Determine the sensitivity of rate of return to useful life

Assignment Help Econometrics
Reference no: EM13234207

A newspaper is considering buying locked vending machines to replace open newspaper racks in the downtown area. The vending machines cost $45 each. It is expected that the annual revenue from selling the same quantity of newspapers will increase $12 per vending machine. The useful life of the vending machine is unknown.

a) To determine the sensitivity of rate of return to useful life, prepare a graph for rate of return versus useful life for lives up to 8 years.

b) If the newspaper requires a 12% rate of return, what minimum useful life must it obtain from the vending machines?

c) What would be rate of return if the vending machines were to last indefinitely?

Reference no: EM13234207

Questions Cloud

Advocates of negritude believe : Advocates of negritude believe that...there is little difference between races and cultures. African-American society is the model to be emulated by Africa
Give examples of 4 vertices and 6 vertices degrees graph : If possible, give examples of: a) A graph with 4 vertices whose degrees are 1, 2, 3 and 3. b) A graph with 6 vertices whose degrees are 2, 4, 3, 3, 4 and 5. If it is not possible, explain why.
Explain what is the ph of the benzoic acid solution : what is the pH of the benzoic acid solution prior to adding sodium benzoate? B. how many grams of sodium benzoate should be added to prepare the buffer? neglect the small volume change that occurs when the sodium benzoate is added.
What is the sound intensity : The bellow of a territorial bull hippopotamus has been measured at 110 dB above the threshold of hearing
Determine the sensitivity of rate of return to useful life : A newspaper is considering buying locked vending machines to replace open newspaper racks in the downtown area. The vending machines cost $45 each. It is expected that the annual revenue from selling the same quantity of newspapers
How do plans differ in services from a production : How do plans differ in services from a production or manufacturing setting? How do the planning strategies impact operational plans in services?
An african served as governor in the british colony : An African served as governor in the British colony of...
How are these systems related to p&g business strategy : What management, organization, and technology issues had to be addressed when implementing Business Sufficiency, Business Sphere, and Decision Cockpits?
Find the velocity of the air in the small-diameter tube : Air passes through a large-diameter glass tube, then through a small-diameter tube, and finally through a large-diameter tube again, Find the velocity of the air in the small-diameter tube

Reviews

Write a Review

Econometrics Questions & Answers

  What pricing strategy will yield the greatest revenue

The manufacture has determined that men value a simple microwave at $70 and one with auto-defrost at $80 while women value a simple microwave at $80 and one with auto-defrost at $150. If there is an equal number of men and women, what pricing str..

  What is opportunity cost of your day at professional game

Ahead of you is a wonderful weekend. You bought a ticket to see a professional football game. The ticket cost $50 a piece, plus you estimate a cost of $25 each for gas to the game and parking. Since the game is in the middle of the afternoon, you ..

  What is the present value of the payment to be received

You expect to receive a payment of $104 one year from one. Your discount rate is 4 percent. What is the present value of the payment to be received Suppose that the discount rate is 5 percent what is the present value of the payment to be received

  Why the supply of money needs to be increased

If nominal GDP is $4,000 billion and the amount of money demanded for transactions purposes is $800 billion, it can generally be concluded that: The asset demand for money will be $3,200 billion The total demand for money will be $4,800 billion On..

  Estimate the mean score on the exam for students

An insurance company wants to estimate the mean score on this exam for students who have enrolled in a special study program. They take a sample of 8 students in this program and determine that their scores are: 2, 5, 8, 8, 7, 6, 5, and 7. This sa..

  What average price change per year for the entire 10-year

An economist has predicted that for the next 5 years the U.S. will have an 8% annual inflation rate, followed by 5 year at a 6% inflation rate. this is equivalent to what average price change per year for the entire 10-year period

  Calculate a point estimate of jtfs average sales

Just The Fax, Inc. (JTF) has hired you as a consultant to analyze the demand for its line of telecommunications devices in 35 different market areas. The available data set includes observations on the number of thousands of units sold by JTF per ..

  What price should the firm charge in the short run

A firm sells its product in a perfectly competitive market where other firms charge a price of $130 per unit. The firm's total costs are C(Q) = 40 + 10Q + 2Q2. a. How much output should the firm produce in the short run?units

  How much is the bank required to hold as reserves

Suppose a depositor comes to the bank and withdraws $200 in cash. Show the banks new balance sheet assuming the bank obtains the cash by drawing down its reserves. Does the bank now hold excess reserves

  Calculate the elasticity of demand betwen two prices

When the price of squiggles is $700, 2200 units are demaded. When the price per unit of squiggles is $300, 4200 units of squiggles are demanded. 1) Use these two points and calculate the estimated demand function.

  Explain is the franc selling at a premium or discount

The 1-year interest rate in the U.S. is 10%; in Switzerland it is 12%. The current spot rate (dollars per franc) is $0.40. a. What do you expect the 1-year forward rate to be b. Is the franc selling at a premium or discount

  Solve for the cournot equilibrium

An industry consists of two firms, each of which have variable costs of $10 per unit but no fixed costs. The industry demand curve is P = 70 - Q. Solve for the Cournot equilibrium. In doing so, derive the reaction function of each firm (call Q1 an..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd