Suppose you are enrolled in Oceanside University (OU). Tuition fees for the year are 2000+(1000 x the number of credits you take per year). This is your only option if you attend University.

a) [9 points] Assume for this part that we are in a pre-COVID-19 world and all classes are face-to-face etc. Suppose quantity is the number of credits per year that you can take. Assume also that credits can only purchased in integer amounts. Create a small, clearly labeled table that captures your Marginal Willingness to Pay (MWTP) for every credit, no equations. Explain carefully how you calculate these numbers. Does your MWTP increase or decrease with the number of credits taken? Why? Note: the actual numbers don't matter as much as your explanation about how you would determine these numbers.

b) [8 points] Now COVID-19 hits. You, your family, and everyone in your city are all healthy, thankfully, but all classes move online. Tuition fees stay the same. How does your Does your MWTP in part (a) change? Does your decision to attend University change when classes move online?. Why or why not? Explain your reasoning.

On Wednesday, Frederick advertised his Nikon D800E digital camera in the local newspaper for £2000. George, on seeing the advertisement, called at Frederick’s house on the same day to see the camera. After discussion, Frederick offered to sell the camera to George for £1500. George stated that he would need some time to think it over but that Frederick should assume if he heard nothing from George by Thursday evening, that George had bought it. Frederick replied that this arrangement was fine by him.

At 3:00 p.m. Hari telephoned Frederick and offered to buy Frederick’s camera for £2300. Frederick immediately accepted Hari’s offer and e-mailed George revoking his original offer. Unknown to Frederick and George, there was a problem with George’s internet service provider and the message to George was never directed to him. Although Frederick did not know this, he was worried about the matter and tried to telephone George again at 6pm. Frederick spoke to Isabel, George’s wife, and told her that the camera had been sold. Isabel said that she expected George home at 6:30 p.m. and would pass the message on to him then. However, George had already decided to buy the camera and had faxed his acceptance to Frederick’s home at 5:15 p.m. Frederick did not read George’s acceptance until 6:30 p.m. George came at 7:15 p.m. and Isabel then gave him the message from Frederick.

1. What would Frederick’s advertisement amount to?

2. Who made the offer in this case?

3. State two (2) cases distinguishing an invitation to treat from an offer:

4. What is the general principle governing the acceptance of an offer?

5. State the case that supports this principle:

6. List one exception to the general principle governing acceptance of an offer:

7. Could Frederick accept Hari’s offer? Give reasons.

8. What is the general principle governing the revocation of an offer?

9. Could Frederick communicate the revocation of his offer to George, to George’s wife, Isabel? Give reasons.

10. What is the principle of law governing the Postal Rule?

11. What is the principle of law governing instantaneous forms of communication?

12. Was a valid contract formed between Frederick and George?

Suppose you make some income when healthy, IH = $2000, and none when sick, IS = 0, and are considering the following an insurance contract with premium, r = 540, and insurance payout when sick, q = $1800.

a. What probability of sickness would make the insurance contract actuarially fair? What would the probability of sickness need to be for the insurer to make positive profits in expectation? Explain/show your work.

b. Is this potential contract an offer of full insurance or partial insurance? Explain/show your work.

c. What is your expected income if you purchase this contract and your probability of sickness is 0.2?

d. Assume the individual’s utility over income is U(I) = √ I and has a probability of sickness, p = 0.2. Calculate your expected utility E[U(I)] (a) with the contract and (b) without the contract.

e. Is this individual risk averse? Explain. (2 points) f. Should the individual purchase this contract? Explain.

An insurance company collects data on​ seat-belt use among drivers in a country. Of

2000 drivers

30 -39 years​ old,

23​%

said that they buckle​ up, whereas

482

of

1800

drivers

55-64

years old said that they did. Find a

90​%

confidence interval for the difference between the proportions of​ seat-belt users for drivers in the age groups

30-39

years and

55-64

years.

Construct a

90​%

confidence interval.

A parachutist whose mass is 80 kg drops from a helicopter hovering 2000 m above the ground and falls toward the ground under the influence of gravity. Assume that the force due to air resistance is proportional to the velocity of the​ parachutist, with the proportionality constant b1=20 ​N-sec/m when the chute is closed and b2=100 ​N-sec/m when the chute is open. If the chute does not open until the velocity of the parachutist reaches 35 ​m/sec, after how many seconds will the parachutist reach the​ ground? Assume that the acceleration due to gravity is 9.81 m/s^2.

The processing division of the Sunrise Breakfast Company must produce one ton (2000 pounds) of breakfast flakes per day to meet the demand for its Sugar Sweets cereal. Cost per pound of the three ingredients is: Ingredient A $4 per pound Ingredient B $3 per pound Ingredient C $2 per pound Government regulations require that the mix contain at least 10% ingredient A and 20% ingredient B. Use of more than 800 pounds per ton of ingredient C produces an unacceptable taste. Determine the minimum-cost mixture that satisfies the daily demand for Sugar Sweets.

Can you please explain me this question? Thanks!

Anette made deposits of $2000 at the beginning of every three months for seven years into an investment fund that was earning 7.2% compounded quarterly. She left the money in the fund for another three years to accumulate interest. If the fund was earning the same interest rate during the entire time period, what was the amount of interest earned on her investment during the term?

Nara inherits a perpetuity from her grandfather that will pay here $2000 today and every year forever. The annual interest rate is 3%.

a) How much is Nara's inheritance worth?

Nara decides to sell the perpetuity (for its present value) and instead buy an annuity due paying $P for the next 22 years.

b) What is $P?

She changes her mind again, and decides instead on an annuity due paying $4000 per year for n years, except for the last (nth) payment which is a drop payment.

c) What is n?

d) What is the amount of the final payment?

You have the following information about a company.

·       Sales in 2019 were £2000 million. Sales are expected to grow at a rate of 15% in 2020, and afterwards the growth rate will drop to 3%.

·       EBIT margin is expected to stay constant at 15%.

·       The corporate tax rate is 40%.

·       Net working capital each year is expected to stay constant at 10% of next year's sales.

·       To generate sales growth, each year t, capital expenditure net of depreciation (i.e., Capex- Depreciation) is expected to be 1/3 of the sales increase from year t to year t+1.

·       The debt-to-equity ratio (D/E) of the company is expected to stay constant at 1/2 and its equity cost of capital is 15%.

·       The firm has perpetual bonds outstanding with a coupon rate of 9% paid annually. The bonds are currently selling at par and have a AAA credit rating.

Question: Compute the value of the company at the beginning of 2020 using the WACC method. You may assume that all cash flows occur at the end of each year.