Assume you can invest in 2 projects whose payoff depend on the state of the economy. The profits from each project for each state of the economy are presented below. What are the expected payoffs of each project if there is a 30% chance of a recession and a 70% of no recession? Profit under recession Profit under normal conditions Project 1 100,000 150,000 Project 2 50,000 240,000 O Project 1: $130,000 and Project 2: $180,000 O Project 1: $135,000 and Project 2: $183,000 O Project 1: $135,000 and Project 2: $180,000 O Project 1: $130,000 and Project 2: $183,000

Assume you can invest in 2 projects whose payoff depend on the state of the economy. The profits from each project for each state of the economy are presented below. What are the expected payoffs of each project if there is a 30% chance of a recession and a 70% of no recession? Profit under recession Profit under normal conditions Project 1 100,000 150,000 Project 2 50,000 240,000 O Project 1: $130,000 and Project 2: $180,000 O Project 1: $135,000 and Project 2: $183,000 O Project 1: $135,000 and Project 2: $180,000 O Project 1: $130,000 and Project 2: $183,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following binary linear programming formulation of a capital budgeting problem. Projects x3 and x4 are a. Mutually exclusive b. x3 is contingent on x4 c. x4 is contingent on x3 d. Not related
3. Consider an individual whose income stream is (200,120) in a situation where he is faced with the choice of 3 economically independent projects, alpha, beta and gamma. The market interest rate is 50%. The cash flows for the three projects are as follows: Project Co C₁ Alpha Beta -20 24 Gamma 10 -12 a) Which projects (if any) would the individual invest in? b) How much would he end up consuming in time 0? c) How much would he end up consuming in time 1? d) Show that the individual is better off with the investments than if he just consumed according to his income pattern. -12 30
Pls help with below homework.
9. Please use the formula to solve the problem.
Which of the following is true about net present value? O The higher the NPV, the better the return on the investment. O A project is acceptable if NPV > 0 O All of the given answer choices. O NPV is one of the easiest decision methods to calculate.
III. PROBLEM SOLVING Lino Batumbakal is now exploring the option to start selling beef wellington. He is trying to find out how many must he sell in order to start earning money. From an initial feasibility study, he will incur a total of 200,000 pesos for equipments and other fixed expenses. He is planning to sell the wellington at 500 pesos for each incurring direct expenses of 150,000 pesos in the production. According to Lino Bataumbakal's feasibility study, should he start selling the beef wellington, he will have the following data: Price 500 2,100 Q 12 10 4 6 1. What will be the TOTAL COST EQUATION? 2. How many units must he sell in order to break even? 3. How much should be her revenue to earn a profit worth 100,000 pesos? 4. If Lino would like a Net Profit of 300,000 pesos, how many units should he sell?
A project that will provde annual cash flows of $2,350 for nine years costs $9,700 today. a. At a required return of 12 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At a required return of 28 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) а. NPV b. NPV C. Discount rate %
11. Please use the formula to solve the problem.
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