1. A monopolistic competitor has the following information about cost and demand.
   1. In the short run, what price will the monopolistically competitive firm charge?  What quantity of output will they produce? And what profit would they obtain.  Explain what you would expect to happen in the long run and why.
   2. Had this been data for a typical firm in a perfectly competitive market, what level of output and price would result?

Implementation in CLIPS programming language for the following problem

Acme Electronics makes a device called the Thing 2000. This device is available in five different models distinguished by the chassis. Each chassis provides a number of bays for optional gizmos and is capable of generating a certain amount of power. The following table sumarizes the chassis attributes:

Chassis --------- Gizmo Bays provided --- Power Provided----- Price($)
C100--------------------------- 1--------------------------- 4------------------ 2000
C200------------------------- 2 -------------------------- 5------------------ 2500
C300--------------------------- 3---------------------------7 ------------------3000
C400---------------------------2----------------------------8------------------ 3000
C500-------------------------- 4 ---------------------------9 ------------------3500

Each gizmo that can be installed in the chassis requires a certain amount of power to operate. The following table summarizes the gizmo attributes

Gizmo-------------------- Power Used --------------------Price($)

Zaptron ------------------------ 2 ------------------------------100
Yatmizer ----------------------- 6------------------------------ 800
Phenerator--------------------- 1 ------------------------------300
Malcifier----------------------- 3 ------------------------------200
Zeta-shield------------------- 4 ------------------------------150
Warnosynchronizer---------- 2 -------------------------------50
Dynoseparator---------------- 3 ------------------------------400

Given as input facts representing the chassis and any gizmos that have been selected, write a program that generates facts representing the number of gizmos used, the total amount of power required for the gizmo, and the total price of the chassis and all gizmos selected

A stock is currently trading for $32. The company has a price–earnings multiple of 10. There are 100 million shares outstanding. Your model indicates that the stock is actually worth $42. The company announces that it will use $350 million to repurchase shares.

1. After the repurchase, what is the value of the stock, according to your model? Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

2. After the repurchase, what is the actual price–earnings multiple of the stock? Do not round intermediate calculations. Round your answer to two decimal places.

3. If the company had used the $350 million to pay a cash dividend instead of doing a repurchase, how would the value of the stock have changed, according to your model? Do not round intermediate calculations. Round your answer to the nearest cent.

   The market value of the stock is now $   .

4. If the company had used the $350 million to pay a cash dividend instead of doing a repurchase, what would be the actual price–earnings multiple after the dividend? Do not round intermediate calculations. Round your answer to two decimal places.

You are asked to answer all the questions in the proposed case. This task assesses the following learning outcomes:

• Assess the present value of future cash flows and the future value of regular savings, annually and periodically.

• Understand the Perpetuity and annuity valuation and their factors – annual and periodical – and with various starting dates with and without

  growth.

• Demonstrate an ability to apply the technical skills in a practical context.

  LAUNCH: WEEK 10 / DELIVERY: MAY 10Tth, 2020, 23:59HRS ON MOODLE
  Submission file format: Word document with all the answers, clearly identifying all steps, results, and including comments besides each answer. Task (100 points)

  The Andreotti family—comprising Mr. Andreotti, aged 40, Mrs. Andreotti, aged 38, and their three young children— relocated to Barcelona in 2020 when Mr. Andreotti received a job offer from a leading investment banking giant. For the next six years, they rented a three-bedroom condominium for 2.000€ in Barcelona per month, which included parking and condominium fees.

  While renting made life easy, the Andreotti family began weighing the pros and cons of purchasing a flat, in the same building, that became available in June 2020. In the past three years, the real estate market had softened somewhat, and the cost of the flats were stable. The idea of home ownership as a form of pension investment appealed to the couple. The monthly rents could be used for mortgage payments instead.

  While searching for the right property they found a nice apartment with 200 square meters, very close to Diagonal-Numancia, one of the best locations of the city.

  The apartment was owned and been promoted by a state-owned construction company and was offering to type of alternatives:

Option A: renting the apartment with a perpetual contract, meaning for ever and ever. The Andreotti family thought that could be a good solution for them.

The family was very happy living in that area, and they had the chance to live there forever at an offered price of 1.600€ per month. The contract contained a clause stating that the rent price will be growing at a 0.1% monthly.

At the same time, they were not forced to ask for a loan, which represented a heavy weight in Mr. Andreotti ́s shoulders.

Option B: consisted in acquiring the property with a mortgage scheme for 40 years. The ownership was demanding an initial down payment of 1.000.000€. The total price of the apartment was still not clear, it seems there was some space for negotiation.

Mr. Andreotti new that the interest applicable rates were very attractive, around 2.4% compounded monthly, this is supposed to be the market rate for this type of activities.

Mr. Andreotti is fixing the maximum amount he can pay monthly in 2.000€.

