1. A publisher faces the following demand schedule for the next novel from one of its popular authors:

The author is paid $2 million to write the book,

Price 100 90 80 70 60 50 40 30 20 10 0

QD(1000s) 0 100 200 300 400 500 600 700 800 900 1000

and the marginal cost of publishing the book is a constant $10 per book.

a. Compute the total revenue, total cost, and profit at each quantity. What quantity would a profit-maximizing publisher choose? What price would it charge?

The total revenue at each level of production is given by the demand schedule above, using T R = P Q. The total cost is the constant fixed costs of $2 million plus the variable cost of ($10)Q. For convenience, the units of revenue, cost, and profit are given in millions. In the table below, we combine these equations with the calculation of marginal revenue. It turns out that the profit-maximizing level of output is 500,000 units, corresponding to a price of $50.

b. Compute marginal revenue. (Recall that MR = ∆T R/∆Q). How does marginal revenue compare to the price? Explain.

QD(1000s) 0 100 200 300 400 500 600 700 800 900 1000

TR ($ millions) 0 9 16 21 24 25 24 21 16 9 0

TC ($ millions) 2 3 4 5 6 7 8 9 10 11 12

Profit ($ millions) -2 6 12 16 18 18 16 12 6 -2 -12

Marginal Revenue ($) 90 70 50 30 10 -10 -30 -50 -70 -90

Marginal Cost ($) 10 10 10 10 10 10 10 10 10 10

c. Graph the marginal-revenue, marginal-cost, and demand curves. At what quantity do the marginal-revenue and marginal-cost curves cross? what does this signify?

The relevant information is given in the table above. In the table, we can see that marginal cost and marginal revenue are equal at Q = 50. That is MR(50) = MC(50) = 10. Not coincidentally, this is also the profit-maximizing level of output that we found earlier.

d. In your graph, shade in the deadweight loss. Explain in words what this means.

The social surplus maximizing level of output would set the price equal to marginal cost. In that case, P = 10 and then turning to the demand schedule this corresponds to output of Q(10) = 900, 000. The deadweight loss is the surplus that is lost because we do not makes the units from 500,000 to 900,000. In this case, the deadweight loss if represented with a triangle with base 900, 000− 500, 000 = 400, 000 and the height of 50 − 10 = 40. The area of this triangle is 0.5(400000)(40) = 2 million

e. If the author were paid $3 million instead of $2 million to write the book, how would this affect the publisher’s decision regarding what price to charge? Explain.

Recall that there are two questions for the firm — how much to produce, and how whether to stay in business. The first question — how much to produce — is based on comparing marginal costs and benefits (e.g. should I go from 3 to 4? From 4 to 5, and etc.). By definition, marginal costs are variable costs i.e. they are related to how much output is chosen. The increase in the fee to the author is a type of fixed cost. In the current exercise, the fee paid to the author has no affect on the market demand schedule or on the production costs of the book. Thus, there is no affect of the author’s fee on any of the MARGINAL factors in our exercise. The publisher’s profit will go down, but otherwise there is no effect on what choices it will want to make.

QUESTION 1 Following the outbreak of the Novel Coronavirus (COVID 19), CPC a pharmaceutical company is considering introducing a new vaccine unto the market to help fight the virus. This will require the injection of huge capital to the tune of GH¢40,000,000 for the purchase of the equipment for production. It will cost CPC an additional GH¢ 5,500,000 to set up the production facility and install that equipment for production. Mr. Smart, the CEO of CPC believes that the vaccine could be manufactured in a building owned by the firm and located in East Legon. This vacant building and the land can be sold for GH¢ 1,500,000 after taxes. CPC will finance the production of the vaccine (including initial working capital investment) by issuing 2000,000 new common stocks at GH¢ 20 per share from its existing shareholders. A total of GH¢ 15,000,000 is expected to be raised from the rights issue. It expects to finance the remaining from the issue of a 5-year bond with a before-tax yield to maturity (YTM) of 12%. Mr. Qwesi, the Finance Director has estimated the beta of the project to be 2.5 and the average return for stocks traded on the Ghana Stock Exchange to be 10% while the rate on Government of Ghana traded Treasury bills is 5%. The successful production of the vaccine will generate additional cash flows for CPC. The Production and Marketing department has presented the information in the table below:

2020 Variable cost per unit of the product GH¢150

Selling price per unit GH¢350

Quantity 400,000units per annum

Again the following information should be taken note of:

