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A steel fabrication company invested $800,000 in a new shearing unit. At an interest rate of 12% per year, compounded monthly, the monthly income required to recover the investment in 3 years is clo
A building is purchased with a principal amount to pay down of $108000. The payments will be made in 20 EQUAL, end of year (not monthly!) installments. What are the equal installments if the annual
The risk-free rate is 5 % and the expected return on the market portfolio is 18%. Based on the capital-asset-pricing model, what is the expected return on the above portfolio?
Assume that in a certain economy the LM curve is given by Y = 2000r - 2000 + 2 (M/P), and the IS curve is given by Y = 8000 - 2000r + v, where v is a shock that is equal to 200 half of the time and
Assume a profit maximizing firm's short run cost is TC = 700 + 60Q. If its demand curve is P = 300 - 15Q, what should it do in the short run?
Which factor would you use when computing the present value of a series of rent payments, assuming the rent is paid at the beginning of each period as in a standard lease:
For each of the following, predict the effects on the equilibrium levels of aggregate output (Y) and the interest rate ( r ):
Prepare a schedule reflecting an incremental analysis of this proposal. Indicate the effect the acceptance of this order might have on the company's income.
Explain the effects of monetary and fiscal policy on economic activity using both IS/LM and AS/AD models. Also explain the difference between the supply side and demand theories.
Suppose you to are receive a stream of annual payments (also called annuity) of $7000 every year for 3 years starting this year. The discount rate is 6 %. What is the present value of these payments
If a firm buys on trade credit terms of 2/10, net 60 and decides to forgo the trade credit discount and pay on the net day, what is the effective annualized cost of forgoing the discount?
Problem 1. Explain how do banks create money? What is money multiplier?
From time to time, the city of Chicago provides free concerts. Can this program be rationalized on the basis of welfare economics? Relate the program to the concept of merit goods.
Question 1: The bank of canada increases the monetary base by $50 million. Calculate the chartered banks' deposit multiplier, and the increase in chartered bank deposits. Question 2: Calculate the i
During economic boom times, the number of new personal care businesses, such as gyms and tanning salons, is proportionately greater than the number of other new business such as grocery stores.
Problem: Why might M1 and M2 grow at very different rates during a given year?
List a minimum of four fundamental factors to be considered when trying to forecast stock prices. List two advantages of buying a put on a stock instead of selling it (the stock) short.
a. Compute the incremental net income of the investment for each year b. Compute the incremental cash flows of the investment for each year
1. What factors would you consider in making the choice of how you will allocate your time between work and leisure? 2. Would these factors change as your earnings increased? As you aged?
Problem: Financial intermediation is the process by which financial institutions transfer funds from ultimate lenders, i.e. savers, to ultimate borrowers, i.e. investors.
If you will receive $1,200,000 at the end of two years from today and your required return is 11% what is the value (present) of the this future cash flow to you today?
Problem: As an economist, you have been asked to address a meeting of a group of international professionals to explain the differences between microeconomics and macroeconomics and to provide real-
Successful activist stabilization policy presumes that a) the timing and magnitude of the impact of AD disturbances are known, forecasted with precision b) the timing of policy impacts of nominal GNP
A machine is purchased for $50,000 and costs $30,000 per year in electrical and maintenance costs. The estimated life is 15 years and interest is at 6% compound. What is the total annual cost of thi
Why is universal acceptability such an important characteristic of money? What other characteristics can you think of that might be important to market participants? What do you think might happen i