This member of the construction crew stands above all the crew chiefs and answers only to the director, the designers, and the b
1 answer:
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Answer:
$10
Explanation:
We are to account for external costs in production, since we are asked to find optimal tax.
Given:
We now have:
A represents number of aluminum units produced, let's find A, since the margnal cost is $30.
Thus,
Let's equate the private marginal cost with the marginal revenue of each unit in order to achieve this amount of produced units with tax, t.
We have:
Substituting 100 for A above, we have:
30 - t = 20
t = 30 - 20
t = 10
Therefore, the socially optimal tax on aluminum is $10 per unit
Answer:
PVxa = $27,132.00, PVya = $26,413.00,
Explanation:
Present value (PV) is the value of the future expected cash flow. PV rests on the idea that the worth of a cash received is more than that of the cash promised to be received in the future. To calculate PV a stream of incomes to be received a number of period in the future, the following formula is used:
Where PV = present value
C = cash flow amount from the investment
r = discount rate
n = number of period, in this case years, to receive the cash flow.
The PV formula above is therefore employed to answer the question as follows:
<u>Answer to question (a) </u>
<em>For Investment X in question (a)</em>
PVxa = $4,200 * {[1-(1+r)^-n]/r}
PVxa = $4,200 * {[1-(1+0.05)^-8]/0.05}
PVxa = $4,200 * 6.463212759
PVxa = $27,145.49
<em>For Investment Y in question (a)</em>
PVya = $6,100*{[1-(1+r)^-n]/r}
PVya = $6,100*{[1-(1+0.05)^-5]/0.05}
PVya = $6,100 * 4.329476671
PVya = $26,409.81
<u>Answer to question (b) </u>
<em>For Investment X in question (b)</em>
PVxb = $4,200 * {[1-(1+r)^-n]/r}
PVxb = $4,200 * {[1-(1+0.15)^-8]/0.15}
PVxb = $4,200 * 4.487321508
PVxb = $18,846.75
<em>For Investment Y in question (b)</em>
PVyb = $6,100*{[1-(1+r)^-n]/r}
PVyb = $6,100*{[1-(1+0.15)^-5]/0.15}
PVyb = $6,100 * 3.352155098
PVyb = $20,448.15
Where PVxa, PVya, PVxb and PVyb represents PV for X and Y in questions (a) and (b).
Decisions:
1. In question (a) part where the PV of $27,145.49 of X is greater than $26,409.81 of investment Y, it is better to invest on investment X.
2. In question (b) part where the PV of $20,448.15 of Y is now greater than $18,846.75 of investment X, it is better to invest on investment Y.