5.783 Managerial Economics > Assignments > Chapter 2 Exercises Chapter 2 Exercises Due Sunday by 11:59pm Points 5 File Types doc, xls,docx, xlsx, and pdf Submitting a file upload Available Jan 19 at 12am - Jan 26 at 11:59pm 8 days Respond to Exercises 2, 3, and 4 at the end of Chapter 2 (pages 59-60, 13th and 14th ed.). Take care to follow the guidelines for "What Does a Good Answer Look Like?". Hint: In order to answer Exercise 4, you might find Table A-4: Present Value of an Annuity of $1 on page A-8 of the Appendix toward the back of the textbook extremely useful. Remember, ESPN (Disney) is offering a 2-year deal while Fox and CBS are offering only 6-year contracts. Grading Rubric for Individual Exercises duction EXPECTED RATE OF RETURN (%) 23.0 18.0 21.0 3. The Ajax Corporation has the following set of projects available to it: INVESTMENT REQUIRED (S MILLION) 500 PROJECT 75 16.0 14.0 50 125 13.0 19.0 300 150 250 *Note: All projects have equal risk 15.5 18.0 Ajax can raise funds with the following marginal costs: 14.0% First $250 million Next 250 million 16.0 Next 100 million 16.5 Next 250 million Next 200 million Next 200 million 21.0 Use the marginal cost and marginal revenue concepts developed in this chapter derive an optimal capital budget for Ajax. 4. ESPN currently pays the NFL $1.1 billion per year for eight years for the right to exclu- sively televise Monday Night Football. What is the net present value of this investment if the parent Disney Company has an opportunity interest rate equal to its cost of capi. tal of 9 percent. Fox and CBS agreed to pay $712 million and $622 million respectively for six years to televise Sunday afternoon NFC games. What was that worth? Tri noducts is related to the state of the economy. If the UALLTILS. 2. Gasoline prices above $3 per gallon have affected what Enterprise Rental Car Co. can charge for various models of rental cars. SUVs are $37 with one-day return and subcompacts are $41 with one-day return. Why would the equilibrium price of SUVs be lower than the equilibrium price of subcompacts