Macroeconomics
11th Edition
ISBN: 9781260506891
Author: Colander
Publisher: MCG
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A linear programming computer package is needed.
As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars).
Year
1
2
3
4
5
6
Payment
170
195
220
265
295
440
The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings (at 4% annually) and government securities, at prices and rates currently quoted in The Wall Street Journal.
Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value = $1,000). Funds not invested in these securities will be placed in savings.
Security
Current Price
Rate (%)
Years to Maturity
1
$1,055
6.750
3
2
$1,000
5.125
4
Assume that interest is paid annually. The plan will be submitted to the judge and, if approved,…
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Eskom is South Africa’s monopoly power producer which the majority of South Africans depend on. Suppose there is extensive deregulation in the power industry. What is the impact of this deregulation on the industry?
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