New Semester
Started
Get
50% OFF
Study Help!
--h --m --s
Claim Now
Question Answers
Textbooks
Find textbooks, questions and answers
Oops, something went wrong!
Change your search query and then try again
S
Books
FREE
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Tutors
Online Tutors
Find a Tutor
Hire a Tutor
Become a Tutor
AI Tutor
AI Study Planner
NEW
Sell Books
Search
Search
Sign In
Register
study help
business
economics
Managerial Economics 12th edition Mark Hirschey - Solutions
George Constanza is a project coordinator at Kramer-Seinfeld & Associates, Ltd., a large Brooklyn-based painting contractor. Constanza has asked you to complete an analysis of profit margins earned on a number of recent projects. Unfortunately, your predecessor on this project got an abrupt
TLC Lawn care, Inc., provides fertilizer and weed control lawn services to residential customers. Its seasonal service package, regularly priced at $250, includes several chemical spray treatments. As part of an effort to expand its customer base, TLC offered $50 off its regular price to customers
Controller Elliot Reid has asked you to review the pricing practices of Hollywood Medical, Inc. Use the following data to calculate the relevant markup on cost and markup on price for the following disposableitems:
Dr. John Dorian, chief of staff at the Northern Medical Center, has asked you to propose an appropriate markup pricing policy for various medical procedures performed in the hospital€™s emergency room. To help in this regard, you consult a trade industry publication that provides data
Brake-Checkup, Inc., offers automobile brake analysis and repair at a number of outlets in the Philadelphia area. The company recently initiated a policy of matching the lowest advertised competitor price. As a result, Brake-Checkup has been forced to reduce the average price for brake jobs by 3%,
The Bristol, Inc. is an elegant dining establishment that features French cuisine at dinner six nights per week, and brunch on weekends. In an effort to boost traffic from shoppers during the Christmas season, the Bristol offered Saturday customers $4 off its $16 regular price for brunch. The
Betty's Boutique is a small specialty retailer located in a suburban shopping mall. In setting the regular $36 price for a new spring line of blouses, Betty's added a 50 percent markup on cost. Costs were estimated at $24 each: the $12 purchase price of each blouse, plus $6 in allocated variable
Nash Bridges Construction Company is a building contractor serving the Gulf Coast region. The company recently bid on a Gulf-front causeway improvement in Biloxi, Mississippi. Nash Bridges has incurred bid development and job cost-out expenses of $25,000 prior to submission of the bid. The bid was
The General Eclectic Company manufactures an electric toaster. Sales of the toaster have increased steadily during the previous five years, and, because of a recently completed expansion program, annual capacity is now 500,000 units. Production and sales during the upcoming year are forecast to be
Coach Industries, Inc., is a leading manufacturer of recreational vehicle products. Its products include travel trailers, fifth-wheel trailers (towed behind pick-up trucks), and van campers, as well as parts and accessories. Coach offers its fifth-wheel trailers to both dealers (wholesale) and
The Heritage Club at Harbor Town offers elegant accommodations for discriminating vacationers on Hilton Head Island, South Carolina. Like many vacation resorts, Heritage Club has discovered the advantages of offering its services on an annual membership or “time-sharing” basis. To illustrate,
Each ton of ore mined from the Baby Doe Mine in Leadville, Colorado, produces one ounce of silver and one pound of lead in a fixed 1:1 ratio. Marginal costs are $10 per ton of ore mined.The demand and marginal revenue curves for silver arePS = $11 - $0.00003QSMRS = ∂TRS/∂QS = $11 -
A. Use your knowledge of monopoly pricing practices to explain why advertising rates and newspaper circulation prices were likely to increase and jobs were likely to be lost, following adoption of this joint operating agreement. Use company information to support your argument (see
Simpson Flanders, Inc., is a Motor City-based manufacturer and distributor of valves used in nuclear power plants. Currently, all output is sold to North American customers. Demand and marginal revenue curves for the firm are as follows:P = $1,000 ‑ $0.015QMR = ∂TR/∂Q = $1,000 ‑
Domestic investors sometimes miss out on better investment opportunities available to global investors. At the same time, global investors face special risks. Discuss some of the special risks faced by global investors.
The standard deviation measure of risk implicitly gives equal weight to variations on both sides of the expected value. Can you see any potential limitations of this treatment?
