You are a college sophomore who tutors fellow classmates in your free time for extra money. With your current abilities, you can earn $2,000 per year for the next three years from tutoring. However, suppose you have the option of enhancing your ability to tutor by acquiring special training for $6,000. After paying the fee, the raining takes two years to complete, but at the end of this training period, you can earn $13,000 tutoring during the third year. While training in your free time, you are unable to continue tutoring. At what discount rate would you be indifferent between acquiring and not acquiring the training? You would be indifferent if the discount rate were percent. (Enter a numeric response rounded to two decimal places.)

You are a college sophomore who tutors fellow classmates in your free time for extra money. With your current abilities, you can earn $2,000 per year for the next three years from tutoring. However, suppose you have the option of enhancing your ability to tutor by acquiring special training for $6,000. After paying the fee, the raining takes two years to complete, but at the end of this training period, you can earn $13,000 tutoring during the third year. While training in your free time, you are unable to continue tutoring. At what discount rate would you be indifferent between acquiring and not acquiring the training? You would be indifferent if the discount rate were percent. (Enter a numeric response rounded to two decimal places.)

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter27: Investment, The Capital Market, And The Wealth Of Nations

Section: Chapter Questions

Problem 13CQ

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E1 Prior to the expansion, the Fountainbleau profits were $60m and the Eden Roc's profits were $25m. If the Fontainebleau completes the highrise expansion, their profits will increase by A. If the expansion is built and Eden Roc makes no changes, Eden Roc's profits will fall by B from the shadow cast on its pool area. Eden Roc can convert the shaded region of their property to a nightclub (which is unaffected by any shadow). In that case, Eden Roc will earn a total profit of C. Alternatively, the Fountainblue can demolish the expansion and instead put in two story condominiums which will not interfere with Eden Roc's sunlight, but then will only increase profit by D. Suppose that Eden Roc loses the lawsuit, and Fountainebleau is permitted to complete construction as it chooses. A) What will each party choose to do in the absence of bargaining? B) What will be the threat values? C) What is the cooperative surplus from bargaining? Enter zero if there is no cooperative surplus to…