ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Calculate the marginal efficiency of capital if the prospective yield is $80 and the supply
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- A vegetable producer is considering investing in an indoor hydroponic system. Which of the following would contribute to them choosing a lower discount rate when evaluating the investment? O A high interest rate on loan to finance the investment O High debt to asset ratio O Decreased crop loss to outdoor pests and disease O All of the above O None of the abovearrow_forwardIf the market interest rate equals 8 percent, the opportunity cost of the last new investment project undertaken would approximately be equal to zero percent. 16 percent. infinity. 8 percent. 4 percent.arrow_forwardQuantity Price 0 $100 1 $90 2 $80 3 $70 4 $60 5 $50 6 $40 7 $30 8 $20 9 $10 10 $0 Marginal Cost $45 $40 $35 $30 $35 $40 $45 $60 $100 $180 Average Total Cost $80 $64 $52 $44 $40 $40 $52 $64 $80 $100arrow_forward
- If the marginal personal tax rate imposed on interest income paid to bondholders were to increase, holding the corporate tax rate and the personal tax rate on payments to equity (e.g., taxes on dividends), what is the impact on the marginal benefit of debt to the corporation? How might this effect the optimal amount of debt the firm should have in its capital structure?arrow_forwardSuppose there is a nonrenewable resource with inverse demand function p= 20- 2q and with MEC= 10. Suppose the time horizon is 2 periods. The resource stock, S is finite and = 50 units.a. If interest rates are 60%, how much should be extracted in each period?arrow_forwardHelp me pleasearrow_forward
- Assume the relationship between the growth of a fish population and the population size can be represented as g= 8S – 0.2S2, where g is the growth in tons and S is the size of the population (in thousands of tons) a. Given a price of $100 a ton of fish, what is the marginal benefit of smaller population sizes? b. Estimate the population size that is compatible with the maximum sustainable yield. What would be the size of the annual catch if the population were to be sustained at this level? c. If the marginal cost of additional catches (represented in terms of the population size) is MC= 3(120-S), what is the population size that is compatible with the efficient sustainable yield? d. Is there a difference between the maximum sustainable yield you calculated in part (b) and the efficient sustainable yield in part (c)? Why or why not? Explain briefly (in 1 paragraph or less)arrow_forwardBen is a retired budget auditor who is currently looking for a new investment opportunity. He is considering two investments: Calzone Zone, a small restaurant specialising in calzone, and Icetown, a skating and curling rink. The projected cash flows of the two investments are shown below. Ben can only choose one projects, so he asks for your help and advice in reaching a decision on which investment to accept. He tells you he requires a 5% rate of return on his investment. Calzone Icetown Zone Cash flows £000 £000 Initial investment (885) 150 (300) 215 Cash flows year 1 Cash flows year 2 Cash flows year 3 Cash flows year 4 Cash flows year 5 195 215 200 230 265 215 215 (585) Assume the initial investment arises at the start of the first year of the project and all the subsequent cash flows occur at the end of the year. Question A. What are the economic factors reflected in the required rate of return? Discuss the likely effects of the economic shock brought by the COVID-19 pandemic on…arrow_forwardFind the marginal efficiency of capital if the prospective yield is 291 and the supply price is 52.arrow_forward
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