 Feasibility studies cost the company GH¢2,000,000

 Test marketing expenses amounts to GH¢1,000,000

 The research into the discovery of the vaccine costs GH¢5,000,000

 Variable cost will increase by 5% per annum

 Selling price will increase by 10% per annum

 Marketing expense will be 5% of sales revenue per year

 Overhead cost will be fixed at GH¢6000,000 per year

 The project will last for five (5) years (2021-2025)

 Charge depreciation using the straight-line method

 Salvage value for equipment is GH¢2,000,000

 CPC falls within the 25% tax bracket

 An initial working capital investment of GH¢10,000,000 will be made. Subsequently, net working capital at the end of each year will be equal to 10 percent of sales for that year. In the final year of the project, net working capital will decline to zero as the project is wound down. In other words, the investment in working capital is to be completely recovered by the end of the project’s life

 The introduction of this new vaccine is expected to lead to 10,000 units per annum drop in sales of vaccines for other types of corona virus by. The selling price per unit of existing products is GH¢100 while the variable cost is GH¢70. This has no tax implications for the new vaccine.

 The project will be financed with debt and equity Required: a. Evaluate the project using the NPV and Profitability index and recommend whether CPC should go ahead with the production of the vaccine. b. Discuss three (3) qualitative factors that the Management of CPC might have to consider and how these factors are expected to influence the decision of Management with regards to the production of the vaccine. c. Under what circumstances will you prefer profitability index to NPV as project evaluation techniques. d. Explain why sunk costs should not be included in a capital budgeting analysis, but opportunity costs and externalities should be included. (Total: 20 marks)

Following the outbreak of the Novel Coronavirus (COVID 19), CPCa pharmaceutical company is considering introducing a new vaccine unto the market to help fight the virus. This will require the injection of huge capital to the tune of GH¢40,000,000 for the purchase of the equipment for production. It will cost CPC an additional GH¢5,500,000 to set up the production facility and install that equipment for production. Mr. Smart, the CEO of CPC believes that the vaccine could be manufactured in a building owned by the firm and located in East Legon. This vacant building and the land can be sold for GH¢ 1,500,000 after taxes. CPC will finance the production of the vaccine (including initial working capital investment) by issuing 2000,000 new common stocks at GH¢ 20 per share from its existing shareholders. A total of GH¢ 15,000,000 is expected to be raised from the rights issue. It expects to finance the remaining from the issue of a 5-year bond with a before-tax yield to maturity (YTM) of 12%. Mr. Qwesi, the Finance Director has estimated the beta of the project to be 2.5 and the average return for stocks traded on the Ghana Stock Exchange to be 10% while the rate on Government of Ghana traded Treasury bills is 5%. The successful production of the vaccine will generate additional cash flows for CPC. The Production and Marketing department has presented the information in the table below:

Again the following information should be taken note of:

·Feasibility studies cost the company GH¢2,000,000

·Test marketing expenses amounts to GH¢1,000,000

·The research into the discovery of the vaccine costs GH¢5,000,000

·Variable cost will increase by 5% per annum

·Selling price will increase by 10% per annum

·Marketing expense will be 5% of sales revenue per year

·Overhead cost will be fixed at GH¢6000,000 per year

·The project will last for five (5) years (2021-2025)

Charge depreciation using the straight-line method

·Salvage value for equipment is GH¢2,000,000

·CPC falls within the 25% tax bracket

·An initial working capital investment of GH¢10,000,000will be made. Subsequently, net working capital at the end of each year will be equal to 10 percent of sales for that year. In the final year of the project, net working capital will decline to zero as the project is wound down. In other words, the investment in working capital is to be completely recovered by the end of the project’s life

·The introduction of this new vaccine is expected to lead to 10,000units per annum drop in sales of vaccines for other types of corona virus by. The selling price per unit of existing products is GH¢100while the variable cost is GH¢70.This has no tax implications for the new vaccine.

·The project will be financed with debt and equity

Required

a.Evaluate the project using the NPV and Profitability index and recommend whether CPC should go ahead with the production of the vaccine.

b.Discuss three(3) qualitative factors that the Management of CPC might have to consider and how these factors are expected to influence the decision of Management with regards to the production of the vaccine. (6 marks )

c.Under what circumstances will you prefer profitability index to NPV as project evaluation techniques. (2marks )

d.Explain why sunk costs should not be included in a capital budgeting analysis, but opportunity costs and externalities should be included. (2 marks )

