1. For this assignment you will need to first build a graph to these specifications: Draw a downward sloping demand curve with vertical intercept (0,150) and horizontal intercept (25,0). Draw a supply curve with vertical intercept (0,50) and with slope=4 i.e. the market equilibrium occurs at (10, 90).

a. Compute consumer, producer, and total surplus at the market equilibrium.

b. Label consumer surplus and producer surplus if the government imposes a price floor of $120, then compute deadweight loss.

c. Compute deadweight loss when the government imposes a price floor of $70.

2.) Good weather in Florida creates a bumper crop of oranges. As a result of the good weather, what happens to the consumer surplus in the market for oranges and to the consumer surplus in the market for orange juice? Draw the necessary graphs to represent this scenario and then write a sentence or two with your answer.

The first table shows cost data for a single firm. Now suppose that there are 600 identical firms in this industry, each with the same cost data. Suppose, too, that the demand curve for this industry is as shown in the second table.

Based on all these data, the equilibrium price of the product in the market will be

Multiple Choice

• $95.

• $75.

• $120.

• $60.

Monty Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company’s bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $3,258,500 of 8% term corporate bonds on March 1, 2020, due on March 1, 2035, with interest payable each March 1 and September 1, with the first interest payment on September 1st, 2020. At the time of issuance, the market interest rate for similar financial instruments is 6%.

Click here to view factor tables

As the controller of the company, determine the selling price of the bonds. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

he current price of a non-dividend paying stock is 40 and the continuously compounded risk-free interest rate is 4%. The following table gives call and put option premiums for three-month European-style options of various exercise prices.

Exercise price

Call Premium

Put premium

35

5.75

0.40

40

2.29

1.90

45

0.50

5.05

A trader interested in speculating on volatility is considering two investment strategies. The first is a long 40-strike straddle. The second is a long strangle consisting of a long put option at strike 35, and a long call option at strike 45.

Determine the range of stock prices (ST) in 3 months for which the strangle outperforms the straddle.

Select one:

The strangle never outperforms the straddle.

35.90 < ST < 44.10

The strangle always outperforms the straddle.

36.71 < ST < 43.29

34.10 < ST < 45.90

Please compose three full paragraphs (one page single spaced) with any graphical or technical analysis as appropriate for each question 4) Suppose the legislature was considering an increase in the tax on cigarettes of 50 cents per pack. Assume the current price of a pack of cigarettes of $4.00, and sales in your state are five million packs per year. The estimated short-run elasticity of demand for cigarettes at the current price and quantity is 0.4. The long-run elasticity of demand (one year or longer) is 0.75.

a) Calculate and explain how much additional revenue the government can expect to receive in the first year (assuming no growth in the number of people smoking)? How much will smoking be reduced by?

b) Calculate and explain how much additional revenue the government can expect to receive in the second year (assuming no growth in the number of people smoking)? How much will smoking be reduced by?

Can you do in excel and include the excel show formulas

The Air Marshal Co. has recently completed a $10,000,000 two-year marketing study.  Based on the results of this study, Air Marshal has estimated that 800 units of its new security electro-optical human scanning hardware, known as "Marshal Dillon," could be sold annually over the next 12 years, at a price of $110,000 the first year with an estimated 2% annual rise from inflation in years 2-6.  The sales price is expected to drop to $90,000 in year 7 due to increasing competition with 2% annual increase for year 8-12.  Variable costs per unit are $45,000 with an estimated 4% annual rise from inflation in years 2-12 and incremental cash fixed costs total $15 million per year all 12 years.   

NPV.  Miglietti Restaurants is looking at a project with the following forecasted​ sales: ​ first-year sales quantity of 32,000​, with an annual growth rate of 4.00​% over the next ten years. The sales price per unit will start at $42.00 and will grow at 2.00% per year. The production costs are expected to be 55​% of the current​ year's sales price. The manufacturing equipment to aid this project will have a total cost​ (including installation) of $2,200,000. It will be depreciated using​ MACRS, and has a​ seven-year MACRS life classification. Fixed costs will be $360,000 per year. Miglietti Restaurants has a tax rate of 40​%. What is the operating cash flow for this project over these ten​ years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for ​$140,000 at the end of the​ ten-year project and the cost of capital for this project is 99%.

Please find cash flow for each year :)

Questions 1-4 show excel formulas

The coupon rate and market price for the 10-year US Treasury bond are 2.50% and 96.3828 respectively. Note, the price is expressed as a percentage of par (like other bonds). If par is $1000, then this bond is selling for $963.828.

1. Assume that this bond will mature in precisely 10 years, pay coupons semi-annually, and has a par value of $1000. Determine the yield to maturity for this bond.

2. Compute the duration of this bond and use it to estimate the new value of the bond if rates were to suddenly decline by 0.80%.

3. Calculate the bond's value directly (using the present value approach) assuming that rates declined 0.80% from the yield to maturity you estimated in the first question.

4. Compare your answers to Questions 2 and 3. Explain the source of any difference. Which is more correct

NPV.  Miglietti Restaurants is looking at a project with the following forecasted​ sales: ​ first-year sales quantity of 33,000​, with an annual growth rate of 4.00​% over the next ten years. The sales price per unit will start at ​$40.00 and will grow at 2.00% per year. The production costs are expected to be 55​% of the current​ year's sales price. The manufacturing equipment to aid this project will have a total cost​ (including installation) of ​$2 comma 500 comma 0002,500,000. It will be depreciated using​ MACRS, LOADING... ​, and has a​ seven-year MACRS life classification. Fixed costs will be ​$350,000 per year. Miglietti Restaurants has a tax rate of 38​%. What is the operating cash flow for this project over these ten​ years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for ​$140,000 at the end of the​ ten-year project and the cost of capital for this project is 99​%.

Problem 1: A company is going public at $16 and will use the ticker XYZ. The underwriters will charge a 7 percent spread. The company is issuing 20 million shares, and insiders will continue to hold an additional 40 million shares that will not be part of the IPO. The company will also pay $1 million of audit fees, $2 million of legal fees, and $500,000 of printing fees. The stock closes the first day at $19.

The company in Problem 1 grants a 15 percent overallotment option to the underwriter. The underwriter issues shares that are backed by the entire overallotment option but has not yet exercised the option. a. Explain what will happen if the price of the stock increases to $22. Describe the underwriter profits from the overallotment option in your explanation.
b. Explain what will happen if the price of the stock decreases to $11.50. Describe the underwriter profits from the overallotment option in your explanation.