Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Business Economics Expert

Given 2 (two-period) Jobs with the following cost and flows. Job A: will cost $50,000 in year 1 and will yield $84,000 in year 2 Job B: will cost $80,000 in year 1 and will yield $120,000 in year 2 Dwight and James are looking at these 2 jobs and will make choices. Job B looks more attractive by using simple arithmetic in a static world; but since these will occur in different periods, we know that the best way to evaluate each one is by getting the net present value of each job using each individual's discount rates. James is a patient and hard-working individual while Dwight is a happy-go-lucky come what may surfer type. a. Given 2 discount rates of 30% and 8% and knowing Dwight and James' personalities, assign the discount rate appropriate to each individual. b. Solve for the NPVs of each Job for each individual. (Show your solution). c. Based on the NPVs, which Job will Dwight pick and which Job will James pick? d. Solve for the IRR (show your solution). What does this number (IRR) mean for Dwight or James when they are trying to choose between Jobs A or B? 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M91720529

Have any Question?


Related Questions in Business Economics

A person who is hit by lightning had a 14 chance of being

A person who is hit by lightning had a 1/4 chance of being killed. What is the probability that someone who is struck by lightning will live to tell about it?

1 the demand for good x is given by qxdnbsp 6000 - frac12

1. The demand for good X is given by: Q X d  = 6,000 - ½ P X  - P Y  + 9P Z  + 1/10M Research shows that the prices of related goods are given by P Y  = $6,500 and P Z  = $100, while the average income of the individuals ...

Consider a perfectly competitive market with market supply

Consider a perfectly competitive market with market supply QS= -2+ P and market demand QD= 40 -P/2. Suppose the government imposes a tax of $6 per unit on this market. How much tax revenue is collected? a.$0 b.$48 c.$96 ...

Income effects depend on the income elasticity of demand

Income effects depend on the income elasticity of demand for each good that you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elastici ...

How might profit maximization lead to higher demand for

How might profit maximization lead to higher demand for female workers and result in female workers earning higher wages than male workers in the same firm?

Suppose that the demand curve for a businesses is given by

Suppose that the demand curve for a businesses is given by P= 10000-4Q^3 and supply is P= 2000 + 4Q^3 a. Find the equilibrium price and quantity b. Calculate consumer surplus at the equilibrium price c. Calculate produce ...

Research research and sample 5000 household concerning tv

Research research and Sample 5000 household concerning TV shows they watch. Based on the sample 18% reported watching 60 Minutes. What is the 95% confidence interval for the proportion of all Americans that watch 60 minu ...

Discuss the budgeting process and describe the success or

Discuss the budgeting process and describe the success or failure of the process.

What are the characteristics of perfect competition and

What are the characteristics of perfect competition, and does is exist in the real world?

Global warming is related to the concentration of

Global warming is related to the concentration of greenhouse gases in the atmosphere. Once in the atmosphere, gases remain there for long periods of time (centuries). Greenhouse gases include carbon dioxide and methane. ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As