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Question 2: Cost Estimation [1!] marks] 'r'ou have been asked to estimate the cost of manufacturing 100 extremeweather tenm that can be used by refugees after a natural disaster. Bad: 'Ln EDIE] your companv had a similar contact to produce i'IJ tents that provided LUBE square metres of oor space each and were 2.5 metres high at the peak. This time the tents need to he a little bit larger, providing 1,2[H] square metres of floor space. The cost of materials in EDIE was $1835 per square metre of oor space. The shop foreman's estimate of labour required to manufacture the rst new tent is 93 hours. a} Using a cost capacity factor of 1165 and cost index WEIIUES of HS in ll and 211'] in EDZI estimate cost of materials for the new tents. b] Assuming a loaded labour rate of $120 per hour, a 9196. learning curve what is the cost of the 50'\" tent? c]: Calculate the average labour cost per tent dl 1What will the total price of the contract be if you use a 20% prot marltup?I 4. Consider the following moral hazard problem with limited liability. Suppose a risk- nentml restaurant owner wants to hire a risk-neutral waitress to serve the customers in his restaurant. The number of customers served is stochastic; it can be either (j = 100 people or q = 50 people. When the waitress exerts effort, then 1T1 = 3/4 is the probability that the number will be it} and 1/4 is the probability that the number will be q. When the waitress does not exert effort, then no : 1/4 is the probability that thenumber will be (j and 3/4 is the probability that the number will be q. Exerting effort is costly to the individual and suppose this cost is equal to 1/) = 2. Sppose the owner receives a payoff from serving of the customers by the payoff function 3(q) = 43?. Suppose the contract the owner proposes consists of payments {(5.1)} to the individual1 depending on whether the serving number is high or not. (a) (b) Suppose that the owner can observe if the waitress exerts effort or not. Set the optimization problem and nd the optimal transfers when the owner induces effort. Show that the owner prefers inducing effort over not. inducing effort. Now suppose that the owner cannot observe if the waitress exerts effort or not. Set the optimization problem and nd the optimal transfers when the owner induces effort. What is the cost. of inducing effort? Suppose again the owner cannot observe if the waitress exerts effort. Now suppose also that the landlord cannot impose a transfer less than l, where l = 2. Set the optimization problem and nd the optimal transfers when the owner induces effort. What is the expected limited liability rent. of the waitress? Suppose once again the owner cannot observe if the waitress exerts effort. Now suppose also that the owner cannot impose a transfer less than l, where l = 0 this time. Set the optimization problem and nd the optimal transfers when the owner induces effort. What is the expected limited liability rent of the waitress? (0) Now suppose that the owner makes the waitress a shareholder of the prots by using a simple linear sharing rule. Set the optimization problem and nd the optimal linear sharing rule. 6. Consider an investor who, on January 1, 2016, purchases a TIPS bond with an original principal of $100,000, an 8 percent annual (or 4 percent semiannual) coupon rate, and 10 years to maturity. (LG 6-2) a. If the semiannual inflation rate during the first six months is 0.3 percent, calculate the principal amount used to determine the first coupon payment and the first coupon payment (paid on June 30, 2016). b. From your answer to part a, calculate the inflation-adjusted principal at the beginning of the second six months. c. Suppose that the semiannual inflation rate for the second six-month period is 1 percent. Calculate the inflation-adjusted principal at the end of the second six months (on December 31, 2016) and the coupon pay- ment to the investor for the second six-month period. What is the inflation-adjusted principal on this coupon payment date