1) A firm has 4 divisions-food, retail, cookware, and credit services- that make revenues of= $1.5 million, 3.8 million, $5.7 million, and $3.1 million, respectively. find out the Herfindahl Index (HI) for firm. Firm is considering purchase of the rival retailer, which would increase retail division’s revenues by another= $3.2 million. Firm is also thinking of selling its credit services division. Suppose these 2 actions happen, what will HI become? What is HI if sale of credit division doesn’t occur but rival is acquired?
2) When Marilyn Monroe died, ex-husband Joe DiMaggio swears to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, bunch of fresh flowers that former baseball player thinking suitable for the star cost about $7. Based on actuarial tables, "Joltin' Joe" could expect to live for 27 years after actress died. Suppose that EAR is= 10.7%. Also, suppose that price of flowers will rise at 4.7% per year, when expressed as the EAR. Suppose that each year has exactly 52 weeks, present value of this commitment is $ . Joe began purchasing flowers week after Marilyn died.