Why are economic rents important to managers

Assignment Help Finance Basics
Reference no: EM132777127

Question 1:

(a) Why are economic rents important to managers?

(b) What may hamper the firm's chances of earning economic rents?

(c) You are considering investing in a glove manufacturing plant for which you need to immediately pay RM10 million. You expect to produce and sell 10,000 gloves per year. Production commences after 12 months, i.e, at the end of year 1 (which is also the begining of Year 2. You expect production cost to be RM50 per glove. Selling price is estimated at RM100 per glove for the first three years of sales. You are not sure about the sales price after Year 3 because your exclusive patent right expired then. The plant facilities last for 8 years. Cost of capital is 8%. Compute the following including the timeline:

(i). What is the glove's sales price after Year 3?

(ii). What is the project's NPV?

Reference no: EM132777127

Questions Cloud

Prices of zero-coupon bonds with par value : The prices of zero-coupon bonds with par value of $1000 and various maturities are:
Determine the project baseline npv and apv : You are considering a project which requires an initial investment of $15Million and which will generate cash flow of $3Million a year for ten years.
Show that wn is an nth root of unity : Show that if j and k are positive integers and if uj = wnj-1 and zk = wn-(k-1), then uj, zk, and ujzk are all nth roots of unity.
Calculate the monthly installment payment for a repayment : Let's say you have been working in a medium-sized private company for a few years and due to the current pandemic, the company is planning to restructure
Why are economic rents important to managers : (a) Why are economic rents important to managers? (b) What may hamper the firm's chances of earning economic rents?
Pesent value of cca tax shield : A company is considering building a new and improved production facility for one of its existing products. it would be built on a piece of vacant land
Which of the accounting records : Hennigan Company, Based on the December 15 transaction, Farmer's Electric will record which of the following in its accounting records?
Describe the situation and the investment structure cory : After watching the video, describe the situation and the investment structure Cory was invested in. Is this type of structure always wrong?
Describes the effects of recognizing revenue earned : Describes the effects of recognizing revenue earned by a business entity? Stockholders' equity increases only when credit sales are made.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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