1. 1) What is the maximum amount that Mr. Andreotti should pay? Show the calculations and explain why. (15 points)

2. 2) What is the total amount that Mr. Andreotti will pay in total after 40 years? (15 points)

3. 3) What is the present value of the rental contract offered by the owner as option A? (15 points)

4. 4) Mr. Andreotti believes that he might be interested in selling the apartment in 40 years’ time, this is when he is planning to retire.

   If the interest rates remain at the existing level, what will be the price of the apartment in that moment? (15 points)

5. 5) Mr. Andreotti is very happy for knowing how to calculate future values and present values, because this helps him in taking this type of decisions. Having said that he wonders what the future value of the rental contract could be. Can you help him? Explain your answer and show your calculations. (10 points)

6) We are still thinking that the price of the apartment is very expensive, we believe we could convince the bank of making payments only once a year, at the end of the year. The interest rate would still be the same 2.4%, how much money have we saved with this action?

a) In the payments for each year? b) in the total amount paid for the whole period? c) what is the present value of the savings?

(15 points)

7)There is a risk according to Mr. Andreotti that the interests may rise after the first 5 years. If this is the case, and the new interest rate is 5%, just after the first 5 years, how much will then be the monthly payments for the remaining 35 years of mortgage? (Hint the total initial value of the loan is depends of the offered purchase price in point 2). Explain your answer and show your calculations. (15 points)

Rubrics

Points are at the end of each question.

Bothe Woody Woods and Luther Lumbers are merchants of timber. woods calls lumber and leaves a message saying that he wants to buy 100 trunks of pine woods for delivery by december 15, 2017. Lumber immediately takes a piece of his stationery with letterhead and fexes woods stating 'Agreed that i will send you 100 trunks of pine to be received by december 15, 2017. Before december 15, 2017, lumber ships 100 trunks of oak wood to woods since in the past wood has accepted oak as a subsititute of pine. One december 13, 2017 woods receives the shipments and rejects shimpment stating "i asked for pine not for oak". lumber receives the shipment back and replaces it with 100 trunks of pine shipped to woods and receivedby woods on december 16, 2017. woods again rejects stating " you failed to cure within the delivery time provided by the contract time which was december 15,2017 so you may not cure. Luther sells the pine to another buyer for $20000 which is $5000 less than he would have gotten from woods and he sues woods for $25,000. woods offers following defenses:

answer the following questions separately with appropriate explanation

a) there was never a contract because of the stature of frauds. (b) there never was a contract because luther never acceped the offer because he shipped the wrong product. (c) there never was contract because there never was an agreed upon the price. (d) even if there was a contract, luther lost the right to cure because the time within which to perform under the contract had passed. (e) luther cannot recover anything because he alread sold the goods to someone else.

Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below.

The balance in the firm's cash and equivalents account is needed for operations and is not considered "excess" cash.

What is Rosnan's 2019 net operating working capital (NOWC)?

$  

What is Rosnan's 2019 net working capital (NWC)?

$  

Suppose that you are the CEO of a discount airline that caters to students on tight budgets who want to travel to warm locations when the weather gets cold. Currently, your airline flies small regional jets from the MBS International Airport to 6 cities in Florida. Assume that your airline has a monopoly on the local market.

1. List the conditions that apply to monopolies, and briefly describe how they apply to this airline. (6 points)
2. Using the table below, determine the profit maximizing number of passengers that you should serve out of the MBS market. The price is for a round-trip ticket. (8 points)

3. Suppose that your fixed costs are $50,000, and your variable costs are $100 per passenger. Would you ever consider shutting down the airline? At what point would you do this and why? (8 points)

3. Suppose that your airline was competing with 3 other airlines for the passengers wanting to fly to Florida. How would you determine what fare to charge? Would you collude with your competitors? Why or why not? (8 points)

Suppose that you are the CEO of a discount airline that caters to students on tight budgets who want to travel to warm locations when the weather gets cold. Currently, your airline flies small regional jets from the MBS International Airport to 6 cities in Florida. Assume that your airline has a monopoly on the local market.

1. List the conditions that apply to monopolies, and briefly describe how they apply to this airline. (6 points)
   
2. Using the table below, determine the profit maximizing number of passengers that you should serve out of the MBS market. The price is for a round-trip ticket. (8 points)

3. Suppose that your fixed costs are $50,000, and your variable costs are $100 per passenger. Would you ever consider shutting down the airline? At what point would you do this and why? (8 points)

3. Suppose that your airline was competing with 3 other airlines for the passengers wanting to fly to Florida. How would you determine what fare to charge? Would you collude with your competitors? Why or why not? (8 points)

49

During the first month of the year, the Boise plant produced 43,000 belts. Actual leather purchased was 110,000 strips at $3.20 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 35,000 hours at $14.50 per hour.

Required:

1. Compute the costs of leather and direct labor that should be incurred for the production of 43,000 leather belts.

2. Compute the total budget variances for materials and labor.

3. Conceptual Connection: Would you consider these variances material with a need for investigation?