Confronted with a choice between $50 today or $100 one year from now, economic experiments suggest that the vast majority of people will take will take the $50 today. At the same time, economic experiments show that most people will opt to take $100 in ten years over $50 in nine years. Is such
State-run lotteries commonly pay out 50 percent of total lottery ticket sales in the form of jackpots and prizes. Use the certainty equivalent concept to quantify the minimum value placed on each risky dollar of expected return by lottery ticket buyers. Why are such lotteries so popular?
Graph the relation between money and its utility for an individual who buys both household fire insurance and state lottery tickets.
“Market estimates of investors’ reactions to risk cannot be measured precisely, so it is impossible to set risk-adjusted discount rates for various classes of investment with a high degree of precision.” Discuss this statement.
If the expected net present value of returns from an investment project is $50,000, what is the maximum price that a risk-neutral investor would pay for it? Explain.
Courtney-Cox, Inc., is a Texas-based manufacturer and distributor of components and replacement parts for the auto, machinery, farm, and construction equipment industries. The company is presently funding a program of capital investment that is necessary to reduce production costs and thereby meet
The Central Perk Coffee House, Inc., is engaged in an aggressive store refurbishing program and is contemplating expansion of its in-store banking facilities. This investment project is to be evaluated using the certainty equivalent adjustment factor method and the risk-adjusted discount rate
Identify each of the following as being consistent with risk-averse, risk-neutral, or risk-seeking behavior in investment project selection. Explain your answers.A. Larger risk premiums for riskier projectsB. Preference for smaller, as opposed to larger, coefficients of variationC. Valuing certain
The certainty equivalent concept can be widely employed in the analysis of personal and business decision making. Indicate whether each of the following statements is true or false and explain why:A. The appropriate certainty equivalent adjustment factor, α, indicates the minimum price in certain
Perry Chandler, a broker with Caveat Emptor, Ltd., offers free investment seminars to local PTA groups. On average, Chandler expects 1 percent of seminar participants to purchase $25,000 in tax-sheltered investments and 5 percent to purchase $5,000 in stocks and bonds. Chandler earns a 4 percent
Firefly Products, Inc., has just completed development of a new line of skin-care products. Preliminary market research indicate two feasible marketing strategies: (1) creating general consumer acceptance through media advertising or (2) creating distributor acceptance through intensive personal
Narcissism Records, Inc., has just completed an agreement to re-release a recording of “The Boss’s Greatest Hits.†The Boss had a number of hits on the rock and roll charts during the early 1980s. Preliminary market research indicates two feasible marketing strategies: (1)
One-Hour Dry clean, Inc., is replacing an obsolete dry cleaning machine with one of two innovative pieces of equipment. Alternative 1 requires a current investment outlay of $25,373, whereas alternative 2 requires an outlay of $24,199. The following cash flows (cost savings) will be generated each
Recently, the housing market suffered the worst slump in nearly two decades. Hot housing markets like Boston, Ft. Lauderdale Florida, and Washington DC cooled as rising interest rates and tightened lending standards eliminated lots of potential buyers. With job losses in the auto industry, the
Tex-Mex, Inc., is a rapidly growing chain of Mexican food restaurants. The company has a limited amount of capital for expansion and must carefully weigh available alternatives. Currently, the company is considering opening restaurants in Santa Fe or Albuquerque, New Mexico. Projections for the two
Keystone Manufacturing, Inc., is analyzing a new bid to supply the company with electronic control systems. Alpha Corporation has been supplying the systems and Keystone is satisfied with its performance. However, a bid has just been received from Beta Controls, Ltd., a firm that is aggressively
Speedy Business Cards, Inc., supplies customized business cards to commercial and individual customers. The company is preparing a bid to supply cards to the Nationwide Realty Company, a large association of independent real estate agents. Because paper, ink, and other costs cannot be determined
A. Describe some of the attributes of an ideal risk indicator for stock market investors.B. On the Internet, go to Yahoo! Finance (or msn Money) and download weekly price information over the past year (52 observations) for GOOG and the Nasdaq market. Then, enter this information in a spreadsheet
“The decision to start your own firm and go into business can be thought of as a capital budgeting decision. You only go ahead if projected returns look attractive on a personal and financial basis.” Discuss this statement.
What major steps are involved in the capital budgeting process?
