Ask Question, Ask an Expert


Ask Computer Engineering Expert

Problem Set1

1. To attract Walt Snore to job of CEO of Good Sleep Inc. Walt is given the following (a) a signing bonus of $500,000 (b) a bonus of $200,000 in any year that company profits raise by at least 2% over the previous year and (c) 1000 shares per annum of the stock, which he might not sell for 5 years.  Which of these components is most likely to address the principle-agent problem?  Which is least likely? Why?
Most Likely:______________

Least Likely:_____________

Reason: _________________________________________________________


2. Good Sleep Inc. is considering the buy a new mattress assembler which allows the construction of multiple firmness levels in same mattress.  Good Sleep anticipates the following 4-year earnings stream from the sale of this mattress.

Years in the Future    Anticipated Profit (‘000’s)
1                                      50
2                                      40
3                                      30
4                                      20

If the discount rate is 5% and the machine costs $130 (000), payable at once, what is the net present value of machine?  Is it a good buy?  (prepare out the net earnings stream to generate your answer)

Net Present Value_______________________________________

Good purchase?:________

3. Fred Smith owns a British Consul, a security that pays the equal of $1000 U.S. every year on September 15, forever.  Fred has recently considered selling the security.  The current interest rate is 10%

a. What is the minimum sales price he must be offered to should consider selling the Consul, after Sept. 15?


b. Joe Miller offers to purchase the Consul, but wants to buy it on Sept. 14. Should Fred change his price in (a)?  If so, why and what price must he charge?



4. Joe Holiday operated a business renting beach umbrellas this past summer.  He operated the concession for 3 months.  Joe knew that rain was frequent along this stretch of beach, but he was luck and enjoyed 60 rentable days this season.  On each rentable day Joe rented 40 umbrellas per day at $10 per rental.  He ran the concession by himself, but had to pay Beachcomber Enterprises $10,000 for the concession (the use of the umbrellas and for the beachfront rental location).  Suppose Joe could have earned $10,000 working construction.

a. What were Joe’s Accounting Profits for undertaking business? What were his Economic Profits?

Accounting profits: ______________________________________________

Economic profits: _ ____________________________________________

Did Joe realize positive economic profits from venture?  If so, to what were these profits attributable?

Positive economic profits? ( Y / N )

Justification: _______________________________________________________
5. Assume that as a lottery prize you win a trip worth $5000.  You are uninterested in trip, however under the terms of prize you can collect the $5,000 in cash, however only if you do not redeem the trip for 3 years.  If the interest rate is 4%, the present value of the prize is

a) $4,445
b) $4,807
c) $5,200
d) $5,624

6. Assume that you own a small portfolio of stock. Your holdings are from mature firms who have a long history of paying a $1000 dividend every year on February 1. You anticipate this pattern to continue indefinitely.  If the interest rate is 5%, what is minimum amount you would require to consider selling this portfolio on February 2?

a) $952.82
b) $1050
c) $20,000
d) $21,000

7. After receiving good reviews for her work at a series of the art shows, Jean Rodin considers quitting her job as a management consultant to pursue full time her hobby of sculpting.  Jean figures which she can sell $90,000 worth her art each year. She found a studio which she can rent for $2,000 per month and know that materials will cost her $10,000 per year.  She now earns $70,000 per year.  If her computations are correct, Jean’s annual economic profits from the venture will be.

a) $56,000
b) $20,000
c) $10,000
d) $14,000

8. Consider again the circumstances in problem 7 above.  What differentiation would it make in Jean’s computations of economic and accounting profits if rather than having to find a studio, she owns a space that she could rent for $2,000 per month if she did not use it herself?

a) Both accounting and economic profits would increase
b) Economic profits would increase but accounting profits would remain unchanged
c) Accounting profits would increase, but economic profit would remain unchanged
d) Neither economic nor accounting profits would change.

Computer Engineering, Engineering

  • Category:- Computer Engineering
  • Reference No.:- M91135

Have any Question? 

Related Questions in Computer Engineering

Need help writing a paper700- to 1050-word paper that will

Need help writing a paper 700- to 1,050-word paper that will be used as your reference manual in which you address the following: Define HIE Explain the purpose and use of HIE. Explain the 3 key forms of HIE. Explain how ...

1 the models in this chapter do not discuss availability

1. The models in this chapter do not discuss availability. What unstated assumptions about that service are they making? 2. A physician who is addicted to a pain-killing medicine can prescribe the medication for herself. ...

Compare the performance of shell sort implementations that

Compare the performance of shell sort implementations that use respectively the sequence of decrements n/2, n/4, n/8, ..., 1 and 2 P -1, ..., 31, 15, 7, 3, 1. Use random data sets and use the number of comparisons and mo ...

1 in sctp a packet is carrying two data chunks each

1. In SCTP, a packet is carrying two DATA chunks, each containing 22 bytes of user data. What is the size of each DATA chunk? What is the total size of the packet? 2. In SCTP, a SACK chunk reports the receipt of three ou ...

Assume that our network may corrupt packets but it never

Assume that our network may corrupt packets, but it never loses or duplicates a packet. We are also concerned about flow control. We do not want the sender to overwhelm the receiver with packets. Design an FSM of a new p ...

1 for each of the major types of information security job

1. For each of the major types of information security job titles covered in the chapter, list and describe the criteria used for selection. 2. What are some of the factors that influence an organization's information se ...

1 how is data transfer achieved using catv channels2

1. How is data transfer achieved using CATV channels? 2. Distinguish between CM and CMTS. 3. What is the relationship between SONET and SDH? 4. What is the relationship between STS and STM?

1 implement the function treesizeroot which computes the

1. Implement the function treeSize(root), which computes the number of nodes in a binary tree. 2. Implement the function treeHeight(root), which computes the height of a binary tree. 3. Implement the computeOp(lvalue, op ...

Write a program that creates a list of card objects see

Write a program that creates a list of card objects (see Programming Exercise 11 from Chapter 10) and prints out the cards grouped by suit and in rank order within suit. Your program should read the list of cards from a ...

Question 1polybius was an ancient greek writer who first

Question 1 Polybius was an ancient Greek writer who first proposed a method of substituting different two-digit numbers for each letter. The alphabet is written inside a 5-by-5 square matrix which has numbered rows and c ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro