Current Year1 Year 2 Year 3
Revenue $1,500 $1,650 $1,815 $2,000
EAT $95 $106 $117 $130
The company also receives a royalty net after taxes of $10 million per year. It is expected that the cash flows equal to depreciation will have to be reinvested to keep the firm operating. Further, capital expenditures equal to 60 percent of the net cash flow will need to be invested to keep the firm growing. Other items on the balance sheet remain unchanged. The CFO believes that it will just forecast for the first three years and then simply assume a 6 percent annual growth rate after the third year.
T-bills yield 8 percent and the market return is 13 percent. The company’s beta using Hamada equation is 1.2. What is the value of the company or what would you pay for the firm if you were interested in it.
In: Finance
Explain how marginal revenue product is derived. Why is the MRP
curve also the firms' short-run
the demand curve for labor? Explain why and how the demand curve
for labor differs between firms
operating in a competitive industry and an imperfectly competitive
industry (i.e., monopoly).
In: Economics
Question 2
2.1.
Using average and marginal cost curves and
average and marginal revenue curves show a firm in a perfectly
competitive market in short run making and
maximising its profit. (Draw a diagram and explain it.)
2.2.
Using average and marginal cost curves show
a firm in a monopolistically
competitive market making a loss whilst simultaneously behaving
rationally in the
short run. (Draw a diagram and explain it.)
2.3. Explain the Prisoner’s Dilemma. (You can use a pay-off matrix if you wish.)
In: Economics
14.
Consider a monopoly facing the following demand, marginal revenue,
total cost, and marginal cost curves:
Demand curve: P = 12 – 0.002 Q
Marginal revenue curve: MR = 12 – 0.004 Q
Marginal cost curve: MC = 3 + 0.001 Q
a. Calculate the profit maximizing output of this monopoly. Briefly explain your answer.
b. What is the socially efficient output level? Briefly explain your answer.
c. Suppose the government wants to adopt a price ceiling to induce this monopoly to produce at the socially efficient output level. Briefly explain what the level of this price ceiling should be and what will be the economic profit of this monopoly under this price ceiling.
In: Economics
In: Economics
In: Economics
Write a short business report (400-500 words) about Alibaba Group sources of revenue and their profit for the past 3 years.
In: Economics
The following equations describe a firm’s demand, marginal revenue, total cost, & marginal cost:
Demand: P = 1,000 – 10Q
Total Cost: TC = 500 + 10Q + Q^2
Marginal Revenue: MR = 1,000 – 20Q
Marginal Cost: MC = 10 + 2Q
a. What level of output should be produced to maximize profits?
b. What is the market price?
c. How much profit will be earned?
d. The firm sells cereal and competes with other firms selling slightly differentiated cereal products. What type of market is this firm operating in?
The following equations describe a firm’s total cost and marginal cost:
Total Cost: TC = 500 + 10Q + Q^2
Marginal Cost: MC = 10 + 2Q
e. If the firm is a price taker and other firms in the industry sell output at a price of $100, what price should the manager of this firm put on the product?
f. What level of output should be produced to maximize profits?
g. How much profit will be earned?
h. The firm sells orange juice, which is a perfect substitute, at a farmers market. What type of market is this firm operating in?
In: Economics
Please answer all.
84. Explain why marginal revenue is less than price for a monopolist.
85. What are the reasons for preferring competition to monopoly?
In: Economics
In: Economics