Afghan Saffron Exporters Vs Iranian Saffron Market:
Economists use ‘Game Theory’ as a tool to analyze economic competition, economic phenomena such as bargaining, mechanism design, auctions, voting theory; experimental economics, political economy, behavioral economics etc. Refer to below short case study and respond to listed questions using the core concept of Game theory to determine and analyses the expected outcome. “A company, say Afghan Saffron, is considering entering the Iranian’s market which is dominated by its principal rival, say Iranian Saffron. Clearly, Afghan Exporters decision to enter or not will be judged on the potential profitability of such a move. This, in turn, depends upon the way Iranian will react to such a business move by Afghan Exporters. If Iranian reacts aggressively by launching a big commercial campaign, then an entry by Afghan n Saffron Exporters will result to a loss of $2.8 million for Afghan Saffron Exporters and a loss of $2.2 million for Iranian Manufacturers. If, on the other hand, Iranian accommodates Afghan Saffron exporter’s entry, then both Afghan and Iranian will be making profits of $1 million and $1 million, respectively. Finally, if Afghan Exporter does not enter the market at all, then Iranians will be making monopoly profits of $3.5 million”.

Required:
a) What would you do if you were the CEO of Afghan Saffron Exporter and Why, Explain briefly-use any practical approach or model discussed in the class to justify your response?
b) If you were an Iranian Saffron Producer, Would you play aggressively or would you accommodate Afghan Exporters entry?
c) What about if you were Iranian Saffron Exporters CEO?

You can answer any of above 3 a, b or c follow your role

“Bankrupt” Corporation is in a deep financial crisis. You are one of the financial avengers “Bankrupt” is desperately seeking help from. CEO of the company informed you that he is considering the two risky projects “Thanos” and “Loki” to protect the firm from financial collapse. Both projects have similar risk characteristics. Bankrupt’s WACC is 11%. The initial investments for both the projects are $200 million. Cashflow from the projects are as follows;

Year           1                2                3                4

Thanos       10M           60M           80M           160M

Loki           70M           50M           20M           160M

Now, your job is to explain the following questions in great detail so that the CEO understands your plans to protect the firm.

1. Explain the concept of capital budgeting decisions. How it is different from the firm’s investing decisions.
2. Explain the concepts of independent and mutually exclusive projects
3. What is NPV -explain with an example?
4. Calculate NPV for both the projects and show the steps
5. Explain your decision when Thanos and Loki are mutually exclusive, and when they are independent.
6. WACC has increased to 15%. What change you will see in NPV?
7. What is IRR and how it is different from NPV? What is the IRR for Thanos and Loki? Based on IRR which project you should accept?
8. How is IRR identical to Bond’s YTM?
9. WACC has increased to 15%. What change you will see in IRR? Is it good for the firm?
10. What is the reinvestment assumption for NPV and IRR? Why NPV is better than IRR?
11. Find the MIRR for both projects and explain the difference with IRR.
12. Is MIRR a better measure than NPV? Why and why not?
13. Calculate the pay-back and discounted pay-back for both the project. Discuss the differences between the two methods.

Suppose that we wish to assess whether more than 60 percent of all U.S. households in a particular income class bought life insurance last year. That is, we wish to assess whether p, the proportion of all U.S. households in the income class that bought life insurance last year, exceeds .60. Assume that an insurance survey is based on 1,000 randomly selected U.S. households in the income class and that 640 of these households bought life insurance last year.

a)   Assuming that p equals .60 and the sample size is 1,000, what is the probability of observing a sample proportion that is at least .64?

b)  Based on your answer in part a, do you think more than 60 percent of all U.S. households in the income class bought life insurance last year? Explain.

Suppose that we wish to assess whether more than 60 percent of all U.S. households in a particular income class bought life insurance last year. That is, we wish to assess whether p, the proportion of all U.S. households in the income class that bought life insurance last year, exceeds .60. Assume that an insurance survey is based on 1,000 randomly selected U.S. households in the income class and that 640 of these households bought life insurance last year. a) Assuming that p equals .60 and the sample size is 1,000, what is the probability of observing a sample proportion that is at least .64? b) Based on your answer in part a, do you think more than 60 percent of all U.S. households in the income class bought life insurance last year? Explain.

