Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company’s product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.

Revenues are vital for the expansion and growth of any organization. The reason is that they are an important component of the organization’s net income. Hence, they are central to financial analysis. According to US GAAP, a firm recognizes revenues when earned and when it has received an asset or satisfied a liability with a value the firm can precisely measure. In some instances, a firm can make an argument to recognize revenue before a product or service has been completed and delivered. Discuss situations when this scenario is correct

Determine the ending inventory under the conventional retail method for the furniture department of Bonita Department Stores from the following data. (Round ratio of cost to selling price to 2 decimal places, e.g. 15.25% and final answer to 0 decimal places, e.g. 5,125.)

Assume revenues decrease and expenses increase with the age of the machine as given in the table below and it can be sold for $200,000 at the end of year five. Calculate NPV, payback, BCR, and IRR, should the equipment be purchased if the discount rate is 6% or 10%?

           Revenue   Expense

   Year 0       -      $1,500,000 (investment)

   Year 1       $850,000   $200,000

   Year 2       $750,000   $250,000

   Year 3       $650,000   $300,000

   Year 4       $550,000   $350,000

   Year 5       $450,000   $400,000

Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company’s product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.

When performing tax research, you may come across a vague answer that does not fit your client’s facts. If any of the Internal Revenue Code sections do not provide an answer, where would you turn for additional resources? How often should we reference the committee reports to see what was discussed on the congressional floor? Give an example of when you would (or did) use additional resources to find the answer for a client’s unique situation.

Questions 3 & 4 are more important.

1. Explain consumer and producer surplus and provide an example of each.
2. What happens to the consumer surplus and producer surplus when price increases or decreases?
3. Explain the relationship between the tax size and deadweight loss.
4. When tax causes deadweight loss then why it is imposed in the first place? Who gains in this situation? Also if tax has to be imposed how to determine what size of tax will generate optimum tax revenue for the government?

What do the turnover ratios and cash cycle indicate about this company?