1. Using the date below, respond to (a)-(c) below. Concert Total Marginal Marginal Tee-shirts Revenue Revenue Total Costs Costs Profit Output, (Q) (PxQ) (ATR/AQ) (given) (ATC/AQ (TR-TC) 1,000 $20,000 3,000 $40,000 4,000 $55,000 5,000 $75,000 5,500 $85,000 a. Assuming the price, P, of a tee-shirt is $15, complete the table. b. Using the marginal analysis and the profit maximization decision rule, how many tee-shirts will the firm produce in order to maximize profits? c. How much profit will the firm make? 2. Suppose you are an artist manager for an up and coming pop group. The group has brought a recording project to you and your research finds that the project will yield the following: the music recording would cost your group $28,000 to produce and would be expected to result in net cash flows of $15,000 at the end of year 1, $10,000 at the end of year 2, and $7,500 at the end of year 3. a. If the relevant discount rate is 10%, calculate the NPV. b. Based upon your answer in part (a) above, what advice do you have for the group? Explain. How would your response change if the production cost were $20,000? Explain. c. 3. Suppose upon graduation you land a job working with Lil Waynes management company, Maverick Management, and his manager, Cortez Bryant, is considering two competing contracts to do a three-year gig in Vegas: (1) the first offer is from MGM Grand and will pay him a $0.5 million signing bonus to be received immediately and annual salaries of $4 million at the end of year one, $3 million at the end of year two, and $2 million at the end of year three; (2) the second offer is from the Venetian Casino, Hotel & Resort with a $0.55 million signing bonus to be received immediately and annual salaries of $3 million at the end of year one, $3 million at the end of year two, and $3 million at the end of year three. If the relevant discount rate is 10%, which contract would you recommend he accept? Explain your reasoning. 1. Using the date below, respond to (a)-(c) below. Concert Total Marginal Marginal Tee-shirts Revenue Revenue Total Costs Costs Profit Output, (Q) (PxQ) (ATR/AQ) (given) (ATC/AQ (TR-TC) 1,000 $20,000 3,000 $40,000 4,000 $55,000 5,000 $75,000 5,500 $85,000 a. Assuming the price, P, of a tee-shirt is $15, complete the table. b. Using the marginal analysis and the profit maximization decision rule, how many tee-shirts will the firm produce in order to maximize profits? c. How much profit will the firm make? 2. Suppose you are an artist manager for an up and coming pop group. The group has brought a recording project to you and your research finds that the project will yield the following: the music recording would cost your group $28,000 to produce and would be expected to result in net cash flows of $15,000 at the end of year 1, $10,000 at the end of year 2, and $7,500 at the end of year 3. a. If the relevant discount rate is 10%, calculate the NPV. b. Based upon your answer in part (a) above, what advice do you have for the group? Explain. How would your response change if the production cost were $20,000? Explain. c. 3. Suppose upon graduation you land a job working with Lil Waynes management company, Maverick Management, and his manager, Cortez Bryant, is considering two competing contracts to do a three-year gig in Vegas: (1) the first offer is from MGM Grand and will pay him a $0.5 million signing bonus to be received immediately and annual salaries of $4 million at the end of year one, $3 million at the end of year two, and $2 million at the end of year three; (2) the second offer is from the Venetian Casino, Hotel & Resort with a $0.55 million signing bonus to be received immediately and annual salaries of $3 million at the end of year one, $3 million at the end of year two, and $3 million at the end of year three. If the relevant discount rate is 10%, which contract would you recommend he accept? Explain your reasoning