Ask Question, Ask an Expert


Ask Macroeconomics Expert

Problem 1:

Your brother has an idea for new website which would comprise only of paid links that would provide you money when someone clicks on links on your page (Google ad- words). To draw people to the website you will need to use money on paid search. You expect that you will need to spend $1000 subsequently year and the amount of spending will rise at 7% per year. You think you will get $300 of revenue on upcoming year and your revenue will grow at 11% per year. If the appropriate discount rate is 12%, what is the value of your brother’s website project?

Problem 2:

You’re considering investing in the start-up company which will not generate any dividends for 10 years. In ten years you will collect your first dividend check of $500. The dividends continue to arrive per year in perpetuity but will rise at a 5% annual rate. If the discount rate is 10% what is the value of your investment in start-up?

Problem 3:

Frankie Avalon would like for you to spend in a Churro cart. He tells you that the Cart will cost $7000. Throughout the first year of operation the cart will manufacture $800 of positive cash flow. Throughout the second year it will manufacture $1000 of cash flow. In the third year it will create $1150 of positive cash flow. After the third year the cash inflows will continue yearly and grow at a 5% annual rate. Frankie recognizes that you’re wary of Churro cart investments and pleads with you to consider that fact that cash flows are generated during the year. Hence he suggests that you value the cart assuming that the cash flows arrive in middle of the year. Find out the NPV of cart assuming cash flows come in the middle of year. How different is the NPV assuming middle of year vs. end of the year arrival? Suppose a discount rate of 11%.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M914092

Have any Question? 

Related Questions in Macroeconomics

Suppose a treasury bond will mature in 3 years if the bond

Suppose a Treasury bond will mature in 3 years. If the bond pays a coupon of $100 per year and will make a final par value payment of $3,000 at maturity, what is its price if the relevant market interest rate is 7%? A. $ ...

Article critiquereview biomass energy sustainable solution

Article Critique Review "Biomass Energy: Sustainable Solution for Greenhouse Gas Emission" by A. K. M. Sadrul Islam and M. Ahiduzzaman from the Unit VI Reading Assignment. Write a critique on the effectiveness of biofuel ...

A lower east-side cinema charges 300 per ticket for under

A Lower east-side cinema charges $3.00 per ticket for under 12 years of age and $5.00 per ticket for anyone 12 years of age or older. The firm has estimated that the price elasticity of demand for tickets by those 12 yea ...

How come when marginal revenue marginal cost it maximizes

How come when marginal revenue = marginal cost it maximizes profits in competitive markets? It seems that if marginal revenue was much higher than marginal cost that that would be the most profit earned for the firm.

Suppose johns utility function is u ln2c where c is the

Suppose John's utility function is U = ln(2C) where C is the amount of consumption John has in any given period. John's income is $100,000 per year and there is a 3% chance that he will be involved in a catastrophic acci ...

What is network address translation nat and why would a

What is Network Address Translation (NAT) and why would a company utilize it? Would it be more typical for a small, medium or large company to use NAT?

One paragraph in economicsthis chapter discussed in detail

One paragraph in Economics This chapter discussed, in detail, the "how" of national income accounting. Yet clearly not "everything" is counted. In 2008/2009, the United States was in a recession, and reported GDP was shr ...

Monetarists disapprove of how the federal reserve conducts

Monetarists disapprove of how the Federal Reserve conducts monetary policy. What is it about the Fed's policy process that bothers them? Discuss their criticisms.

Question 1 explain why real gdp might be an unreliable

Question 1: Explain why real GDP might be an unreliable indicator of the standard of living. Question 2: Why does unemployment arise and what makes some unemployment unavoidable? Question 3: Consider the following statem ...

How do government policies andor regulations factor into

How do government policies and/or regulations factor into changes in economic activity on both a domestic and global scale? Give a specific example of a policy or regulation that has helped economic activity. Give a spec ...

  • 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

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

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen