At a student café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i.e., she cannot price-discriminate).

The marginal cost of coffee is 5 and the marginal cost of a banana is 20.

The café owner is considering three pricing strategies:

Assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle.

For simplicity, assume there is just one student with an early class, and one student without an early class.

Pricing strategy   yields the highest profit for the café owner

At a student café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i.e., she cannot price-discriminate).

The marginal cost of coffee is 10 and the marginal cost of a banana is 40.

The café owner is considering three pricing strategies:

Assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle.

For simplicity, assume there is just one student with an early class, and one student without an early class.

Pricing strategy ?  yields the highest profit for the café owner.

Back in the dumps, India’s state-owned banks endure a string of bad news A brief flurry of optimism in the sector comes to an end Print edition | Finance and economics Feb 15th, 2018| MUMBAI OF LATE Indian bankers have felt an unfamiliar sensation: optimism. A 1.3trn-rupees ($21bn) bail-out from the government seemed to have cleaned up the bad lending decisions of years gone by. A new bankruptcy law gave them an edge in long-standing battles with recalcitrant borrowers. It seemed a few Indian companies, having for years eschewed fresh investment, might even start borrowing again. This week woes linked to mismanagement at India’s three biggest partially state-owned lenders plunged the bankers back to their habitual gloom. On February 14th Punjab National Bank (PNB) announced it was investigating a fraud worth 114bn rupees, equivalent to about a third of its market capitalization. A few days earlier the State Bank of India (SBI) unveiled its first quarterly loss since 1999. And Bank of Baroda has hastily announced the closure of its South African operation, accused of having shady business associations there. The Punjab heist is potentially the most serious. The second-largest nationalized bank admitted that employees in Mumbai had approved transactions that left PNB on the hook for $1.8bn. This suggests, to put it mildly, some lacunae in how the place is run. Its shares fell by over 10% as investors tried to assess whether the sum had been lost or was merely at risk. The bank has reportedly filed a complaint against a jeweler, Nirav Modi, and some of his family and businesses. Its accusation, to which Mr. Modi has not responded, is that he induced bank employees to issue letters of credit, which were left off PNB’s books. The letters of credit seem then to have been used as security to borrow from other banks overseas. Mr. Modi says he is willing to sell his businesses to make the banks whole. SBI’s troubles are far easier to grasp. Like other state-owned lenders, which control about two-thirds of assets in the banking system, SBI has repeatedly had to adjust its quarterly profits to recognize that some loans made in past years are unlikely to be repaid. Losses linked to bad loans soared in the most recent quarter, in part because the Reserve Bank of India, the regulator, forced SBI to recognize even more of its loans as duds than it had done previously. The regulator did not say whether it regarded SBI’s management as negligent, or dishonest. Finally, Bank of Baroda, the third-largest nationalized lender, on February 12th announced it would be pulling out of South Africa, one of a handful of markets it had entered in the past two decades. Its strategy of building its franchise by lending to the Indian diaspora had not reckoned with the Gupta brothers, three financiers accused of having undue influence in President Jacob Zuma’s inner circle. An investigation by the Hindustan Times and others detailed how Baroda stuck by the Guptas even as other banks pulled back. Baroda says it is co-operating with South African authorities, which are investigating. The bad news has helped to wipe out half the share-price gains of the 21 state-owned banks after the government’s rescue plan was unveiled in October. Most are trading below the stated value of their net assets, implying investors still don’t trust their accounts. Taken together, all the nationalized lenders are now worth less than HDFC Bank, a single private lender. It may be some time before optimism returns.

What was your reaction when you read this? What did you learn from this? What do you think is the solution to this problem.

Could similar problems arise in the USA? If so, what needs to be done nwo?

How American pension crisis affect citizens?

what challenges come up in your mind to face a crisis on the American Pension plan?

In the american revolution, a disorganized group of thirteen colonies bested the strongest military power in the world. Why did the rebels win the American Revolution?

Why There are People Do Not Trust Police Officers in Policing Specifically American, African American Minorities and Other Minorities? one to two pages.