Following the outbreak of the Novel Coronavirus (COVID 19), CPCa pharmaceutical company is considering introducing a new vaccine unto the market to help fight the virus. This will require the injection of huge capital to the tune of GH¢40,000,000 for the purchase of the equipment for production. It will cost CPC an additional GH¢5,500,000 to set up the production facility and install that equipment for production. Mr. Smart, the CEO of CPC believes that the vaccine could be manufactured in a building owned by the firm and located in East Legon. This vacant building and the land can be sold for GH¢ 1,500,000 after taxes. CPC will finance the production of the vaccine (including initial working capital investment) by issuing 2000,000 new common stocks at GH¢ 20 per share from its existing shareholders. A total of GH¢ 15,000,000 is expected to be raised from the rights issue. It expects to finance the remaining from the issue of a 5-year bond with a before-tax yield to maturity (YTM) of 12%. Mr. Qwesi, the Finance Director has estimated the beta of the project to be 2.5 and the average return for stocks traded on the Ghana Stock Exchange to be 10% while the rate on Government of Ghana traded Treasury bills is 5%. The successful production of the vaccine will generate additional cash flows for CPC. The Production and Marketing department has presented the information in the table below:

Again the following information should be taken note of:

·Feasibility studies cost the company GH¢2,000,000

·Test marketing expenses amounts to GH¢1,000,000

·The research into the discovery of the vaccine costs GH¢5,000,000

·Variable cost will increase by 5% per annum

·Selling price will increase by 10% per annum

·Marketing expense will be 5% of sales revenue per year

·Overhead cost will be fixed at GH¢6000,000 per year

·The project will last for five (5) years (2021-2025)

Charge depreciation using the straight-line method

·Salvage value for equipment is GH¢2,000,000

·CPC falls within the 25% tax bracket

·An initial working capital investment of GH¢10,000,000will be made. Subsequently, net working capital at the end of each year will be equal to 10 percent of sales for that year. In the final year of the project, net working capital will decline to zero as the project is wound down. In other words, the investment in working capital is to be completely recovered by the end of the project’s life

·The introduction of this new vaccine is expected to lead to 10,000units per annum drop in sales of vaccines for other types of corona virus by. The selling price per unit of existing products is GH¢100while the variable cost is GH¢70.This has no tax implications for the new vaccine.

·The project will be financed with debt and equity

Required

a.Evaluate the project using the NPV and Profitability index and recommend whether CPC should go ahead with the production of the vaccine.

b.Discuss three(3) qualitative factors that the Management of CPC might have to consider and how these factors are expected to influence the decision of Management with regards to the production of the vaccine. (6 marks )

c.Under what circumstances will you prefer profitability index to NPV as project evaluation techniques. (2marks )

d.Explain why sunk costs should not be included in a capital budgeting analysis, but opportunity costs and externalities should be included. (2 marks )

Following the outbreak of the Novel Coronavirus (COVID 19), CPCa pharmaceutical company is considering introducing a new vaccine unto the market to help fight the virus. This will require the injection of huge capital to the tune of GH¢40,000,000 for the purchase of the equipment for production. It will cost CPC an additional GH¢5,500,000 to set up the production facility and install that equipment for production. Mr. Smart, the CEO of CPC believes that the vaccine could be manufactured in a building owned by the firm and located in East Legon. This vacant building and the land can be sold for GH¢ 1,500,000 after taxes. CPC will finance the production of the vaccine (including initial working capital investment) by issuing 2000,000 new common stocks at GH¢ 20 per share from its existing shareholders. A total of GH¢ 15,000,000 is expected to be raised from the rights issue. It expects to finance the remaining from the issue of a 5-year bond with a before-tax yield to maturity (YTM) of 12%. Mr. Qwesi, the Finance Director has estimated the beta of the project to be 2.5 and the average return for stocks traded on the Ghana Stock Exchange to be 10% while the rate on Government of Ghana traded Treasury bills is 5%. The successful production of the vaccine will generate additional cash flows for CPC. The Production and Marketing department has presented the information in the table below:

Again the following information should be taken note of:

·Feasibility studies cost the company GH¢2,000,000

·Test marketing expenses amounts to GH¢1,000,000

·The research into the discovery of the vaccine costs GH¢5,000,000

·Variable cost will increase by 5% per annum

·Selling price will increase by 10% per annum

·Marketing expense will be 5% of sales revenue per year

·Overhead cost will be fixed at GH¢6000,000 per year

·The project will last for five (5) years (2021-2025)

Charge depreciation using the straight-line method

·Salvage value for equipment is GH¢2,000,000

·CPC falls within the 25% tax bracket

·An initial working capital investment of GH¢10,000,000will be made. Subsequently, net working capital at the end of each year will be equal to 10 percent of sales for that year. In the final year of the project, net working capital will decline to zero as the project is wound down. In other words, the investment in working capital is to be completely recovered by the end of the project’s life

·The introduction of this new vaccine is expected to lead to 10,000units per annum drop in sales of vaccines for other types of corona virus by. The selling price per unit of existing products is GH¢100while the variable cost is GH¢70.This has no tax implications for the new vaccine.