OIBDA is an abbreviation for "operating income before depreciation and amortization." Like its predecessor EBITDA (“earnings before interest, taxes, depreciation and amortization”), OIBDA is used to analyze profitability before non cash charges tied to plant and equipment investments. Can you
Toyota Motor Corp., like most major multinational corporations, enjoys easy access to world financial markets. Explain why the NPV approach is the most appropriate tool for Toyota’s investment project selection process.
Level 3 Communications, Inc., like many emerging telecom carriers, has only limited and infrequent access to domestic debt and equity markets. Explain the attractiveness of a “benefit-cost ratio” approach in capital budgeting for Level 3, and illustrate why the NPV, PI, and IRR capital
How is a crossover discount rate calculated, and how does it affect capital budgeting decisions?
An efficient firm employs inputs in such proportions that the marginal product/price ratios for all inputs are equal. In terms of capital budgeting, this implies that the marginal cost of debt should equal the marginal cost of equity in the optimal capital structure. In practice, firms often
Suppose that Black & Decker’s interest rate on newly-issued debt is 7.5% and the firm’s marginal federal-plus-state income tax rate is 40%. This implies a 4.5% after-tax component cost of debt. Also assume that the firm has decided to finance next year’s projects by selling debt. Does this
Research in financial economics concludes that stockholders of target firms in takeover battles “win” (earn abnormal returns) and that stockholders of successful bidders do not lose subsequent to takeovers, even though takeovers usually occur at substantial premiums over pre-bid market prices.
“Risky projects are accepted for investment on the basis of favorable expectations concerning profitability. In the post-audit process, they must not be unfairly criticized for failing to meet those expectations.” Discuss this statement.
Suppose that your college roommate has approached you with an opportunity to lend $25,000 to her fledgling home healthcare business. The business, called Home Health Care, Inc., plans to offer home infusion therapy and monitored in-the-home healthcare services to surgery patients in the Birmingham,
Bob Sponge has been retained to analyze two proposed capital investment projects, projects X and Y, by Square Pants, Inc., a local specialty retailer. Project X is a sophisticated working capital and inventory control system based upon a powerful personal computer, called a system server and PC
Identify each of the following statements as true or false, and explain your answers.A. Information costs both increase the marginal cost of capital and reduce the internal rate of return on investment projects.B. Depreciation expenses involve no direct cash outlay and can be safely ignored in
The net present value (NPV), profitability index (PI), and internal rate of return (IRR) methods are often employed in project valuation. Identify each of the following statements as true or false, and explain your answers.A. The IRR method can tend to understate the relative attractiveness of
Indicate whether each of the following would increase or decrease the cost of capital that should be used by the firm in investment project evaluation. Explain.A. Interest rates rise because the Federal Reserve System tightens the money supply.B. The stock market suffers a sharp decline, as does
New York City licenses taxicabs in two classes: (1) for operation by companies with fleets and (2) for operation by independent driver-owners having only one cab. Strict limits are imposed on the number of taxicabs by restricting the number of licenses, or medallions, that are issued to provide
Suppose the Pacific Princess Luxury cruise line is contemplating leasing an additional cruise ship to expand service from the Hawaiian Islands to Long Beach or San Diego. A financial analysis by staff personnel resulted in the following projections for a five-year planning horizon:A. Calculate the
Louisiana Drilling and Exploration, Inc. (LD&E) has the funds necessary to complete one of two risky oil and gas drilling projects. The first, Permian Basin 1, involves the recovery of a well that was plugged and abandoned five years ago but that may now be profitable, given improved recovery
Toby Amberville’s Manhattan Café, Inc., is considering investment in two alternative capital budgeting projects. Project A is an investment of $75,000 to replace working but obsolete refrigeration equipment. Project B is an investment of $150,000 to expand dining room facilities. Relevant cash
Cunningham€™s Drug Store, a medium-size drugstore located in Milwaukee, Wisconsin, is owned and operated by Richard Cunningham. Cunningham€™s sells pharmaceuticals, cosmetics, toiletries, magazines, and various novelties. Cunningham€™s most recent annual net income
Dunder-Mifflin, Inc., is analyzing the potential profitability of three printing jobs put up for bid by the State Department of Revenue:Assume that (1) the company’s marginal city-plus-state-plus-federal tax rate is 50%; (2) each job is expected to have a six-year life; (3) the firm uses
Eureka Membership Warehouse, Inc., is a rapidly growing chain of retail outlets offering brand-name merchandise at discount prices. A security analyst’s report issued by a national brokerage firm indicates that debt yielding 13% composes 25% of Eureka’s overall capital structure. Furthermore,
A. Describe the essential components of Level 3's Silicon Economics Model.B. Explain how Level 3's Silicon Economics Model differs from more standard and simplified approaches to capital budgeting. For comparison purposes, you may want to consider valuation spreadsheets compiled and maintained by
Describe the difference between vertical and horizontal business relationships.
