3. Lockheed Martin has secured a satellite launch contract from a European communications To land that contract, they company that will pay them €3.9M per year for the next 8 years. invested €13M in a satellite tracking system. Of that amount, €8M was paid up front and the remaining €5M was spent during the first year of operation. The annual operating costs for the satellite tracking system are estimated at €0.9M per year (which includes the cost of personnel, electricity, maintenance, etc.). At the end of the contract, it is estimated that the equipment will have a salvage value of €0.5M. What is Lockheed Martin's internal rate of return (IRR) on this project?

3. Lockheed Martin has secured a satellite launch contract from a European communications To land that contract, they company that will pay them €3.9M per year for the next 8 years. invested €13M in a satellite tracking system. Of that amount, €8M was paid up front and the remaining €5M was spent during the first year of operation. The annual operating costs for the satellite tracking system are estimated at €0.9M per year (which includes the cost of personnel, electricity, maintenance, etc.). At the end of the contract, it is estimated that the equipment will have a salvage value of €0.5M. What is Lockheed Martin's internal rate of return (IRR) on this project?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(Warning: Hypothetical scenario) A widely read new study suggesting that eating too much bacon can cause digestive problems and stomach cancer is likely to cause Demand for bacon to shift left. Ceteris paribus, a leftward shift in the demand curve for bacon is expected to lead to ____________ prices and ____________ units sold.
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5. (b) Are the following statements true or false? Justify your answer (simply saying true or false will carry no credit). i) "A labor market dominated by a single buyer achieves Pareto efficiency if the buyer operates as a perfectly discriminating monopolist". ii) "A cake is divided between two individuals; Pareto optimality requires that they receive equal shares".
(Figure: Demand and Supply of Sugar) Use Figure: Demand and Supply of Sugar. A factor that may have shifted the supply from S₁ to S₂ is: Price (per pound) $50 40 40 30 25 20 15 10 0 100 200 S₁ $2 D 500 600 300 400 Quantity of sugar (per month) better technology in the production of sugar. increased demand. lower labor productivity in sugar production. increased prices of substitutes in the production of sugar.
2. (Market segment) In a monopoly market, the producer has a cost function of: C = 5+3q, there are two different types of consumers, they have different demand functions: p1 = 15-qı, P2=25-2y2.| a. If the monopolist can conduct the third-degree price discrimination, i.e. he can charge different price to different types of consumers, what is the price he will charge on each market? What is the quantity sold on each market? What is the total profit? b. If the monopolist cannot conduct third degree price discrimination, i.e. he cannot distinguish between the consumers but decide to charge a single price, what is the price he will charge? What is the quantity sold? What is his profit in this case?
7 (a) Assume P₁ = 1, P₂ = 2, Y (income) = 100. Point rationing is in force. Government specifies that when the consumer buys one unit of each good, she must hand over a specified number of ration coupons as well as the money price and she is given an initial endowment of ration coupons. One unit of X₁ requires two coupons and a unit of X₂ requires one coupon, total 100 coupons. Maximize the consumer's utility given that: B U=X₁ X₂ Show your result in a graph.
3. (20%) Elasticity (related to Total Revenue): (Please show your steps & decision rules) The demand schedule for a specific computer software is as follows- Please use the relationship between Elasticity and TR (total revenue) to make judgment. Price (per copy of software) $630 640 Quantity demanded (in million) 64 61 660 59 690 55 750 53 765 50 775 49 820 47 850 45 860 43 a. What type of elasticity (elastic, inelastic, or others) is this demand if the price of this software decreases from $750 to $640? (2%) explain why and show your steps. b. What type of elasticity (elastic, inelastic or others) is this demand if the price of this software increases from $690 to $765? (2%) explain why and show your steps. At what price is total revenue a maximum and what quantity sold? 2% Show your calculation/numbers d. When the price increases from $660 to $775, is the demand for this software elastic or inelastic or others? Explain why. 2% e. When the price decreases from $850 to $765, is the…
4- The increase in the quantity supplied of the good as its price rises is expressed as …………. a) inferior goods B) Value paradox NS) law of supply D) Marginal propensity to import TO) law of demand
3. (Hand in) The elasticity of demand in the market for softdrinks is known to be ED = -1. It is known that if the government would implement a one dollar per gallon tax, then the price paid by consumers would go up by 0.8 dollars per gallon. Calculate the elasticity of supply Es.
5. (12 pts-2 points for each subpart) Spring break travel prices are estimated to be 8-10% higher this year. A resort in South Padre decided to run a price promotion for room rentals. They know the elasticity of demand for resort rooms is -2.50. During the price promotion, they expect to be at full capacity with 500 rooms sold per night. Before the price drop, they sold an average of 375 rooms a night. Round to the nearest two decimal places for calculations. a. Does this resort have an inelastic or elastic own-price elasticity of demand? Interpret the OPE given above. b. For them to be able to achieve this increased sale, what would the percentage change in price need to be? c. If the price before the promotion was $250 per night, what is the new price? d. Calculate the revenue before the price drop. e. Calculate the revenue after the price drop. f. Is the price drop a good marketing strategy, given all else is same?
2. (a) Imagine yourself in a tea garden in Sylhet. You see beautiful green tea trees around you and plantation workers plucking the matured leaves off the trees. Beside the garden you see a factory of a renowned tea brand Victoria inside which there are heavy machineries that convert raw tea leaves into ready to consume refined ground tea. Based on your knowledge about the Factors of Production, figure out which of the following fall under Price which factor and briefly explain the reason behind. Qo Qs 1000 10 65 800 20 50 600 30 30 (b) After having a brief chat with the manager of the factory, you get the monthly demand and supply schedule of per box Victoria Tea Leaves in the market. Plot these in one graph, identify the equilibrium and show the annual Revenue of the tea. 400 40 15 200 50 5
1. Suppose that you are in charge of purchasing for a U.S. corporation that is planning to acquire a large number of new computers. The company's computer specialist has identified two models, one Japanese-made and one U.S.-made, that meet the necessary specifications. Since the two models are essentially equivalent, the company will buy the one with the lower price. Suppose the U.S.-made computer costs $2,400, and a similar Japanese-made computer costs 242,000 yen. If the nominal exchange rate is 110 yen per dollar, which computer is a better buy? (Hint: calculate the real exchange rate for computers)