·The project will be financed with debt and equity

Required

a.Evaluate the project using the NPV and Profitability index and recommend whether CPC should go ahead with the production of the vaccine.

b.Discuss three(3) qualitative factors that the Management of CPC might have to consider and how these factors are expected to influence the decision of Management with regards to the production of the vaccine. (6 marks )

c.Under what circumstances will you prefer profitability index to NPV as project evaluation techniques. (2marks )

d.Explain why sunk costs should not be included in a capital budgeting analysis, but opportunity costs and externalities should be included. (2 marks )

QUESTION 5

As the novel coronavirus (COVID-19) pandemic continues to spread and large parts of the world are under lockdown, livestock producers are working hard to maintain production in the face of many uncertainties.

(A) Discuss five (05) ways in which COVID-19 is impacting the livestock industry in the world. (5 Marks)

(B) Discuss five (05) ways in which African Swine Fever outbreaks are similar to Covid-19 infections (5 Marks)

(C) Define Biosecurity? List eight (08) biosecurity measures you would enforce on an intensive pig production farm

The novel corona virus disease (also known as COVID – 19) which started in WUHAN in December 2019 has grounded the global economy to a halt. World crude prices reached their lowest and trade among nations have generally slowed. Production has slowed and jobs are being lost across the globe. Globally, over seven million people have contracted the virus and over four hundred thousand have died. Ghana announced its first two confirmed cases of COVID – 19 on 12 March, 2020 and as at June 14, 2020, the number of confirmed cases stood at 11,964 with 54 deaths. The impact of the COVID – 19 pandemic on Ghanaian economy and the global economy at large is predicted to be very severe. The government of Ghana, like many other governments, is spending more funds on containing the pandemic and limiting the effect of the pandemic on the economy. The IMF Executive Board approved the disbursement of US$1 billion drawn under the Rapid Credit Facility (RCF) for Ghana on April 13, 2020 after receiving application from the country’s government. Given this background, briefly discuss the repercussions of the corona virus pandemic for the Ghanaian economy and foreign exchange market. Suggest ways of mitigating the effects of covid – 19 on Ghana’s balance of payments (BOP).

How will we lessen discriminatory effects in relation to wages?

In the novel, We Wanted Workers, in the chapter titled, "The Self-Selection of Immigrants" George Borjas explains the differences in wages between immigrants and people from different ethnicities compared to native, White Americans. When comparing the average Mexican worker, Black worker, and native, White worker, wages differ dramatically, with the White worker making more money on average. Borjas discusses how differences in education and skill level attribute to some of the differences in wage that we witness across ethnicities as Mexican individuals are less likely to achieve as much years of schooling as a White person. However, when looking at Black Americans, differences in education and skill level only account of 1/3 of the difference in wages. This leads us to believe that there is a discriminatory factor in play when it comes to wages for Black Americans.

Throughout America's history, Black individuals have had to fight for their rights after breaking from the chains of slavery that White people put them under. Although some may believe that every American, no matter age, sex, gender, or other characteristics, have the same rights, however that could not be more untrue. This is because of the way society discriminates towards certain groups, one in particular being Black Americans, as we have evidence of as seen through the wage differences reported in the novel. Another group that is being unfairly compensated compared to its counterpart are women. Women still receive only $0.81 to every dollar that a man makes. Under the same conditions, with similar educational backgrounds and skills, women still receive less than a man because they associate with the female sex. These discriminatory effects are unfairly placing people in certain groups at a disadvantage and they need to be eliminated within our society.

What are some ways that you think would help lessen the discriminatory effects to wages that people of certain groups realize in our society? Is this a solution of policy or is this a broader change of cultural norms and society as a whole?

