Monthly Archives: June, 2017

1. Find the present value, P, for the following cash flows.

i = 12%

1. Star Inc. must purchase a small size milling machine. The following is known about the machine and about possible cash flows. The machine is expected to have a useful life of 8 years. The company has a MARR of 7%. Determine the NPW of the machine.
 p=.25 p=.50 p=.25 First cost \$40,000 \$40,000 \$40,000 Annual savings 2,000 5,000 8,000 Annual costs 12,000 8,000 6,000 Actual salvage value 4,000 5,000 6,500

1. The company accountant is uncertain which of three depreciation methods the firm should use for welding equipment that costs \$150,000, and has a zero salvage value at the end of a 10-year depreciable life. Compute the depreciation schedule for the welding equipment using the methods listed:
1. Straight line
2. Double declining balance
3. Sum-of-years’ –digits

Based on your analysis, which depreciation method is most profitable for the firm?

1. A Petroleum company recently completed construction on a large refinery in Louisiana. The final construction cost was \$71,000,000. The refinery covers a total of 260 acres. The Expansion and Acquisition Department at the company is currently working on plans for a new refinery in Texas. The anticipated size is approximately 360 acres. If the power-sizing exponent for this type of facility is .70, what is the estimated cost of construction?

EC-203-44 TERM PAPER INSTRUCTIONS

OVERVIEW

The final project for this course is the creation of a research paper.  Every day, millions of economic choices are made by people—from what brand of soap to buy to how many employees to hire for a factory. Microeconomics provides us with the tools, models, and concepts to better understand individual choices in the marketplace and how resource allocation is determined at the micro level. The decisions made by individuals and households impact the market and influence decisions made by firms. Firms use these tools as a way to determine pricing, output, and profit maximization. As a student of economics, you can use the microeconomic principles to gain an understanding of how firms and individuals make decisions and also to make your own conclusions about actions we can take to improve those decisions.

Now, imagine that you are a consultant to the firm of your choice. The firm has hired you to advise it on how it can ensure its future success as a company in its current market. To do this, you will write a 7–9-page research paper analyzing market and business data to explain how the core microeconomic principles impact the sustainability of the firm and what actions it can take to ensure success.

In this assignment, you will demonstrate your mastery of the following course outcomes:

• Apply microeconomic models to real-world situations for informing effective business decisions
• Analyze business and market data using microeconomic tools for their impact on business sustainability
• Evaluate the structure of various markets for informing effective decision-making strategies
• Assess the behavior and decisions of individuals and firms for their relation to the microeconomic framework

PROMPT

You will choose a Fortune 500 firm for which you can find reliable data and information, both at the firm level and the industry level. The firm you select must be a publicly traded company, must operate in the U.S. market, and must currently be in business. You will need instructor approval before continuing on with your research paper in order to ensure you have met the necessary requirements. Publicly traded companies file reports with a great deal of data that you will find useful for your analysis. Once you have selected a firm for your case study, you will gather information and data relevant to the firm and its industry and use the core microeconomic principles you have learned in class to analyze the information and make a recommendation for your firm. You will compose a 7–9-page research paper in which you will analyze the market and business data to explain how the core microeconomic principles impact the sustainability of the firm, and your recommendation will suggest the actions the firm can take to ensure success.

Specifically the following critical elements must be addressed:

1. Introduction

Work with your instructor to choose a firm that matches the following criteria: a publicly traded company operating in the U.S. market that is currently in business.

1. a) Outline the purpose of this paper and how it will inform your conclusion.
2. b) Summarize the history of the firm, and provide an overview for what the firm does and what goods/services it sells.

1. Explore the supply and demand conditions for your firm’s product.

1. a) Evaluate trends in demand over time, and explain their impact on the industry and the firm. You should consider including annual sales figures for the product your firm sells.
2. b) Analyze information and data related to the demand and supply for your firm’s product(s) to support your recommendation for the firm’s actions. Remember to include a graphical representation of the data and information used in your analysis.

III. Examine the price elasticity of demand for the product(s) your firm sells.

1. a) Analyze the available data and information, such as pricing and the availability of substitutes, and justify how you determine the price elasticity of demand for your firm’s product.
2. b) Explain the factors that affect consumer responsiveness to price changes for this product, using the concept of price elasticity of demand as your guide.
3. c) Assess how the price elasticity of demand impacts the firm’s pricing decisions and revenue growth.

1. Examine the costs of production for your firm.

1. a) Analyze the various costs a firm faces, their trends over time, and how they have impacted your firm’s profitability.
2. b) Apply the concepts of variable and fixed costs to your firm for informing its output decisions. For instance, analyze how different kinds of costs (labor, research and development, raw materials) affect the firm’s level of output.

1. Explore the overall market for your firm.

1. a) Discuss the market share of the firm and its top competitors by providing details on current percentages for each firm and describing the trend over time. You might consider presenting the data graphically.
2. b) Analyze the barriers to entry in this market to illustrate the potential for new competition and its impact on your firm’s future in the market.
3. c) Describe the market structure for this firm, and analyze how this affects the firm’s ability to influence the market.
4. Recommendation
5. a) Develop a recommendation for how the firm can manage its future production by synthesizing the data presented.
6. b) Suggest how the firm’s position within the market and among its competitors will allow it to take your recommended action.
7. c) Describe how the firm can sustain its success going forward by evaluating the findings from demand trends and price elasticity.

Apply APA formatting to citations and references.