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- Is it worth investing in a project that costs up to 600 million dollars across 11 years but is expected to bring tens of billions of dollars in benefit between 60 and 120 years from now when there is a 0 percent discount rate? Why or why not? What about a discount rate greater than 0, should the policy be implemented then?Find The net present value of the project if discounted at a social discount rate of 7%.Management of AG Travel and Tour has identified two groups of individuals thatwould be interested in the vacation package consisting of room and board and/orentertainment. The maximum amount that group 1 is willing to pay for room andboard is GHC 2500 and for entertainment is GHC 500. For group 2, the maximumamount they are willing to pay for room and board is GHC 1800 and forentertainment is GHC 750. Although AG Travel and Tour is not able to identifymembers of either group, it does know that each group values the components ofthe package differently. Assuming there are an equal number of members in eachgroup and that the total membership in each group is a single individual. If themarginal cost of providing the service (room and board and/or entertainment) toeach group is GHC 1000. How much will the profit for AG Travel and Tour be?
- Management of AG Travel and Tour has identified two groups of individuals thatwould be interested in the vacation package consisting of room and board and/orentertainment. The maximum amount that group 1 is willing to pay for room andboard is GHC 2500 and for entertainment is GHC 500. For group 2, the maximumamount they are willing to pay for room and board is GHC 1800 and forentertainment is GHC 750. Although AG Travel and Tour is not able to identifymembers of either group, it does know that each group values the components ofthe package differently. Assuming there are an equal number of members in eachgroup and that the total membership in each group is a single individual. If themarginal cost of providing the service (room and board and/or entertainment) toeach group is GHC 1000. Since AG Travel and Tour is not able to identify members of each group,what price should it charge for each product?Management of AG Travel and Tour has identified two groups of individuals thatwould be interested in the vacation package consisting of room and board and/orentertainment. The maximum amount that group 1 is willing to pay for room andboard is GHC 2500 and for entertainment is GHC 500. For group 2, the maximumamount they are willing to pay for room and board is GHC 1800 and forentertainment is GHC 750. Although AG Travel and Tour is not able to identifymembers of either group, it does know that each group values the components ofthe package differently. Assuming there are an equal number of members in eachgroup and that the total membership in each group is a single individual. If themarginal cost of providing the service (room and board and/or entertainment) toeach group is GHC 1000. If AG Travel and Tour wants to charge a package price, what is the highestprice it can charge?Firms do not add to their stock of capital when Tobin's q ratio is 0 . 9 . If q is less than 1 , then the stock market values installed capital at more than its replacement cost. True or False
- Why is the residual model more often used to establish a longrun payout target than to set the actual year-by-year dividendpayout ratio?State the economic meaning of the viability condition and express it mathematically.Suppose a firm is facing a two-period (t = 0, 1) depletable resource (e.g., oil) extraction problem. The inverse demand function of the resource is Pt=20–0.5Qt ; marginal extraction cost is MCt = $5/unit; resource stock is Q = 20 units and interest rate is r = 50%. a) Write down the firm’s objective and efficiency condition. Using diagrams for this problem, calculate the dynamically efficient extractions, marginal user costs, present value of scarcity rents, and present value of total net benefits for the two periods.
- A university spent $1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500 kw, have a life expectancy of 20 years and suppose the discount rate is 10%. If electricity can be purchased for costs of$0.10 per kwh, how many hours per year will the solar panels have to operate to make this project break even? If efficient systems operate for 2,400 hours per year, would the project break even? The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?assume the health production function is h = 365-1 /H where h is the number of healthy days a person has in each year and H is the persons health capital. Assume this person earns $100 a day and the marginal cost of health investment is pi = 25 and remains constant overtime. The annual interest rate is 5% and health capital depreciates at a rate of 15% per annum. Suppose the person acquire a chronic disease and his health depreciation rate rises to 35% annually what is the new optimum level of health this person should demand now having the chronic disease? suppose instead of having a chronic disease the person experiences a recession and his wage falls to $50 a day. Assume the change in the price of time inputs changes the cost of a unit of health investment by 10%. What is the value of the persons optimal health demand now?Compare the market multiple, LBO, and DCF models and discuss which one you prefer when it comes to the valuing of a private company. Explain.