Billy is a resident of Oklahoma. He is terminally ill and in pain. He would like his physician to prescribe medications to cause a quick, painless death. Billy’s physician refuses to do so, because under the state law, physician-assisted suicide is a felony. Billy challenges the law in court, arguing that the state law violates the U.S. Constitution. Is he right? Why or why not?

Select one:

a. No, because the U.S. Supreme Court has held that states can choose to prohibit physician-assisted suicide

b. No, because the U.S. Constitution never applies to state laws

c. Yes, because there is a fundamental constitutional right to physician-assisted suicide

d. Yes, because physician-assisted suicide is a privacy right under the U.S. Constitution

Q. Assume a basket that costs $100 in the U.S. would cost $120 in the United Kingdom. (18 pts)

a) What is the U.S. real exchange rate, qUS/UK, with the United Kingdom? Intuitively, what does this real exchange rate imply? (5 pts)

b) Does PPP hold true here? Why? (5 pts)

c) Instead, let’s assume that a basket that costs $100 in the U.S. would cost also $100 in the United Kingdom. For the next year, the Fed is predicted to keep U.S. inflation at 2% and the Bank of England is predicted to keep U.K. inflation at 3%. Does PPP hold true here? If so, use relative PPP to predict what will happen to the dollar’s value against the poundin one year’s time. (8 pts)

A poll of 2514 U.S. adults found that 41% regularly used Facebook as a news source.

Find the margin of error and confidence interval for the percentage of U.S. adults who regularly use Facebook as a news source, at the 90% level of confidence. Round all answers to 2 decimal places.

Margin of Error (as a percentage):

Confidence Interval:

Find the margin of error and confidence interval for the percentage of U.S. adults who regularly use Facebook as a news source, at the 95% level of confidence. Round all answers to 2 decimal places.

Margin of Error (as a percentage):

Confidence Interval:

Find the margin of error and confidence interval for the percentage of U.S. adults who regularly use Facebook as a news source, at the 99% level of confidence. Round all answers to 2 decimal places

Margin of Error (as a per

1. Suppose there is an outbreak of a virus in the U.S. that causes labor productivity to greatly decrease. Further assume that, at the same time, the real interest rate in Canada is expected tp decrease sharply in the near future. Everything else held constant, the cumulative effect of these changes will cause the real interest rate in the U.S. to ____
   a. either increase, decrease, or remain the same

b. increase

c. remain constant

d. decrease

2. the standard for oil internationally is that a barrel of oil is always priced in terms of U.S. dollars no matter where it is sold. Suppose that, after a recent OPEC meeting, the price of a barrel of oil rises. Everything else held constant, this would cause the U.S. dollar to _____ against the currencies of oil exporting countries.

a. remain constant

b. either appreciate, depreciate, or remain constant

c. depreciate

d. appreciate

China has recently retaliated to US tariffs on steel and aluminum and has imposed a wide range of tariffs on U.S agricultural export that are destined to China. These tariffs are expected to have a significant negative impact on the U.S. agriculture products.

If the U.S. Agricultural products, which are heavily subsidized by the US government are not exportable to China due the existing trade war, how does this affect:

1) the U.S. farmers

2) the American tax payer

3) short term food supply in America

4) long term food supply in America

Discuss each in detail.

5) Assuming that China seeks its food supply from Africa, do you think that China might get cheaper agricultural products from Africa and as a result, America, but not China will be on the losing side?

A poll of 2514 U.S. adults found that 41% regularly used Facebook as a news source.

Find the margin of error and confidence interval for the percentage of U.S. adults who regularly use Facebook as a news source, at the 90% level of confidence. Round all answers to 2 decimal places.

Margin of Error (as a percentage):

Confidence Interval:

Find the margin of error and confidence interval for the percentage of U.S. adults who regularly use Facebook as a news source, at the 95% level of confidence. Round all answers to 2 decimal places.

Margin of Error (as a percentage):

Confidence Interval:

Find the margin of error and confidence interval for the percentage of U.S. adults who regularly use Facebook as a news source, at the 99% level of confidence. Round all answers to 2 decimal places

Margin of Error (as a percentage):

Confidence Interval: