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A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump-sum of $10mln, or in parts, where $5.5mln can be provided in year 1, and another $5.5mln can be provided in year 2. Assuming the opportunity interest rate is 6%, what is the present value of the second alternative? Which of the two alternatives should be chosen and why? How would your decision change if the opportunity interest rate was 12%? Please, show all your calculations. 2. An angel investor is considering investing in one of two start-up businesses and is evaluating the expected returns along with the risk of each option in order to choose the better alternative. Business 1 is an innovative protein energy drink, which has ENPV of $100,000 with a standard deviation of $40,000. Business 2 is a unique chicken wings dipping sauce with an ENPV of $60,000 and a standard deviation of $25,000. a) Apply the coefficient-of-variation decision criterion to these alternatives to find out which is preferred by the angel investor, assuming that he/she is risk-averse. b) Apply the maximin criterion, assuming that the worst outcome in Business 1 is to lose $5,000, whereas the worst outcome in Business 2 is to make only $5,000 in profit. c) If you were the angel investor, what is your certainty equivalent for these two projects? Are you risk-averse, risk-neutral, or risk-lover?
Use the orange points square symbol on the graph below to plot the short-run industry supply curve for the wheat industry.
Illustrate what is the highest possible beta approximate for the project before its NPV becomes negative.
Using the formula for β^1 and β^0, show what will happen to the estimator of the slope and intercept in the SLR model if y is multiplied by the constant k, and at the same time x is multiplied by the constant m.
If David also Ellen live in rent-controlled apartments, illustrate what is the equilibrium cost for the non-rent-controlled apartments.
What is the impact of a tax cut in an economy operating under a flexible exchange rate regime on household spending, interest rates.
Elucidate how the equilibrium quantity for the representative firm on the same graph.
Elucidate the balance sheet balances if these are the only assets and liabilities. Supposing that the people hold no currency, what happens to each of these values.
elucidate the social gain from the market for cars. Be sure to show gains and losses to all relevant groups of Americans.
Explain how this may be related to the problem of adverse selection. What could banks do to try to reduce this problem?
Specify the best parametric model for estimating the direct cost of commercial facility construction projects performed by this firm.
firms marginal cost curve crosses marginal revenue curve at an output level of 1,000 unit. What is firms current profit. What is likely to occur in this market and why.
Suddenly, 20,000 people immigrate from abroad and initially settle in the West. Elucidate why they possess the same skills as the native residents and also supply their labor inelastically.
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