Essay about Econ Homework Key

4. Based on your analysis in (1) – (3) above, what is your overall conclusion regarding the

THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ECONOMICS ECON1202/2291 QUANTITATIVE MEHODS A FINAL EXAMINATION SESSION 2 2008

Your paper should be between 1750 and 2500 words, in APA format and structured as follows:

Imagine that you have decided to open a small ice cream stand on campus called "Ice-Campusades." You are very excited because you love ice cream (delicious!) and this is a fun way for you to apply your business and economics skills! Here is the first month's scenario--you order the same number (and the same variety) of ice creams each day from the ice cream suppliers, and your ice creams are always marked at $1.50 each. However, you notice that there are days when ice creams remain unsold but other days when there are not enough ice creams for the number of customers.

8) A) The problems with the discount rate being a nominal rate and the cash flows a real rate is the fact that the discount rate is inflation adjusted and the cash flows are not. Therefore the discount rate should subtract inflation due to the fisher effect, nominal = real plus inflation to have the same “rate” as the cash flows or the cash flows should take into account inflation. If not the cash flows are understated or the discount rate is too high.

SABMiller and Diageo are two largest beer producer in Africa. ”SABMiller, if combined with its partnership with France's Castel Group, sells roughly 60% Africa’s beer by volume. Diageo’s also expands its operation successfully that Senator Keg, its supercheap beer, is also now number two most popular beers in Kenya. As these giant brewers monopolized Africa’s beer market, it can be said that the market has an oligopoly market structure, and both pursue identic operations, so the market can be labeled as competitive. The interdependence that is happening between both brewers makes the competition happens. As SABMiller produces Impala that is half price from its previous beer Manica, Diageo produces Senator Keg to balance it. Diageo

* Compute the value with leverage, VL, by discounting the free cash flows of the investment using the WACC.

Using the data and your own economic knowledge, assess the case for financing universities mainly through charging fees to their students.

8. Calculate the return on investment in dollars and as a percentage for an investment that you purchase for $500 and sell for $600. (2.0 points) 20 % ($100 profit)

Basic economic models assume that all parties have “perfect information.” How does “informational asymmetry” undermine our market economy?

7. How might you use this three asset optimal-allocation model to construct and graph an

6.The Year 0 net investment outlay for the project is $-475,000. This computed by adding the price of the machinery, installation, shipping, and the change in net working capital. The non-operating cash flow when the project is

The present value of the net incremental cash flows, totaling $5,740K, is added to the present value of the Capital Cost Allowance (CCA) tax shield, provided by the Plant and Equipment of $599K, to arrive at the project’s NPV of $6,339K. (Please refer to Exhibit 4 and 5 for assumptions and detailed NPV calculations.) This high positive NPV means that the project will add a significant amount of value to FMI. In addition, using the incremental cash flows (excluding CCA) generated by the NPV calculation, we calculated the project’s IRR to be 28%. This means that the project will generate a higher rate of return than the company’s cost of capital of 10.05%. This is also a positive indication that the company should undertake the project.

6. NI is composed of a number of categories. What category makes up the largest portion of NI?

1) According to the Law of Demand, the demand curve for a good will A) shift leftward when the price of the good increases. B) shift rightward when the price of the good increases. C) slope downward. D) slope upward. Answer: C 2) An increase in the price of pork will lead to A) a movement up along the demand curve. B) a movement down along the demand curve. C) a rightward shift of the demand curve. D) a leftward shift of the demand curve. Answer: A 3) An increase in consumer incomes will lead to A) a rightward shift of the demand curve for plasma TVs. B) a movement upward along the demand curve for plasma TVs. C) a rightward shift of the supply curve for plasma TVs. D) no change of the demand curve for plasma TVs. Answer: