In early 2008, you purchased and remodeled a 120 - room hotel to handle the increased number of conventions coming to town. By mid-2008, it became apparent that the recession would kill the demand for conventions. Now, you forecast that you will be able to sell only 10,000 room - nights, which cost $80 per room per night to service. You spent $20.00 million on the hotel in 2008, and your cost of capital is 25%. The current going price to sell the hotel is $15 million. If the estimated demand is 10,000 room - nights, the break - even price is $ per room, per night. (Hint: Remember that the cost of capital is the opportunity cost, or true cost, of making an investment.)

3. Your boss has suggested that, instead of a savings of $37,000 annually, it makes more sense to expect a savings that starts at $20,000 in year 3 and rises $2,000 per year to an ending value in year 13 of $40,000. She bases her suggestion on the fact that the experience curve will gradually reduce production costs. What would be the NPV of the cash flow at 4% if you adopt her suggestion?

There is a 50% chance that consumer spending will increase next year. Our clothing business heavily depends on levels of consumer spending. The table below shows the profits for various alternatives. Increase Decrease 0.5 0.5 Purchase footprint 5 0 Short-term lease 4 2 Expand e-commerce 3 1 Keep all as is 0 3 What should we do based on Maximax? Expand e-commerce Keep all as is Purchase footprint Short-term lease

Sean lives in San Diego and runs a business that sells pianos. In an average year, he receives $724,000 in revenue from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $424,000; he also pays wages and utility bills totaling $266,000. He owns his showroom; if he chooses to rent it out, he will receive $4,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Sean does not operate this piano business, he can work as a paralegal and receive an annual salary of $21,000 with no additional monetary costs. No other costs are incurred in running this piano business. Identify each of Sean's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wages and utility bills that Sean pays The rental income Sean could receive if he chose to rent out his showroom The salary Sean could earn if he worked as a paralegal The wholesale cost for the…

Joe is self-employed in a store that has a rental value of $500 a month which he pays, but he can vacate the building without giving notice. His other expenses are $100 a month for maintenance. He makes $25,000 a year on net sales (total revenue minus the wholesale cost of the product). If he quit his job and worked the same number of hours elsewhere at a job he liked equally well, he estimates that he could make $20,000 a year. No one else can be hired to work in the store. Joe should A B C D quit his job. keep the job. work part-time. It is impossible to say with the information given in the problem

Suppose that you are considering an investment, which would require you to pay $1,000 up front (today), and you would receive a payment of $100 per year, for 5 years, beginning one year from now. One year after your fifth payment, you would then have $800 paid to you as a final payment. Assume that the interest rate is equal to 5%. Round all answers to two decimal places. 5. Calculate the Present Value (PV) of the cost and each of the payments for the investment. Does this investment have a positive or negative present value? Should you make this investment? 6. How much would the initial cost ($1,000) need to change for you to be exactly indifferent about this investment? (i.e. you receive the same return for making this investment as you do for not making this investment?)

Steve collects old synthesizers. One he bought a few years back for $3000 he's decided to sell. Over the time he owned it, Steve did $250 in repairs and renovations. In preparing to sell the synthesizer, he's told by a source he considers 100% reliable that he could sell it for $3250 as it currently is. If, however, he is willing to pay $400 for some additional cosmetic repairs, he's told he could definitely get $3800 instead. In this case, the marginal benefit of doing the repairs before selling is $ (Carefully follow all numeric instructions. We'll work with this information again in the next question.) MacBook Air 吕口 F3 F4 F5 F7 F8 F9 2$ & 4 5 6 7 8. R Y U F G H. K

Suppose that you are considering an investment, which would require you to pay $1,000 up front (today), and you would receive a payment of $100 per year, for 5 years, beginning one year from now. One year after your fifth payment, you would then have $800 paid to you as a final payment. Assume that the interest rate is equal to 5%. Round all answers to two decimal places. 6. Calculate the Present Value (PV) of the cost and each of the payments for the investment. Adding up the costs and benefits, does this investment have a positive or negative Net Present Value? Should you make this investment? [5 points] 7. How much would the initial cost ($1,000) need to change for you to be exactly indifferent about this investment? (i.e. you receive the same return for making this investment as you do for not making this investment?) [2 points] 8. How would a decrease in interest rates increase or decrease the present value (PV) of the investment that this question is considering? Explain your…

12. Vanessa is working for a marketing firm making $60,000 per year but considers starting her own marketing company. Vanessa has determined that to launch the business, she needs to invest $100,000 of her own funds. She currently makes 6% return on her money while it is in the bank, so if she invests in this business, she will be giving up $6000 ($100,000x.06) in interest each year. The annual cost of running the business will include $70,000 for the rent of the office space, $210,000 for employee wages, and $5,000 for materials and utilities. Vanessa plans to manage the business, which means that she will have to quit her current job. a. Which costs above are considered explicit costs? Which costs are considered implicit costs? b. What is Vanessa's explicit cost per year? C. What is Vanessa's implicit cost per year?

If Peregrine consumes(1,500,880)and earns(1,300,1,100)and if the interest rate is10%, the present value of his endowment is