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# 5. Answer both parts (a) and (b) of this question. (a) A monopolist sells

Question: 5. Answer both parts (a) and (b) of this question. (a) A monopolist sells its product in two markets, Spain and France. Its cost function is given by C = 4Q, where Q denotes total output, so the marginal cost is constant and equal to 4. The Spanish demand is given by QS = 6 – 0.5PS and the French demand is given by QF = 16 – PF, where PS and pf denote the
Show transcribed image textAnswering part (a ) full. Ans(a)1—- MEANING OF THIRD DERGEE PRICE DISCRIMINATION Third degree price Discrimination is charging different price in different markets as per the elasticity of demand. Under this policy, the monopolist charges higher pr…View the full answerTranscribed image text: 5. Answer both parts (a) and (b) of this question. (a) A monopolist sells its product in two markets, Spain and France. Its cost function is given by C = 4Q, where Q denotes total output, so the marginal cost is constant and equal to 4. The Spanish demand is given by QS = 6 – 0.5PS and the French demand is given by QF = 16 – PF, where PS and pf denote the price in Spain and the price in France, respectively. (i) [8 marks] Define third-degree price discrimination. Assuming that third-degree price discrimination between the two markets is possible, calculate the price the monopolist will set in Spain, the price it will set in France and the firm’s total profit. (ii) [4 marks] A new regulation now requires the firm to charge the same price to all its customers irrespective of the country they live in. Discuss the effect of this on the consumer surplus of Spanish customers, the consumer surplus of French customers and the firm’s profit as compared to the situation in part (i). (b) Bignet is a monopolist in a market with inverse demand given by P = 100 – Q, where Q is the output produced and sold and P is the market price. Initially the firm has constant marginal cost equal to 20. There are no fixed costs. (i) [5 marks] Calculate the output produced by Bignet to maximise its profit, the profit- maximising price and the profit made. (ii) [4 marks] Suppose that by investing a fixed amount in a new production process Bignet can reduce its marginal cost to 10. The demand curve is unchanged. Both the old and the new process are proprietary, so no other firm can enter the industry. Derive the profit- maximising level of output if the firm makes this investment. What would the firm’s price and profit be? What is the maximum amount Bignet would be prepared to spend for the new production process? Explain your answer. (iii) [4 marks] Now suppose that the old production process that generates marginal cost of 20 is going off-patent so that there is free entry by other firms into the industry at this level of marginal cost. Bignet can still invest in a new process to reduce its marginal cost to 10. The new process will be proprietary, so no other firm will be able to produce at a marginal cost of 10. Calculate the price Bignet would set to maximise its profit and the profit it would earn if it adopted the new process. What is the maximum amount the firm would now be willing to spend for the new process? Explain your answer.

## Business And Legal Environment Assignment | Homework For You write essay help

Requirements (Eaasy or Report Format)

WORD DOCUMENT or WORD File;

Typed on A4 paper using Arial 12 point font and 1.5 spacing;

Sequential page numbering;

Title page with Student Name/Student Number and Subject Code/Subject Name;

Accurate spelling, grammar, punctuation, paragraph construction and proofreading;

Consistent and accurate acknowledgment of textbooks, legislation and case studies using APA reference style;

Use of Resources

This is a Research Assessment. You are required to use a range of legal resources in addition to the textbooks including journals, at least Eight (8) Online Legal Resources; and Statutes, as supporting evidence for the arguments, analysis and discussion of the given Assignment questions.

There are SIX (6) Case Studies in this Task. You must attempt all Case Studies and answer all Questions.

General comments: suggested marking for questions

To achieve a Pass, students should have covered at least the main issues etc. in each question,

To achieve a Credit, students should have covered more than the main issues etc. for each question AND supported response by reference to relevant cases and relevant legislation,

To achieve a Distinction, students must have covered most issues etc. for each question AND referred to relevant cases and legislation in their response and exhibit research skills.

CASE STUDY ONE:(Law of Torts – Negligence)

Gordon, was walking inside the Westfield Shopping Centre as it was a wet morning. He slipped on the tiled floor in the foyer of the Shopping Centre and sustained injury.

a)Briefly provide advice to Gordon whether he can exercise legal actions against the shopping Centre for tort of negligence, and what sort of damages he would be entitled to?

b)Briefly provide advice if there is any applicable defence available for the shopping Centre after being sued by Gordon.

