Consider a private value auction with four bidders and two identical goods. Supposeeach bidder demands just a single unit. The values for bidders 1, 2, 3, and 4 are v1 = 32, v2 =26, v3 = 45, and v4 = 22. The seller values each unit at v=20 (only seller knows his valuation).

a. In a Vickrey (second-price sealed bid) auction, which bidder(s) get the two units andhow much do they pay? Is the outcome Pareto efficient? (Hint: The auction will be hold twice to sell each unit).

b. Now suppose that the bidders have positive but diminishing values for the secondunit as well. In particular, the values are v1 = (32, 19), v2 = (26, 18), v3 = (45, 24),and v4 = (22, 14), where the first number is the value for the first unit and thesecond number is the value for the second. In a Vickrey auction, which bidder(s) getthe two units and how much do they pay? Is the outcome Pareto efficient? (Hint:The auction will be hold twice to sell each unit).

c. Suppose that the bidder’s valuations are still as described in part b above, and theseller actually knows bidders’ true valuations. Can the seller increase its profits byusing a different type of auction? If yes, prove your argument by giving a numericalexample. If no, explain why not.

## The annuitys first payment occurs six yearsWhat is the value today of a 15-year annuity that pays $650 a year? The annuity’s first payment occurs six years from today. The annual interest rate is 11 percent for Years 1 through 5, and 13 percent thereafter. |

## What is the current price of bondJallouk Corporation has two different bonds currently outstanding. Bond M has a face value of $70,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $2,800 every six months over the subsequent eight years, and .. |

## What is the accounting break-even pointNight Shades Inc. (NSI) manufactures biotech sunglasses. The variable material cost is $1.15 per unit, and the variable labor cost is $2.07 per unit. What is the variable cost per unit? Suppose NSI incurs fixed costs of $670,000 during a year in whic.. |

## What is the expected return of the two asset portfolioAn investor wants to form a two asset portfolio consisting of Treasury bills with a return of 1.5% and a risky portfolio with a risk premium of 12.7% and a standard deviation of 22%. The investor wants the standard deviation of the two asset portfoli.. |

## What will the market price per share be after the splitRobinson's has 15,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $36 a share. The balance sheet shows $15,000 in the common stock account, $315,000 in the capital in excess of par account, and $189,000 in th.. |

## Describe the market risk premium and risk-free ratePlease describe the market risk premium, risk-free rate and define beta as they relate to investor and creditor decision making. Please provide your estimation of the current risk-free rate and the source you used to support your estimation. You shou.. |

## Present value of her royalty income if opportunity costMary will receive $12,000 per year for the next 10 years as royalty for her work on a finance book. What is the present value of her royalty income if the opportunity cost is 12 percent? |

## Calculate the mirr of project using the combination approachRAK Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$ 28,400 1 10,600 2 13,300 3 15,200 4 12,300 5 – 8,800. The company uses an interest rate of 8 percent on all of its projects. Calculate the MIRR of the project using .. |

## What implication does this ratio have for future cash flowsYear ended December 31, 2011 2010 (In millions) Depreciation and amortization expense $ 98.1 $ 103.0 Property and equipment, net 580.6 624.2 Land 45.2 48.5 Accumulated depreciation and amortization 1,193.2 1.173.9 . By what percentage are the assets .. |

## What is the value at year seven of perpetual streamGiven an interest rate of 7.1 percent per year, what is the value at Year 7 of a perpetual stream of $3,850 payments that begin at Year 17? |

## Conservative financing plan instead of more aggressive planHicks Health Clubs, Inc., expects to generate an annual EBIT of $750,000 and needs to obtain financing for $1,200,000 of assets. Their tax bracket is 40%. If the firm goes with a short-term financing plan, their rate will be 7.5 percent, and with a l.. |

## Suppose the international parity conditions holdSuppose the international parity conditions hold. Does that mean that the nominal interest rates would be equal among countries? Why or why not? |

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd