If a manager has determined that a particular piece of capital is likely to increase the cash flow of a business by $10,000 for the next five years, what is the present value of the capital at an interest rate of 10 percent? (Assume that the cash flow first increases one year from today.)
PV = ($10,000)/(1.1) + ($10,000)/(1.1)2 + ($10,000)/(1.1)3 + ($10,000)/(l.1)4 + ($10,000)/(1.1)5 = $37,907.87
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Kellogg's and General Mills are two of the dominant breakfast cereal manufactures in the U.S. Each firm can either sign or not sign an exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box
If both companies sign an athlete, they will each make $5 million in economic profit. If only firm signs, they earn $8 million in economic profit and the other firm incurs an economic loss of $1 million. If neither firm signs, they break even. Which of the following pairs of payoffs would NOT appear together in a square of the payoff matrix? A) $5 million; $5 million B) $0 million; $0 million C) $8 million; $5 million D) -$1 million; $8 million
The principle of vertical equity is satisfied when _____
a. individuals with a greater ability to pay have higher taxes than individuals with a lower ability to pay b. individuals receiving higher benefits from a government program pay higher taxes than those receiving lower benefits c. taxes increase as family size increases d. taxes on higher income individuals are more efficient than the taxes on lower income individuals