Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 3, Problem 3.2IP
Concert
You were able to purchase two tickets to an upcoming concert for $100 apiece when the concert was first announced three months ago. Recently, you saw that StubHub was listing similar seats for $225 apiece. What does it cost you to attend the concert?
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An engineer is working on the layout of a new research and experimentation facility. Two operators will be required. If, however, an additional $100,000 of instrumentation and remote controls were added, the plant could be run by a single operator. The total before-tax cost of each plant operator is projected at $35,000 per year. The instrumentation and controls will be depreciated by means of a modified accelerated cost recovery system (MACRS). If this corporation (22% combined corporate tax rate) invests in the additional instrumentation and controls. how long will it take for the after-tax benefits to equal the $100,000 cost? In other words, what is the after-tax payback period?
Please write out every step and formula, don't use excel. The answer should be 3.08 years, thank you.
The effective combined tax rate in a firm is 28%. An outlay of $2 million for certain new assets is under consideration. Over the next 9 years, these assets will be responsible for annual receipts of $650,000 and annual disbursements (other than for income tax) of $225,000. After this time, they will be used only for stand-by purposes with no future excess of receipts over disbursements. (a) What is the prospective rate of return before income taxes? (b)What is the prospective rate of return after taxes if straight-line depreciation can be used to write off these assets for tax purposes in 9 years? (c) What is the prospective rate of return after taxes if it is assumed that these assets must be written off for tax purposes over the next 20 years, using straight-line depreciation?
Please write out each step with formulas and don't use Excel. The answers should be (a)15.4% (b) 11.5% (c) 10.0%, thank you
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1. (Maximum length one page)
Consider an infectious disease with the following characteristics:
Individuals can exist in three states, susceptible, infected, and recovered. Once recovered, an individual
cannot be re-infected and remains immune for life.
The transmission rate, t, is 1/20.
The recovery rate, k, is 1/5.
Each person interacts randomly with others in the population and has contacts with 10 people each
time period.
There is no birth or death in the population.
-Initially all people are susceptible.
- No one dies from the disease and there is no treatment.
a) Draw a compartmental model for this infectious disease.
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Managerial Economics: A Problem Solving Approach
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