Following the outbreak of the Novel Coronavirus (COVID 19), CPC a pharmaceutical company is considering introducing a new vaccine unto the market to help fight the virus. This will require the injection of huge capital to the tune of GH¢40,000,000 for the purchase of the equipment for production. It will cost CPC an additional GH¢ 5,500,000 to set up the production facility and install that equipment for production. Mr. Smart, the CEO of CPC believes that the vaccine could be manufactured in a building owned by the firm and located in East Legon. This vacant building and the land can be sold for GH¢ 1,500,000 after taxes. CPC will finance the production of the vaccine (including initial working capital investment) by issuing 2000,000 new common stocks at GH¢ 20 per share from its existing shareholders. A total of GH¢ 15,000,000 is expected to be raised from the rights issue. It expects to finance the remaining from the issue of a 5-year bond with a before-tax yield to maturity (YTM) of 12%. Mr. Qwesi, the Finance Director has estimated the beta of the project to be 2.5 and the average return for stocks traded on the Ghana Stock Exchange to be 10% while the rate on Government of Ghana traded Treasury bills is 5%. The successful production of the vaccine will generate additional cash flows for CPC. The Production and Marketing department has presented the information in the table below:
2020
Variable cost per unit of the product
GH¢150
Selling price per unit
GH¢350
Quantity
400,000units per annum
Again the following information should be taken note of:
 Feasibility studies cost the company GH¢2,000,000
 Test marketing expenses amounts to GH¢1,000,000
 The research into the discovery of the vaccine costs GH¢5,000,000
 Variable cost will increase by 5% per annum
 Selling price will increase by 10% per annum
 Marketing expense will be 5% of sales revenue per year
 Overhead cost will be fixed at GH¢6000,000 per year
 The project will last for five (5) years (2021-2025)
Examiner: Isaac Ofoeda Page 3
 Charge depreciation using the straight-line method
 Salvage value for equipment is GH¢2,000,000
 CPC falls within the 25% tax bracket
 An initial working capital investment of GH¢10,000,000 will be made. Subsequently, net working capital at the end of each year will be equal to 10 percent of sales for that year. In the final year of the project, net working capital will decline to zero as the project is wound down. In other words, the investment in working capital is to be completely recovered by the end of the project’s life
 The introduction of this new vaccine is expected to lead to 10,000 units per annum drop in sales of vaccines for other types of corona virus by. The selling price per unit of existing products is GH¢100 while the variable cost is GH¢70. This has no tax implications for the new vaccine.
 The project will be financed with debt and equity
Required:
a. Evaluate the project using the NPV and Profitability index and recommend whether CPC should go ahead with the production of the vaccine.
b. Discuss three (3) qualitative factors that the Management of CPC might have to consider and how these factors are expected to influence the decision of Management with regards to the production of the vaccine.
c. Under what circumstances will you prefer profitability index to NPV as project evaluation techniques.
d. Explain why sunk costs should not be included in a capital budgeting analysis, but opportunity costs and externalities should be included.
(Total: 20 marks)

You are working on a research project involving a novel transcription factor that regulates gene expression specifically in muscle cells (called MUSC1). You have already done an experiment where you showed that the addition of MUSC1 to muscle cells in culture greatly increased the expression of both actin and myosin (contractile proteins in muscle cells). Answer the following questions below:

Is MUSC1 a general or regulatory transcription factor? Explain your answer.

What two specific components would you expect MUSC1 to have as part of its protein structure?

Briefly describe the two main ways in which MUSC1 could act to stimulate transcription of actin and myosin

Describe an experiment that you could perform to demonstrate that MUSC1 binds to the promoter/enhancer region of actin and myosin genes.

A potential nuclear localization signal has been identified within the protein sequence of the transcription factor MUSC1. What experiments would you perform to demonstrate that this sequence is both necessary and sufficient for nuclear localization?

MUSC1’s entry into the nucleus is regulated so that it only goes into the nucleus to regulate the expression of contractile proteins at the correct time. Describe one mechanism by which this type of regulation can occur in the cell.

The novel corona virus disease (also known as COVID – 19) which started in WUHAN in December 2019 has grounded the global economy to a halt. World crude prices reached their lowest and trade among nations have generally slowed. Production has slowed and jobs are being lost across the globe. Globally, over seven million people have contracted the virus and over four hundred thousand have died. Ghana announced its first two confirmed cases of COVID – 19 on 12 March, 2020 and as at June 14, 2020, the number of confirmed cases stood at 11,964 with 54 deaths. The impact of the COVID – 19 pandemic on Ghanaian economy and the global economy at large is predicted to be very severe. The government of Ghana, like many other governments, is spending more funds on containing the pandemic and limiting the effect of the pandemic on the economy. The IMF Executive Board approved the disbursement of US$1 billion drawn under the Rapid Credit Facility (RCF) for Ghana on April 13, 2020 after receiving application from the country’s government. Given this background, briefly discuss the repercussions of the corona virus pandemic for the Ghanaian economy and foreign exchange market. Suggest ways of mitigating the effects of covid – 19 on Ghana’s balance of payments (BOP)