Warwick and Sunny want to set-up a college using money that they have and that they have borrowed from family and friends. They are not sure about the best business structure to run a college.

b)Briefly outline the registration process for the business structure that you have recommended to Warwick and Sunny.

Mr. and Mrs. Garmin a middle-aged newlywed couple, booked their two week honeymoon package to Bali from “Tours with Us” in Melbourne, after reading their advertised travel brochure. The brochure had many promises but only a few were fulfilled during the couple’s trip. They were the only guests in the Hotel. The owner couldn’t speak English and the room provided to them was not the honeymoon suite as advertised. They were promised that breakfast would be included, but only coffee was provided for them during their stay.  Mr. Garmin who was very distressed decided to sue “Tours with Us” for breach of contract.

b)Briefly explain what sort of remedies are available for Mr and Mrs. Garmin for breach of contract by “Tours with Us”?

The new Telephone Answering Machine that Joanne’s mother gave her as a birthday present failed to work. When Joanne took the machine back to the store with her mother’s receipt, the customer service representative told her, “that this appliance was bought at a sale and our policy clearly states that we do not refund on sale items. But we will give you a credit voucher for the sale price. Unfortunately, the machine is now on sale at the regular price which is \$25 more than your mother paid”.

Suggested Solutions:

Until last week, Warwick was working for“ Professional Posts Pty Ltd” as independent contractor. His contract expired last week and but he is still continuing to work for the company without renewing the contract. Despite the fact that he bought and maintained his own courier vans, he had to work set hours, drive a set route and wear the Professional Post’s uniform with the company logo. He had to accept the work that was allocated to him and deliver the packages according to the company guidelines.  He was under strict supervision and was receiving direct orders every day. One day on his way to a delivery he injured himself.

b)Briefly explain the main factors that courts are likely to take into account in determining whether a worker is an employee or independent contractor. Get Business Law homework help today

## Interest Rate Assignment | Homework For You persuasive essay help

5. Answer both parts (a) and (b) of this question. (a) A monopolist sells

Consider a deposit of \$200 made at the end of the year. Deposits grow at a rate of 5 percent each year for another 5 years. The goal is to save \$2500 at the end of 8 years. What must the interest rate be?Get Finance homework help today

## Yield to Call Assignment | Homework For You persuasive essay help

A 30-year U.S. 8% coupon bond with 25 years left to maturity is callable in 16 years. The call premium is 9%; if the bond is selling today for \$980, what is the yield to call? Get Finance homework help today

## Future Value of Annuity Assignment | Homework For You persuasive essay help

Find the future value of a \$220 annuity if the interest rate is 8 percent compounded quarterly for 15 years. Payments are at the beginning of the year. Get Finance homework help today

## Return on the Investment Assignment | Homework For You persuasive essay help

Suppose that you purchase an investment at a price of \$490,000. If you are receiving monthly cash flows of \$2,500 for 30 years, what is your return on this investment? Show your work below. Get Finance homework help today

## Holding Period Yield Assignment | Homework For You persuasive essay help

An investor is interested in purchasing a 30-year U.S. government bond carrying an 8 percent coupon rate. The bond’s current market price is \$935 for a \$1000 par value instrument. Suppose the investor sells the bond at the end of 13 years for \$970. What is the holding period yield? What is the effective yield?Get Finance homework help today

## Portfolio Assignment | Homework For You persuasive essay help

The risk-free rate, average returns, standard deviations, and betas for three funds and the S&P 500 are given below.

