Pfeitzer is a monopolist for a new drug that makes people feel thinner. The total cost function is C(Q) = 200 + 10Q + Q 2(read as Q SQUARED or Q to the power of 2) . The inverse demand function is p(Q) = 82 − Q.

(a) What are the efficiency losses of the monopoly pricing compared to competitive prices?

(b) Pfeitzer argues that other firms should not be allowed to enter the market, since it is a natural monopoly. A potential competitor argues that it is not a natural monopoly. Show why both are right at the same time.

The inverse demand curve for a Stackelberg duopoly is P =1932 - 3Q. The leader's cost structure is
CL(QL) = 13QL. The follower's cost structure is CF(QF) = 25QF.

Find the follower revenue

Round all calculations to 1 decimal

The Taylor Corporation is using a machine that originally cost $66,000. The machine has a book value of $66,000 and a current market value of $40,000. The asset is in the Class 8 CCA pool. It will have no salvage value after 5 years and the company tax rate is 40%.
Jacqueline Elliott, the Chief Financial Officer of Taylor, is considering replacing this machine with a newer model costing $70,000. The new machine will cut operating costs by $10,000 each year for the next five years. Taylor's cost of capital is 8%.

Should the firm replace the asset? (Use NPV methodology to solve this problem.)

Calculate the Present Values of the followings:

1. Total cashflows in year 0:

($30,000)

($70,000)

($40,000)

$30,000

2. Total Annual Savings for the five years:

$23,956

$25,789

$45,378

$11,289

3. PV CCA:

$8,229

$7,963

$9,365

$10,345

How to do question 2 and 3?

First American Incorporated is considering buying a new copier. It will cost $9,000 to purchase and $1,000 to ship and install. It has a five-year class life. At the end of four years they plan to sell the copier for $3,500. The new copier will allow FA to increase revenues by $2,000 each year but expenses will also increase by $500 each year. Account receivables will increase by $500 and account payables will increase by $800 if the copier is purchased. Straight-line depreciation will be used. FA’s marginal tax rate is 34% and its cost of capital is 5%. Complete parts A through E below.

a) The cost basis is
A: ($9,000)
B: ($9,700)
C: ($10,000)
D: ($10,300)

b) The chance in Working Capital in NICO is
A: $300
B:($300)
C: ($1,300)
D: $1,300

c) The Operating Cash Flow in year 2 is
A: ($300)
B: $1,670
C: $1,330
D: $1,500

d) The TCF is
A: $3,330
B: $3,370
C: $3,030
D: $3,200

e) What should First American do about this project?
A: Accept the project because the NPV is positive
B: Accept the project because the NPV is negative
C: Reject the project because the NPV is positive
D: Reject the project because the NPV is negative

Periodic Inventory by Three Methods; Cost of Merchandise Sold

The units of an item available for sale during the year were as follows:

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Exercise 2
The cost of producing one teddy bear is 10 PLN. At the price of 15 PLN per teddy bear the sales volume is 1000 pieces per year. Each time the price is raised by 1 PLN, the sales decrease by 50 pieces.
PROFIT = (FINAL PRICE - PRODUCTION COST) * number of units sold
(a) Determine the formula of the square function describing the annual profit depending on the price x PLN per unit.

b) Set such a price for one teddy bear that the annual profit of the company is the highest. What will be the sales volume and what profit?

Could you explain to me how to solve for the appropriate values in the cost reconciliation table (as seen in number 4)?

I followed the problem in all the other sections, but not for this one:

http://www.chegg.com/homework-help/scribners-corporation-produces-fine-papers-three-production-chapter-4-problem-10e-solution-9780077386214-exc

The first half of the table, labeled "costs to be accounted for" was confusing.

Coca is a monopolist for a new drug that makes people feel thinner. The total cost function is C(Q) = 200 + 10Q + Q 2(read as Q SQUARED or Q to the power of 2) . The inverse demand function is p(Q) = 82 − Q.

(a) What are the efficiency losses of the monopoly pricing compared to competitive prices?

(b) Coca argues that other firms should not be allowed to enter the market, since it is a natural monopoly. A potential competitor argues that it is not a natural monopoly. Show why both are right at the same time.

Capital Budgeting

Problem 1

Precision Instruments operates a machine that was purchased at a cost of $580,000 three years ago. Its current market value is $240,000 less than the original purchase price. An improved version of the equipment is now available for $600,000. The firm has spent $20,000 on a study examining the feasibility of replacing the old machine with the new and found that the new machine is capable of performing the same functions as the old one. Both machines belong to CCA class 10 (CCA rate = 30%) and have an expected remaining useful life of four years, but while the older machine will be worth only $60,000 by that time, the new machine can be sold for $250,000 in four years. Management believes that the company will have other class 10 assets in four years when the new equipment would be sold. The cost of operating the old machine is expected to be $100,000 next year (i.e. t = 1) with this cost increasing at 4% per year over the next three years. Management estimates that the cost of operating the new machine will be $50,000 in its first year of operation (i.e. t = 1) and will increase at the same rate as the old machine. In addition, the more efficient new machine will immediately reduce the amount of net working capital (NWC) required by $30,000. The firm’s marginal corporate tax rate is 35% and the required rate of return is 12%. Should the firm replace the machine?

Dog Up! Franks is looking at a new sausage system with an installed cost of $507086. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $73250. The sausage system will save the firm $170394 per year in pretax operating costs, and the system requires an initial investment in net working capital of $37679. If the tax rate is 32 percent and the discount rate is 11 percent, what is the NPV of this project?