SAC curve, U-shaped SAVC curve, and upward sloping SMC curve for a perfectly competitive firm. Indicate the firm’s short-run supply curve. What will be the effect of an increase in fixed costs on the firm’s supply curve and..
q1. suppose that i make 15 per hour and you make 20 per hour and we both like to eat hamburgers that cost 5 each.
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