Martinez Corporation engaged in the following cash transactions during 2017

Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch

gulaghasi [49]

Answer:

See the five answers below.

Explanation:

The roommates are debating how many movies they should watch.

This is the constraint; given that they have to pay to rent each movie.

PART (A)

Since their dormitory room is the 'cinema', meaning that it's just going to be 4 of them and a private good that they'll pay for; then the showing of a movie is not a public good!

Public goods are those general utilities usually provided by governments, for their citizens; e.g. public defense, clean drinking water, good roads, etcetera.

PART (B)

Given the 'willingness to pay' constraint, we need to find the optimal number of movies they can watch. It costs $8 to rent a movie, no matter how interesting it is or how much satisfaction the viewers derive from it. So the cost of the 1st film = the cost of the 2nd film = the cost of the 3rd film = the cost of the 4th film = the cost of the 5th film.

To get the total amount they're willing to pay for all 5 movies, sum up!

(10+9+6+3) + (9+7+4+2) + (8+5+2+1) + (7+3+0+0) + (6+1+0+0)

KEY: This arrangement should remind you of the law of diminishing marginal utility. The more movies they watch in one sitting or over a weekend, the less satisfaction they derive from the intangible commodity. Hence, the less they are willing to pay for more of the commodity.

So the sum is 28 + 22 + 16 + 10 + 7 = 83

Now to get the number of movies they should rent if they wish to maximize their total spending, divide the total willingness to pay by the cost for a movie:

83/8 = 10.375

Rounding up to the nearest whole number or in reality, that's 10 movies.

PART (C)

Suppose the roommates choose to rent this optimal number of movies - which is higher than the intended number of movies - and then split the cost equally, what will each roommate pay?

Here, we will use the approximated value 10.

10movies x $8 = $80

Splitting the cost equally, divide by 4

$80 ÷ 4 = $20

This figure is just in obedience to the question's requirements which says the bill must be shared equally. In actual fact, some of the four roommates don't have a purchasing power or willingness that is up to $20! That's Felix and Larry.

PART (D)

Complete the given table by inputing each roommate's total willingness to pay for the 5 movies and the surplus each person obtains from watching the movies. Remember to assume that Van is the same person as Raphael.

Also, total cost for 5 movies is 8 x 5 = $40

Dividing this by 4, you have $10 per roommate. So a surplus would be the excess of each roommate's TWTP over $10.

TWTP($) CS($)

VAN 40 30

CARLOS 25 15

FELIX 12 2

LARRY 6 -4

PART (E)

If the cost is divided up based on the benefits (remember how the price for movie was static despite the movie and satisfaction received by each viewer? That's about to change) or satisfaction each roommate receives, the practical problem with this 'solution' is that each roommate has an incentive to reduce the value of the movies to him; and this can only be measured by the efficient number (the number that rates the value each roommate derives from each movie). In this case, the incentive is the window given to each roommate to 'not tell the truth' about their level of satisfaction from watching each movie, because that would mean a higher bill for the individual.

KUDOS!

4 0

1 year ago

If Dominion Bank also pays 3.25% annual interest, compounded daily. If you had the following deposits and withdrawals, calculate

dimaraw [331]

Answer:

It would have earned 15.91 dollars of interest

Explanation:

We will calcualte for compounding at each moment:

First, we will calculate for $6,500 for March 1st to March 15th:

Then, from March 16th to march 27th we calculate for $5,000 + accrued interest of the peri

and from March 28th to 31th we calcualte $5,700 + accrued interest

$Principal (1 + \frac{r}{m} )^{n \times m} = Amount$

n = 15/365 days

m = 365

r = 0.0325

$6,500 (1 + \frac{0.0325}{365} )^{15/365 \times 365} = Amount$

6508.69

Then we withdraw 1,500

And we calcualte for hte period marchth to March 27th for the currnet value: 5,008.69

$5,008.69 (1 + \frac{0.0325}{365} )^{11/365 \times 365} = Amount$

Amount: 5,013.60

Then we deposit 700 and calcualte the rest of the month:

$5,713.60 (1 + \frac{0.0325}{365} )^{11/365 \times 365} = Amount$

Amount: 5,715.64

We can now calcualtethe interest earned:

6,508.96 - 6,500 = 8.96

5,013.60 - 5,008.69 = 4.91

5,715.64 - 5,713.60 = 2.04

total interest = 15.91

5 0

1 year ago

Mark is a senior manager at a leather manufacturing company. He sets unrealistic goals for the factory workers, and he often mak

crimeas [40]

Answer:

The authority compliance style

Explanation:

The authority compliance style is one of the Blake / Mouton leadership grips where the manager believes that the employees are just a form of means to achieving a goal . As a result of this , the set goals are given more priority over the employees.

Employees under this managerial form of leadership are not motivated as they are forced to work towards achieving the managers goals with in a very stringent condition.

8 0

2 years ago

Read 2 more answers

You are considering replacing your aging propane furnace for a natural gas model. The propane model originally cost $2,200, will

Nat2105 [25]

Answer:

The information is not complete (we do not know the useful life of the propane model), but the difference in costs between one project and the other is two large. The NPV of the savings for the gas model almost pays for the initial investment, plus the present value of the costs of using the gas model are much lower for future equivalent projects, we can assume that replacing the propane furnace with the gas model is a good investment.

We cannot determine exactly by how much the actual worth of the costs of the gas model are lower than the costs of the propane model, but there is no doubt that they are much lower. The only way that the propane model would have lower actual costs would that its useful life is much longer.

Explanation:

use propane model use gas model

initial investment $0 $1,800

operating costs $800 $600

useful life 6 years 13 years

present value of the costs for first product life cycle:

$3,559 (6 years) $6,129 (13 years)

Since the useful lives of the alternatives are not the same, we must find a common denominator for the useful life of the alternatives. Here we have a problem because we are not given the information.

But we can assume that the useful life of a propane furnace is also 13 years:

use propane model use gas model

initial investment $2,200 $2,200

operating costs $800 $600

useful life 13 years 13 years

residual value $0 $500

present value of total costs per life cycle:

$8,190 $6,529

Now we need to determine the NPV of the money saved by using gas propane = -$140 (-$1,800, 9%, $200 saved during 12 periods and $700 received at last period), so basically the gas model almost pays for itself with the money it saves.

5 0

1 year ago

39. You expect to receive $5,000 in 25 years. How much is it worth today if the discount rate is 5.5%?

ivann1987 [24]

Answer:

PV= $1,311.17

Explanation:

Giving the following information:

Future Value (FV)= $5,000

Number of periods (n)= 25 years

Interest rate (i)= 5.5% compounded annually

To calculate the present value (PV), we need to use the following formula:

PV= FV / (1+i)^n

PV= 5,000 / 1.055^25

PV= $1,311.17

6 0

1 year ago