The personal computer has evolved from a tool for computation to an Internet-centered communications device. Is this likely to change corporate structures by increasing the efficiency of smaller, more nimble corporations?
Cite three important categories of transactions costs encountered within the firm, and give some examples.
What is the Coase Theorem, and why is it important in managerial economics?
In a typical corporation, who are the “principals” and who are the “agents”? What is the firm’s agency problem?
Executive stock options are often seen as a simple and effective solution to the “other people’s money” problem that can occur when managers with little ownership interest mismanage firm investment opportunities. Can you foresee any advantages and/or potential pitfalls to the use of
Discuss important differences between centralized and decentralized allocations of decision authority within an organization. Are these methods of decision authority allocation mutually exclusive?
Describe four essential components of an effective decision management and control system.
What are agency costs? Describe some agency costs common among U. S. corporations.
Describe three basic needs that must be met in the design of any organization.
In the 1930s, economists Adolf A. Berle and Gardiner C. Means expressed concern that managers with relatively little ownership interest might demonstrate a suboptimal focus on transitory short-term profits rather than durable long-run value. Berle and Means also voiced concern for value-reducing
Ownership Structure. Both General Electric and Microsoft Corp. feature charismatic and highly effective chief executive officers, display enviable records of serving growing markets with remarkable efficiency, and enjoy sterling accounting returns and stock-market valuations. GE and Microsoft are
Determine whether each of the following statements is true or false. Explain why.A. A vertical relation is a business connection between companies at the same point along the production-distribution chain.B. A work slowdown due to an unexpected strike by unionized workers is a type of decision
Indicate whether each of the following transaction costs is explicit or implicit, and describe how it is a manifestation of a particular type of agency problem.A. A trader at an investment banking firm loses millions of corporate dollars through unsuccessful rank speculation.B. A manager fails to
Describe each of the following factors as being responsible for increasing, decreasing, or having no effect on the amount of concentrated inside equity. Explain why.A. High research and development expenditure requirementsB. A corporate history of poor operating performanceC. High levels of brand
In 2002, Congress held hearings to investigate the collapse of Houston-based energy giant Enron Corp., aiming to discover how to protect against similar disasters. The spectacular implosion of Enron led to the largest corporate bankruptcy in U.S. history and billions of dollars in losses for
According to the Coase Theorem, resource allocation will be efficient so long as transaction costs remain low and property rights can be freely assigned and exchanged. A. Does the Coase Theorem imply that government has little if any role to play in the market economy? Explain.B. According to the
The Sarbanes-Oxley Act, named for sponsors Sen. Paul Sarbanes, D-Md., and Rep. Michael Oxley, R-Ohio, is the most sweeping law affecting corporations since the 1930s. It is having a dramatic effect on the costs companies pay for independent audits of the financial numbers reported to the outside
Shareholders face a daunting information asymmetry problem when it comes to measuring the performance of the CEO. As head of the corporation, the CEO is in charge of the firm’s management information system. Accounting methods always leave room for managerial interpretation, and this flexibility
Warren Buffett, chairman and CEO of Berkshire Hathaway, Inc., is an outspoken critic of executive-stock option plans, at least as they are commonly employed. In a typical stock-option plan, top executives are given the right to buy company stock at the current price for a period of up to 10 years
During the amazing bull market of the 1990s, an investment strategy of simply mimicking the Standard & Poor’s 500 Index became popular. The S&P 500 is a value-weighted market index of 500 common stocks thought to measure overall movement in the aggregate stock market. Under this investment
At the end of World War II, goods production and services provision were each responsible for roughly one-half of economic activity and total employment in the United States. Today, the provision of services is responsible for roughly two-thirds of employment and three-quarters of total
A. Does incompetence by top management and corporate boards of directors invalidate the value-maximization theory of the firm?B. Many shareholder groups prefer to split the chairman and CEO posts, and install an outsider as chairman of the board of directors. From the shareholder viewpoint, discuss
Air pollution costs the U.S. billions of dollars per year in worker absenteeism, healthcare, pain and suffering, and loss of life. Discuss some of the costs and benefits of a Pigou tax on air pollution.
