8. Assume that the consumption function is C= 564 +0.66(Y - T), Y is 6679, and T = 264 +0.58Y.C then equals O 3252.19 O 2241.18 O 3489.93 O 3489.07
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- . Given the consumption function, C=0-75 Y and the investment function, I=110-0:25 i, then the equation of the IS function will be : oubonqom (A) Y=110–0-75 i (B) Y=440-i (C) Y=500–0-25 i M) Y=400-0:75 i %3D dation and %3DA project that will provde annual cash flows of $2,350 for nine years costs $9,700 today. a. At a required return of 12 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At a required return of 28 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) а. NPV b. NPV C. Discount rate %The Rosy company, is planning to start an egg packing factory in the country of Bevery. The initial investment for the egg packing factory is $5Million and it will generate net revenues for every year for the next 10 years starting as $1M in the first year, and increasing by $0.5Million every year (e.g, 1M, 1.5M, 2M, 2.5M...). Currently £1 is equal to $20. However, the $ is being devalued (losing value) against the £ by 12% every year (so next year £1 will be $22.4 ). If Rosy company has a MARR of 30% in Bevery, what is the PW of this egg packing factory in £?
- Organize each of the following equations to express P as a function of Q. Q as a function of P P as a function of Q О%3D 30 — Р О%3D 12 — ЗР 80 3 18 — 2Р3. Your boss has suggested that, instead of a savings of $37,000 annually, it makes more sense to expect a savings that starts at $20,000 in year 3 and rises $2,000 per year to an ending value in year 13 of $40,000. She bases her suggestion on the fact that the experience curve will gradually reduce production costs. What would be the NPV of the cash flow at 4% if you adopt her suggestion?Matollows and 250 shillings in the following year. After that, dividends are expected to grow at constant 5% per year. If the required rate of return is 10%, what price should investors pay for such shares today? 4. Suppose a firm is considering a project that would require an initial cash outlay of 15 million shillings and expected to generate shs 4.5 million each year for the next 4 years. The firm assumes that the prices and costs increases at the same rate and that the required rate of return expressed in nominal terms is 14%. The firm also practices a policy whereby cash flows are stated at the prices of period zero. The inflation rate is expected to be 5%. (a)Outline two ways in which the effects that inflation has on the acceptability of investment projects could be considered. (b)Using the NPV technique, is the project worth taking? What have you learned from your analysis as far as treating inflation in investment analysis is concerned? 30/2021 4:39:41 PM Page 1 of 2
- Refer to the below figure: the saving function can be given as: Aggregate consumption (C) 270 200 130 60 450 100 S = -60 -0.3Y O S = -60+ 0.3Y O S = 60+ 0.7Y O S = -60 -0.7Y O S = -60 +0.7Y 200 300 Aggregate income (Y)An investor pays P1,100,000 for a mine which will yield a net income of x pesos at the end of each year for 10 years and then will become valueless. He accumulates a replacement fund to recover his capital by annual investments at 4.5%. Find x if he desires 11.5% return on his investment. a. P216,000 b. P246,000 c. P236,000 d. P226,000Fatima is an owner of a building and she can lease her building for 100,000 AED per year for two years. The explicit cost of maintaining the building is 30,000 AED, and the implicit cost is 50,000AED. All revenues are received, and costs borne, at the end of each year. If the interest rate is 10 percent, determine the present value of the stream of Accounting Profits? Economic Profits?
- Tonny is currently evaluating two mutually exclusive projects. Both projects have a cost of capital of 12% and can be replicated indefinitely with the same cash flows. Calculate the EAA (Equivalent Annual Annuity) payment for just Project L. t = 0 1 Project S: L A. $34.12 B. $36.91 C. $38.74 D. $40.23 E. $42.87 t = 0 Project L: (8700) 1 6500 2 2 2500 (8700) 1400 6800 3400E1 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…EXAMPLE 5-1 An investment of $10,000 can be made in a project that will produce a uniform annual revenue of $5,310 for 5 years and then have a salvage value of $2.000, Annual disbursements will be $3,000 each year for operation and maintenance costs. The company is willing to accept any project that will earn :0% or more, before income taxes, on all invested capital. Show whether this is a desirable investment by using the present worth method. Draw the cash flow diagram