If the market value of Firm A is 2.2 million and the replacement cost of capital is 605,500. Find the Tobin's q. Should the firm replace capital
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- If the market value of firm A is $2.2 million and the replacement cost of capital is $605,500, find the Tobin's q. Should the firm replace capital? Explain your response.Find the value of marginal efficiency of capital if the prospective yield is 781 and the supply price 362Multiple choice question and give a short explanation about your answerWhen the replacement cost is lower than the market value of installed capital:a. firms are expected to buy more capital.b. its stock value goes up.c. firms do not need to buy more capital.d. none of the above.
- Case: As part of the most recent collective bargaining agreement with employees, an employer must offer medical insurance at "reasonable, non-profit rates." The employer plans to self-insure in place of using a private insurance company. Statistical evidence suggests that the average household currently spends $450 per year for medical bills and $80 for health screening and routine check-ups. Administrative costs are expected to average $30 per family. The collective bargaining agreement dictates that the plan's coverages and rates be fixed for a period of two years. The auditor considers the choice of the plan to be extremely important. Consequently, the auditor has asked you to evaluate the three proposals listed below. Proposal A would charge a $350 premium with no deductible. Coverage is extended to pre-existing conditions, but to cover the non-deductible clause, health screening and routine check-ups are not covered. Proposal B charges a $250 premium with a $200…If the supply price is 14 and the expected yield is 796, what is the capital's marginal efficiency?A rich folk singer has donated $500,000 to endow a university professorial chair in BohemianStudies. If the money is invested at 8.5%, how much can be withdrawn each year, ad infinitum, topay the Professor of B.S.?
- Workers Total Product Product price 0 0 4 1 16 4 2 26 4 3 34 4 4 40 4 5 44 4 If the product price increases to a constant $8, then at a wage rate of $30 the firm will choose to employ how many workers?Treasury bans Bain and Co. from public sector contracts for a decadeNational Treasury has banned consultancy Bain & Co. from tendering for public sector contracts for a period of 10 years for engaging in "corrupt and fraudulent practices" related to its contract at the SA Revenue Service (SARS).The ban will run from 5 September 2022 until 4 September 2032."This restriction has been published on the National Treasury website and database for restricted suppliers. The restriction will apply to any other contract for services awarded to Bain & Co in the public sector."Treasury said it was, in collaboration with SARS, "in the process of restricting Bain & Co, South African Directors through a phased approach".The decision to ban the company comes seven weeks after the UK government banned it from competing for state contracts for three years. Using the information in the article, and additional research, conduct a macro/remote environmental analysis of Bain and Company using…Jim has been employed at Gold Key Realty at a salary of $2,000 per month during the past year. Because Jim is considered to be a top salesman, the manager of Gold key is offering him one of three salary plans for the next year: (1) a 25% raise to $2,500 per month; (2) a base salary of $1,000 plus $600 per house sold; or, (3) a straight commission of $1,000 per house sold. Over the past year, Jim has sold up to 6 homes in a month. Write down the month salary payoff table for Jim.
- When deciding upon the optimal amount of capital, a firm will decide to purchase additional capital if (CV) When deciding upon the optimal amount of capital, a firm will decide to purchase additional capital if the cost of capital falls below the previous period's cost the marginal benefit of capital equals or exceeds the marginal cost of the capital the marginal benefit of capital is less than the marginal cost of the capital the additional capital will add necessitate hiring more laborQ4 (i) A business manager determines that t months after production begins on a new product, the number of units produced will be P thousand,where P(t) =6t2 + 5t (t + 1)2. What happens to production in the long run ? (ii) A ruptured pipe in a North Sea oil rig produces a circular oil slick that is y meters thick at a distance x meters from the rupture.Turbulence makes it difficult to directly measure the thickness of the slick at the source (where x = 0),but for x > 0,it is found that y =0.5(x2 + 3x) /x3 + x2 + 4x.Assuming the oil slick is continuously distributed,how thick would you expect it to be at the source?Consider the problem of a firm who produces output in the present and the future period. This firm is endowed with K units of capital in the current period which is exogenously given. The firm can, however, choose future capital stock K′ through investment I. In particular, we have the following capital accumulation equation: K′ =(1−d)K+I. The firm’s profit is π = Y − wN − I in the current period, where Y = zF(K,N) is output, w is wage, and N is employed labour. Similarly, the profit in the future period is given by π′ =Y′−w′N′+(1−d)K′,whereY′ =z′F(K′,N′)is future output,w′ is future wage, N′ is future labour demand, and (1 − d)K′ is the value of capital left over after production in the future period. The firm maximizes the present value of profits given by V=π+(π'/1+r) Answer the following questions. Write down the firm’s profit maximization problem. Derive labour demands for both the current period and the future period. Suppose the production function is given byY…
