Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 6, Problem 22PAA
To determine

To recommend: Mandatory retirement age of lawyers

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Kathy and Ali registered as partners in a web design business. Kathy purchased a new computer for their business using their partnership's direct debit card. She did not talk to Ali about needing a new computer before she bought it. When she told Ali about the purchase Ali was furious and told Susan she had no right to buy the computer and that she would have to pay for the computer with her own money. Susan told Ali they were partners and that she had the legal right to buy the computer using the partnership's money. Is Kathy correct? Why/Why not?
A young software engineer is selling the rights to a new video game he has developed. Two companies have offered him contracts. The first contract offers $10,000 at the end of each year for the next five years, and then $20,000 per year for the following 10 years. The second offers 10 payments, starting with $10,000 at the end of the first year,$13,000 at the end of the second, and so forth, increasing by $3,000 each year(i.e.the tenth payment will be $10,000+(9×$3,000). Assume the engineer uses an i of 9%. Which contract should he choose? First Company or Second Company.
After graduation, you face a choice. You can work for a multinational consulting firm and earn a starting salary (including benefits) of $45,000, or you can start your own consulting firm using $5,500 of your own savings. If you keep your money in a savings account, you can earn an interest rate of 5 percent. You choose to start your own consulting firm. At the end of the first year, you add up all of your expenses and revenues. Your expenses include $18,000 for rent, $1,000 for office supplies, $26,000 for labor, and $4,700 for telephone expenses. After operating your consulting firm for a year, your total revenues are $95,000. Instructions: Enter your answers as a whole number. a. What is your accounting profit? 2$ b. What is your economic profit? 2$
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