Net Present Value, Break-Even Analysis, Leverage

A firm has three investment opportunities. Each costs $1,000, and the firm's cost of capital is 10 percent. The cash inflow of each investment is as follows: Cash Inflow A B C Year 1 300 500 100 2 300 400 200 3 300 200 400 4 300 100 500 a. If the net present value method is used, which investment(s) should the firm make? b. What is the internal rate of return of investment A? The internal rate of return of investment B is 10.22% and 6.15% for investment C. Which investment(s) should the firm make? c. What is the payback period for each investment? A firm needs $100 to start and expects: ... click for more

how to generate a Supply and Demand function from a Supply and Demand Schedule

Here i demonstrate how to generate a supply and demand function from a data table that includes the supply and demand data for two different price levels. First I show how to compute the slope then the intercept. With slope and intercept information supply and demand can be written in the familar P = a + bQ and... P = a - bQ forms respectively.

Definition of abitrage and the law of prices

Define arbitrage and the law of one price. What role do they play in a market-based system? What do we call the ‘one price’ of an asset?

Economic Policy - Global Environment

Economic Policy - Global Environment. See attached file for full problem description.

Profit Maximizing Output

Monopoly with 2 production plants and cost functions of C1 = 50 + 0.1 Q1^2 and C2 = 30 + 0.05 Q2^2. The demand it faces is Q = 500 - 10 P. What is the profit maximizing level of output? Show steps: Possible answers: Q1 = 62.5; Q2 = 125. Q1 = 125; Q2 = 62.5. Q1 = Q2 = 125. Q1 = Q2 = 62.5.