You sell software downloaded from via a website, which costs $1000 per month to maintain. Marginal cost is essentially $0 per download.  

There are some competitors for your product, but none of them is exactly like your product. You have estimated that your demand follows the following pattern:

Q_d= 100 - 4P + 100A

where A is an ad you can purchase for $500 per ad (you have to purchase a whole ad).  

a) If you don't spend any money on advertising and charge $15, calculate the (own) price elasticity of demand.

b) Again, if A = 0, what is the optimal price to charge? (note, you are maximizing revenue since MC=0)

c) At this optimal price, should you buy any advertising (yes or no, and support your answer).

2. Arcarde Ltd issues both ordinary shares and preference shares to raise capital, in which 500,000 ordinary shares have been issued at the price of $10 and 100,000 preference shares with a par value of $100.

a. Company promises to pay an annual dividend rate of 6.5% per share for its preference shares. If similar investment has a rate of return of 10% p.a, what is the fair price of Arcarde’s preference share?

b. Company also plans to pay dividend for its ordinary shares as follow: Y1 (next year): $0.8; Y2: $1; Y3: $1, after year 3, the dividend will growth at the rate of 3% and company’s rate of return is currently 9%, what should be the fair price of each ordinary shares?

A certain dealer owns a warehouse that can store a maximum of 600 units of a given commodity. He has on hand 100 units of the commodity and knows the buying and selling price for the next 5 time periods. They are:

He is permitted to sell up to the amount that he has in his warehouse at the beginning of each period. If he buys in a given period, delivery will be made so that it is in storage at the beginning of the next period. Let (X_i, Y_i) denote the amount he buys and sells in time-period i respectively. What is the optimal buying\selling strategy.

Formulate the linear programming problem.  

Develop a spreadsheet and solve the problem.

For the following set of demand and supply equations do the following,

1. Determine which equation is demand equation and which one is supply equation. explain how?
2. Find the equilibrium price and equilibrium quantity for each set of equations.
3. Draw each set of equations in a clearly labeled graph and show the equilibrium P and Q.
4. Impose any price floor and determine the new Qd, Qs.
5. Based on a find out whether there is a surplus or a shortage and indicate how large it is?
6. Impose any price ceiling and determine the new Qd, Qs.
7. Based on b find out whether there is a surplus or a shortage and indicate how large it is?

National Rentals has $59,000 shares of common stock outstanding at a market price of $36.00 a share. The common stock just paid a $1.64 annual dividend and has a dividend growth rate 0f 2.8%. There are 12,000 shares of 6% preferred stock outstanding at a market price of $ 51.00 a share. The preferred stock has a par value of $100. The outstanding bonds mature in 17 years, have a total face value of $750,000, a face value per bond of $ 1,000, and a market price of $1,020 each. The bonds pay 8% interest, semiannually. The tax rate is 34% What is the firm's weighted average cost of capital? Please can you explain using excel. Thank you.

A 7.72%

B. 8.68%

C 9.29%

D. 9.97%

E. 10.30%

Q1

The demand and supply schedules for maize in a free market are as follows.

(a) What is the equilibrium price?

(b) If the maize sellers set their price at $144 per tonne, what would be the effect on maize stocks and what would be the resulting reaction of sellers?

(c) If the sellers started selling the maize at $80 per tonne, what would be the effect in this case?

(d) How can equilibrium be restored in this market?

1. Suppose the data for a hypothetical economy is given above. This economy produces only 3 things, pizzas, haircuts and tanks. The base year is 2019.

1. Calculate GDP deflator in 2020. Based on GDP deflator, what is the inflation rate from 2019 to 2020?
2. Suppose a representative consumer basket consists of 10 pizzas and 20 haircuts. Using this consumer basket, calculate CPI in 2020 (again, assuming 2019 is the base year). Based on CPI, what is inflation rate?
3. Why do you think there is such a dramatic difference in the inflation rates from parts a and b?

1. Suppose the data for a hypothetical economy is given above. This economy produces only 3 things, pizzas, haircuts and tanks. The base year is 2019.

a. Calculate GDP deflator in 2020. Based on GDP deflator, what is the inflation rate from 2019 to 2020?

b. Suppose a representative consumer basket consists of 10 pizzas and 20 haircuts. Using this consumer basket, calculate CPI in 2020 (again, assuming 2019 is the base year). Based on CPI, what is inflation rate

c. Why do you think there is such a dramatic difference in the inflation rates from parts a and b?

On July 1, 2017, Jones Limited had the following share structure:

Required:
Complete the following table based on three independent cases involving share transactions: (Round your par value answers to 2 decimal places.)

Pronghorn Company sells many products. Gizmo is one of its popular items. Below is an analysis of the inventory purchases and sales of Gizmo for the month of March. Pronghorn Company uses the periodic inventory system.

Using the FIFO assumption, calculate the amount charged to cost of goods sold for March.

Using the weighted-average method, calculate the amount assigned to the inventory on hand on March 31. (Round intermediate calculation and final answer to 0 decimal places, e.g. 12.)

Using the LIFO assumption, calculate the amount assigned to the inventory on hand on March 31.