12 economics questions…answers must be complete and original due by

Salvatore 14: Discussion Question 12 What is the rationale behind the minimax regret rule? What are some less formal and precise methods of dealing with uncertainty? When are these useful? ANSWER: Your answer goes here     Salvatore 14: Discussion Question 15 How does the adverse selection problem arise in the credit- card market? How do credit- card companies reduce the adverse selection problem that they face? To what complaint does this give rise? ANSWER: Your answer goes here     Salvatore 14: Spreadsheet Problem 1 An individual has to choose between investment A and investment B. The individual estimates that the income and probability of the income from each investment are as given in the following table:   
Investment A   
Investment B
Income Probability  
Income Probability
4000            0.2           4000    
5000            0.3           6000   
6000            0.3           8000   
7000             0.2

(a) Using Excel’s statistical tools, calculate the standard deviation of the distribution of each investment. (b) Which of the two investments is more risky? (c) Which investment should the individual choose?

NOTE: Use table 14-4 as reference
ANSWER: Your answer goes here     Salvatore 14: Spreadsheet Problem 2 An individual is considering two investment projects. Project A will return a zero profi t if conditions are poor, a profi t of $ 4 if conditions are good, and a profi t of $ 8 if conditions are excellent. Project B will return a profi t of $ 2 if conditions are poor, a profi t of $ 3 if conditions are good, and a profi t of $ 4 if conditions are excellent. The probability distribution of conditions is as follows:      

Conditions: Poor Good Excellent
Probability: 40% 50% 10%
(a) Using Excel, calculate the expected value of each project and identify the preferred project according to this criterion. (b) Assume that the individual’s utility function for profit is      
U(X) = X – 0.05X2. Calculate the expected utility of each project and identify the preferred project according to this criterion. (c) Is this individual risk averse, risk neutral, or risk seeking? Why?

NOTE: Use tables 14-5 and 14-6 as reference
ANSWER: Your answer goes here     Froeb et al 17: IP 17-1 You’re the manager of global opportunities for a U. S. manufacturer, who is considering expanding sales into Europe. Your market research has identified three potential market opportunities: England, France, and Germany. If you enter the English market, you have a 0.5 chance of big success (selling 100,000 units at a per- unit profit of $8), a 0.3 chance of moderate success (selling 60,000 units at a per- unit profit of $6), and a 0.2 chance of failure (selling nothing). If you enter the French market, you have a 0.4 chance of big success (selling 120,000 units at a per- unit profit of $9), a 0.4 chance of moderate success (selling 50,000 units at a per- unit profit of $6), and a 0.2 chance of failure (selling nothing). If you enter the German market, you have a 0.2 chance of huge success (selling 150,000 units at a per- unit profit of $ 10), a 0.5 chance of moderate success (selling 70,000 units at a per- unit profit of $ 6), and a 0.3 chance of failure (selling nothing). If you can enter only one market, and the cost of entering the market (regardless of which market you select) is $250,000, should you enter one of the European markets? If so, which one? If you enter, what is your expected profit? ANSWER: Your answer goes here.     Froeb et al 17: IP 17-4 Your company has a customer who is shutting down a production line, and it is your responsibility to dispose of the extrusion machine. The company could keep it in inventory for possible future product and estimates that the reservation value is $250,000. Your dealings on the second-hand market lead you to believe that there is a 0.4 chance a random buyer will pay $300,000, a 0.25 chance the buyer will pay $350,000, a 0.1 chance the buyer will pay 400,000, and a 0.25 chance it will not sell. If you must commit to a posted price, what price maximizes profits? ANSWER: Your answer goes here     Froeb et al 19: IP 19-5 Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value. For example, suppose you’re trying to sell a company a new accounting system that will reduce costs by 10%. Instead of naming a price, you offer to give them the product in exchange for 50% of their cost savings. Describe the information asymmetry, the adverse selection problem, and why soft selling is a successful signal. ANSWER: Your answer goes here     Froev et al 19: IP 19-6 You need to hire some new employees to staff your start-up venture. You know that potential employees are distributed throughout the population as follows, but you can’t distinguish among them:                                                        
Employee Value     Probability
 $50,000                0.25
$60,000                0.25
$70,000                0.25
$80,000                0.25

What is the expected value of five employees you hire?

NOTE: Need to consider adverse selection.
ANSWER: Your answer goes here     Salvatore 15: Discussion Question 7 (a) When can the NPV and the IRR methods of evaluating investment projects provide contradictory results? (b) How can this arise? (c) Which method should then be used? Why? ANSWER: Your answer goes here     Salvatore 15: Problem 8 John Piderit, the general manager of the Western Tool Company, is considering introducing some new tools to the company’s product line. The top management of the firm has identified three types of tools (referred to as projects A, B, and C). The various divisions of the firm have provided the data given in the following table on these three possible projects. The company has a limited capital budget of $ 2.4 million for the coming year. (a) Which project(s) would the firm undertake if it used the NPV investment criterion? (b) Is this the correct decision? Why?

NOTE: Remember the firm has a limited capital budget of $2.4 million for the coming year. In other words, the firm faces the capital rationing and should use the profitability index as its investment criterion (pp. 637–640).
ANSWER: Your answer goes here     Salvatore 15: Problem 10 The MacBurger Company, a chain of fast- food restaurants, expects to earn $ 200 million after taxes for the current year. The company has a policy of paying out half of its net after-
tax income to the holders of the company’s 100 million shares of common stock. A share of the common stock of the company currently sells for eight times current dividends.
Management and outside analysts expect the growth rate of earnings and dividends for the company to be 7.5 percent per year. Calculate the cost of equity capital to this fi rm.

NOTE: Use the dividend valuation model (pp. 642–643). “A share of the common stock of the company currently sells for eight times current dividends

ANSWER: Your answer goes here     Salvatore 15: Spreadsheet Problem 1 The benefits and costs of an investment project (the purchase of a piece of machinery) are those given in the following table. In Excel, calculate net revenue, or the revenue from the investment minus the costs; the present value coefficient for every year; and the present value of the net revenue. Add together column F to get the net present value of the project. Should the firm purchase the machine?

NOTE: Change the present value coefficient from 1/(1+0.5)n to 1/(1+0.05)n. That is the discount rate of 5% instead of 50%
ANSWER: Your answer goes here
Assignment Help
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.


Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.


Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.


Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.