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

1 why are vulnerabilities difficult to predict2 discuss the

1. Why are vulnerabilities difficult to predict? 2. Discuss the sources of system vulnerabilities. 3. Is it possible to locate all vulnerabilities in a network? In other words, can one make an authoritative list of those ...

Assume we have a stream cipher whose period is quite short

Assume we have a stream cipher whose period is quite short. We happen to know that the period is 150-200 bit in length. We assume that we do not know anything else about the internals of the stream cipher. In particular, ...

1 the sequential search algorithm will always find the

1. The sequential search algorithm will always find the first occurrence of an item in a data set. Create a new sequential search method that takes a second integer argument indicating which occurrence of an item you wan ...

1 write down the bit pattern in the fraction assuming a

1. Write down the bit pattern in the fraction assuming a floating point format that uses Binary Coded Decimal (base 10) numbers in the fraction instead of base 2. Assume there are 24 bits, and you do not need to normaliz ...

Visit the nist web site and view the document announcing

Visit the NIST Web site and view the document "Announcing the Advanced Encryption Standard (AES)" which can be found at fips197/fips-197.pdf. Review the FIPS-197 standard. Examine ...

A food processing company makes meatloaf to be sold in the

A food processing company makes meatloaf to be sold in the frozen food section of supermarkets. Each week the recipe used changes based on the current cost of ingredients. Ingredients and current costs are as shown below ...

Given a binary search tree having lesser values at the left

Given a binary search tree having lesser values at the left subtree and larger values at the right subtree. Devise an algorithm to convert this binary search tree such a way that lesser values at the right subtree and la ...

Abstract data types adts are very important as they serve

Abstract data types (ADTs) are very important as they serve as programming tools that enable component reuse and encapsulation. This assignment requires students to create, implement and apply ADTs in an application.The ...

Implement a version of shell sort that incorporates a

Implement a version of shell sort that incorporates a bubble sort in place of the insertion sort. Compare the performance of this implementation with that of the algorithm that incorporates an insertion sort.

1 describe the scenario where none of philosophers ever

1. Describe the scenario where none of philosophers ever eats (i.e., starvation). What is the sequence of events that happen that lead up to this problem? 2. Describe how we can solve this problem by introducing the conc ...

  • 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