What role does the price elasticity of demand play in determining the short-run effects of regulations that increase fixed costs? What if they lead to increased variable costs?
What is the essential difference between public and private goods? Give some examples of each and some examples of goods and services that involve elements of both.
In the 1880s, cattlemen in the American West crowded more and more animals onto common grazing land to feed a growing nation. Cattlemen contended, “None of us knows anything about grass outside of the fact that there is lots of it, and we aim to get it while the getting is good.” Explain this
Does the fact that public decisions are sometimes made by self-interested politicians and bureaucrats undermine the efficiency of public-sector decision making?
A pipeline break reduced the supply of gasoline to the Phoenix, Arizona, area in August, 2003. Press reports indicated that some stations ran out of gasoline, consumers waited in line for hours, and some drivers started following gasoline tankers as they made their deliveries. Explain the
In 1848, the idea of cost-benefit analysis originated with a French engineer by the name of Jules Dupuit. Economists argue that underlying calculations of costs and benefits must be based upon actual market behavior and not based upon consumer and producer surveys or “informed estimates.” Why?
To measure public project desirability, positive and negative aspects of the project must be expressed in terms of a common monetary unit. Explain the importance of the present value concept in benefit/cost ratio calculations using a 5 percent interest rate assumption and a 5-year project life.
The former chairman of the Federal Communications Commission heralded Voice over Internet Protocol, or VoIP, as “the most important shift in the entire history of modern communications since the invention of the telephone.” Using cheap computer software and the Internet, VoIP offers consumers
“Regulation is often proposed on the basis of equity considerations and opposed on the basis of efficiency considerations. As a result, the regulation versus deregulation controversy is not easily resolved.” Discuss this statement.
Anthony Soprano is head of Satriale Pork Producers, Inc., a family-run pork producer with a hog-processing facility in Musconetcong, New Jersey. Each hog processed yields both pork and a render by-product in a fixed 1:1 ratio. Although the by-product is unfit for human consumption, some can be sold
The benefit-cost approach first surfaced in France during 1844. In this century, benefit-cost analysis has been widely used in the evaluation of river and harbor projects since as early as 1902. In the United States, the 1936 Flood Control Act authorized federal assistance in developing
Markets usually allocate resources in a manner that creates the greatest net benefit to society. An efficient allocation is one that maximizes the net benefits to society. Indicate whether each of the following statements is true or false, and explain your answer.A. Markets sometimes fail to
Coal-fired electricity-generating plants emit substantial amounts of sulfur dioxide and particulate pollution into the atmosphere. Concerned citizens are appalled at the aesthetic and environmental implications of such pollution, as well as the potential health hazard to the local population.In
Hathaway-Ross Instruments, Inc., manufactures an innovative piece of diagnostic equipment used in medical laboratories and hospitals. OSHA has determined that additional safety precautions are necessary to bring radioactive leakage occurring during use of this equipment down to acceptable levels.
The Smokey Mountain Coal Company sells coal to electric utilities in the southeast. Unfortunately, Smokey’s coal has a high particulate content, and, therefore, the company is adversely affected by state and local regulations governing smoke and dust emissions at its customers’
Because resources for social programs and public-sector investment projects come from private-sector consumption and/or investment, economists typically advocate the use of a social rate of discount that reflects this private-sector opportunity cost. A good estimate of the opportunity cost of
In benefit-cost analysis, public-sector managers seek to learn if society as a whole will be better off by the adoption of a specific social program or public-sector investment project. Rather than seeking to maximize profits or the value of the firm, public-sector managers use benefit-cost
Highway crashes continue to claim the lives of thousands of Americans. Grim statistics underscore the need for better laws, stricter enforcement, and safer driving behavior. In 2006, approximately 43,300 persons died on the nation’s highways. Alcohol-related fatalities accounted for 41.4 percent
Showing 9700 - 9800
of 28054
First
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
Last
Step by Step Answers
Get 50% OFF
Claim Now
.png)
.png)
.png)
.png)
.png)
.png)
.png)
.png)
.png)
-1.png)
.png)
.png)
.png)
.png)
.png)
