Reference no: EM132598427

Question 1: Over the next three years, a firm is expected to earn economic profit of $700,000 in the first year, $800,000 in the second year, and $500,000 in the third year. After the end of the third year, the firm goes out of business.

a. If the risk-adjusted discount rate is 16 percent for each of the next three years, what is the value of the firm or how much can be sold today for a price of $_______________?

Question 2: A simple linear regression equation relates G and H as follows:

G = a + bH

a. The explanatory variable is _____, and the dependent variable is _____.

b. The slope parameter is _____, and the intercept parameter is _____.

c. When H is zero, G equals _____.

d. For each one unit increase in H, the change in G is ______ units.