Pearson eText for Engineering Economy -- Instant Access (Pearson+)
17th Edition
ISBN: 9780137533138
Author: William Sullivan, Elin Wicks
Publisher: PEARSON+
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Question
Chapter 7, Problem 23P
(a):
To determine
Calculate the MARR.
(b):
To determine
Calculate the
(c):
To determine
Calculate the taxable income.
(d):
To determine
Calculate the ATCF.
(d):
To determine
Calculate the ATCF.
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Problem 3
You are given the following demand for European luxury automobiles:
Q=1,000 P-0.5.2/1.6
where P-Price of European luxury cars
PA = Price of American luxury cars
P, Price of Japanese luxury cars
I= Annual income of car buyers
Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test).
On the basis of the information given, answer the following questions
1. Comment on the degree of substitutability between European and American luxury cars and
between European and Japanese luxury cars. Explain some possible reasons for the results in
the equation.
2. Comment on the coefficient for the income variable. Is this result what you would expect?
Explain.
3. Comment on the coefficient of the European car price variable. Is that what you would expect?
Explain.
Problem 2:
A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch
offices and dealerships across the country and estimated the following demand for its product:
Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc
(5,234) (1.29) (175) (0.12) (0.17) (0.13)
R²=0.68 SER 786 F=21.25
The variables and their assumed values are
P = Price of basic model = 7,000
Q==Quantity
A = Advertising expenditures (in thousands) = 52
P = Average price of a personal computer = 4,000
P.
Average price of a minicomputer = 15,000
Pe Average price of a leading competitor's workstation = 8,000
1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each
variable has on the demand. What implications do these results have for the firm's marketing
and pricing policies?
2. Conduct a t-test for the statistical significance of each variable. In each case, state whether
a one-tail or two-tail test is required. What difference, if any, does it make to…
Chapter 7 Solutions
Pearson eText for Engineering Economy -- Instant Access (Pearson+)
Ch. 7 - How are depreciation deductions different from...Ch. 7 - Prob. 2PCh. 7 - Explain the difference between real and personal...Ch. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10P
Ch. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - A manufacturer of aerospace products purchased...Ch. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Refer to Problem 6-79. The alternatives all have a...Ch. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - AMT, Inc., is considering the purchase of a...Ch. 7 - Prob. 48PCh. 7 - Prob. 49PCh. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Determine the after-tax yield (i.e., IRR on the...Ch. 7 - A 529-state-approved Individual Retirement Account...Ch. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57SECh. 7 - Prob. 58SECh. 7 - Prob. 59SECh. 7 - Refer to the chapter opener and Example 7-14. As...Ch. 7 - Prob. 61FECh. 7 - The Parkview Hospital is considering the purchase...Ch. 7 - Prob. 63FECh. 7 - Prob. 64FECh. 7 - Prob. 65FECh. 7 - Prob. 66FECh. 7 - Prob. 67FECh. 7 - Prob. 68FECh. 7 - Prob. 69FECh. 7 - Prob. 70FECh. 7 - Prob. 71FECh. 7 - Prob. 72FECh. 7 - Prob. 73FECh. 7 - Prob. 74FECh. 7 - Prob. 75FECh. 7 - If the federal income tax rate is 35% and the...Ch. 7 - Prob. 77FECh. 7 - Acme Manufacturing makes their preliminary...Ch. 7 - Prob. 79FECh. 7 - Prob. 80FECh. 7 - Prob. 81FECh. 7 - Prob. 82FECh. 7 - Prob. 83FECh. 7 - Prob. 84FECh. 7 - Two insulation thickness alternatives have been...
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- You are the manager of a large automobile dealership who wants to learn more about the effective- ness of various discounts offered to customers over the past 14 months. Following are the average negotiated prices for each month and the quantities sold of a basic model (adjusted for various options) over this period of time. 1. Graph this information on a scatter plot. Estimate the demand equation. What do the regression results indicate about the desirability of discounting the price? Explain. Month Price Quantity Jan. 12,500 15 Feb. 12,200 17 Mar. 11,900 16 Apr. 12,000 18 May 11,800 20 June 12,500 18 July 11,700 22 Aug. 12,100 15 Sept. 11,400 22 Oct. 11,400 25 Nov. 11,200 24 Dec. 11,000 30 Jan. 10,800 25 Feb. 10,000 28 2. What other factors besides price might be included in this equation? Do you foresee any difficulty in obtaining these additional data or incorporating them in the regression analysis?arrow_forwardsimple steps on how it should look like on excelarrow_forwardConsider options on a stock that does not pay dividends.The stock price is $100 per share, and the risk-free interest rate is 10%.Thestock moves randomly with u=1.25and d=1/u Use Excel to calculate the premium of a10-year call with a strike of $100.arrow_forward
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