Question: In what way is the setup for finding a projects cash flows similar to the projected income statements for a new, single-product firm? In what

In what way is the setup for finding a projects cash flows similar to the projected income statements for a new, single-product firm? In what way would the two statements be different?

Would a projects NPV for a typical firm be higher or lower if the firm used accelerated rather than straight-line depreciation? Explain.

How could the analysis in Figure 11-2 be modified to consider cannibalization, opportunity costs, and sunk costs?

Why do the annual changes in cash flow due to net working capital appear with both negative and positive values in Figure 11-2?

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=+ c. Now suppose that Congress, concerned about the welfare of the working class, passes a law

=+requiring fi rms to pay workers a real wage of one unit of output. How does this wage compare to the equilibrium wage?

=+ d. Congress cannot dictate how many workers fi rms hire at the mandated wage. Given this fact, what are the effects of this law?