Jack Tar, CFO of Sheetbend & Halyard, Inc., opened the company confidential envelope. It contained a draft of a competitive bid for a contract to supply duffel canvas to the U.S. Navy. The cover memo from Sheetbend?s CEO asked Mr. Tar to review the bid before it was submitted. The bid and its supporting documents had been prepared by Sheetbend?s sales staff. It called for Sheetbend to supply 100,000 yards of duffel canvas per year for 5 years. The proposed selling price was fixed at $30 per yard. Mr. Tar was not usually involved in sales, but this bid was unusual in at least two respects. First, if accepted by the navy, it would commit Sheetbend to a fixed-price, long-term contract. Second, producing the duffel canvas would require an investment of $1.5 million to purchase machinery and to refurbish Sheetbend?s plant in Pleasantboro, Maine. Mr. Tar set to work and by the end of the week had collected the following facts and assumptions: ? The plant in Pleasantboro had been built in the early 1900s and is now idle. The plant was fully depreciated on Sheetbend?s books, except for the purchase cost of the land (in 1947) of $10,000. ? Now that the land was valuable shorefront property, Mr. Tar thought the land and the idle plant could be sold, immediately or in the near future, for $600,000. ? Refurbishing the plant would cost $500,000. This investment would be depreciated for tax purposes on the 10-year MACRS schedule. ? The new machinery would cost $1 million. This investment could be depreciated on the 5-year MACRS schedule. ? The refurbished plant and new machinery would last for many years. However, the remaining market for duffel canvas was small, and it was not clear that additional orders could be obtained once the navy contract was finished. The machinery was custom-built and could be used only for duffel canvas. Its secondhand value at the end of 5 years was probably zero. ? Table 9?4 shows the sales staff?s forecasts of income from the navy contract. Mr. Tar reviewed this forecast and decided that its assumptions were reasonable, except that the forecast used book, not tax, depreciation. ? But the forecast income statement contained no mention of working capital. Mr. Tar thought that working capital would average about 10% of sales. Armed with this information, Mr. Tar constructed a spreadsheet to calculate the NPV of the duffel canvas project, assuming that Sheetbend?s bid would be accepted by the navy. He had just finished debugging the spreadsheet when another confidential envelope arrived from Sheetbend?s CEO. It contained a firm offer from a Maine real estate developer to pur- chase Sheetbend?s Pleasantboro land and plant for $1.5 millionin cash. Should Mr. Tar recommend submitting the bid to the navy at the proposed price of $30 per yard? The discount rate for this proj- ect is 12%. Year 1 2 3 4 5 1 Yards sold 100 100 1000 100 100 2 Price per yard 30 30 30 30 30 3 Revenue (1 x 2) 3000 3000 3000 3000 3000 4 cost of goods sold 2100 2184 2271.36 2362.21 2456.7 5 operating cash flow (3-4) 900 816 728.64 637.79 543.3 6 Depreciation 250 250 250 250 250 7 Income (5-6) 650 566 478.64 387.79 293.3 8 Tax at 35% 227.5 198.1 167.52 135.72 102.65 9 Net Income (7-8) $422.50 $367.90 $311.12 $252.07 $190.65 TABLE 9?4 Forecast income statement for the U.S. Navy duffel canvas project (dollar figures in thousands, except price per yard) Notes: 1. Yards sold and price per yard would be fixed by contract. 2. Cost of goods includes fixed cost of $300,000 per year plus variable costs of $18 per yard. Costs are expected to increase at the inflation rate of 4% per year. 3. Depreciation: A $1 million investment in machinery is depreciated straight-line over 5 years ($200,000 per year). The $500,000 cost of refurbishing the Pleasantboro plant is depreciated straight-line over 10 years ($50,000 per year.

MY QUESTION: What is the difference between profits and cash flow?What are the key factors affecting this decision that Mr. Tar should consider?

Thank you

What is leveraging and de-leveraging? What was the role of leveraging and de-leveraging in tulipmania, and the Mississippi and South Sea episodes.

How were the decolonization struggles in China, Middle East, Algeria, Congo, South Africa and India similar and different?