FUND
AVG
STD DEV
BETA

A
18%
30%
1.05

B
25%
35%
1.3

C
20%
25%
1.2

S&P 500
15%
20%
1.0

Rf
5%

If these portfolios are subcomponents that make up part of a well-diversified portfolio, then portfolio ______ is preferred.

a. fund a

b. fund b

c. fund c

d. s&p 500. Get Finance homework help today

## Present Value (PV) of Liabilities Assignment | Homework For You persuasive essay help

You manage an insurance fund, and your liabilities consist of two time payments for the policy holders as follows:
• 10 years \$20 million
• 30 years \$30 million
You currently invest in \$18 million bond assets to offset the liabilities. The interest rate term structure is currently flat at 5%.
(a) Calculate the present value (PV) of your liabilities. (2 marks)
(b) Calculate modified duration (Dmod) of your liabilities. (2 marks)
(c) Calculate an approximate change in the present value of your liabilities, using duration, when interest rates fall by 0.25% (2 marks)
(d) In order to balance the risk on the liabilities, the manager invests the \$18 million into 2 assets : al-year Treasury bills (ie, 1-year zero-coupon bond) and a Treasury bond with modified duration of 20. How would the manager allocate the purchase assets to avoid interest rate risk of your portfolio, which includes both assets and liabilities?
(Hint: value of the Asset portfolio and Liability portfolio should be equal. SValue = P. Dmed) (4 marks)Get Finance homework help today

## Unrecaptured Section 1250 Tax Assignment | Homework For You persuasive essay help

What is the maximum rate at which unrecaptured Section 1250 gain is taxed?Get Finance homework help today

## Liquidity Risk of a Long-Term Debt Assignment | Homework For You persuasive essay help

1) The liquidity risk of a long-term debt generally ________ the liquidity risk of a short-term debt.

A) is less than

B) is equal to

C) is greater than

D) is less than or equal to

2) Which of the following would typically signal an upcoming recession?

B) an increasing credit rating

C) a downward-sloping yield curve

3) A bond that sells below its par value and pays no coupon interest is called a ________.

A) preferred bond

B) discount bond

C) junk bond

D) prime bond

4) A year ago, Sam invested his savings into a corporate bond. Today, he sold his bond and calculated his rate of return from this investment. What real rate of return did he receive, if his nominal rate of return was 6% and the inflation rate during the year was 1.50%?

A) 104.43%

B) 6.00%

C) – 4.25%

D) 4.43%

5) Calculate the current price of the following corporate bond: the bond has 10 years to maturity, face value of \$1,000 and pays interest semi-annually at an annual coupon rate of 4 percent. Assume similar in risk bonds currently carry a rate of return of 5 percent per year.

A) \$768.35

B) \$952.38

C) \$922.05

D) \$922.78. Get Finance homework help today

## Required Return on a Security Assignment | Homework For You persuasive essay help

What is the required return on a security that has a beta of 1.25 if the risk free rate is 3.5% and the return on the market portfolio is estimated to be 10% and you are in the 40% marginal tax rate?
6.975% 0A 3.4.650% 20.375% 11.625% D. 32.0625% OE.. Get Finance homework help today

## Yield to Maturity of the Bonds Assignment | Homework For You persuasive essay help

(a) Bond underwriters agree to purchase a corporate issuer’s new bonds at a specific price, usually near 100% of face value, and then attempt to resell the bonds to the public. The act of reselling takes some time. Underwriting fees increase with the maturity of the bonds. Provide an explanation for this pattern of fees. (6 marks)
(b) Assume the yield curve is flat at 4%. There are a 3-year zero coupon bond and a 3-year coupon bond that pays a 5% coupon annually.
(i) What are the YTMs of these two bonds? (2 marks)
(ii) Suppose the yield curve does not change in the future. You invest \$100 in each of the two bonds. You re-invest all coupons in zero coupon bonds that mature in year 3. How much would you have at the end of year 3? (2 marks)Get Finance homework help today

## Net Operating Cash Flows Assignment | Homework For You persuasive essay help

1.) The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer’s base price is \$1,090,000, and it would cost another \$24,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for \$642,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of \$15,500. The sprayer would not change revenues, but it is expected to save the firm \$321,000 per year in before-tax operating costs, mainly labor. Campbell’s marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar.

a.What is the Year-0 net cash flow?

b.What are the net operating cash flows in Years 1, 2, and 3?

c. What is the additional Year-3 cash flow (i.e, the after-tax salvage and the return of working capital)?

d. If the project’s cost of capital is 10%, what is the NPV of the project?

Should the machine be purchased?

Yes/No. Get Finance homework help today

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