Forum 6 module 7
Answer the 5th question plus 1 more from questions 1–4. Then
reply to 1 classmate’s thread.
A firm is considering 2 capital investment projects. Project
A involves an initial cost of $125,000. The discounted present value of all
future cash flows is $145,000. Project B requires an initial expenditure of
$85,000. The discounted present value of all future cash flows is $102,000.
Calculate the net present value of each of the 2 projects.
Which would be preferred according to the net present value criterion?
Calculate the profitability index of each of the 2 projects.
Which would be preferred according to the profitability index criterion?
(a) Are lower airline fares at midweek an example of
third-degree price discrimination? (b) Under what conditions would it not be
useful to charge different prices in different markets (i.e., practive
third-degree price discrimination) if even possible?
Why is it likely that in a system of private education
(i.e., a system in which individuals pay for their own education without
government subsidy) there will be underinvestment in education (consider the
social benefits in addition to individual benefits of education)?
Why does an exporter face a foreign exchange risk? How can
the exporter hedge its foreign exchange risk?
Do you think the interest on payday loans is too high or
just right? Should Christians charge poor people interest on loans?
“Now in case a countryman of yours becomes poor and his
means with regard to you falter, then you are to sustain him, like a stranger
or a sojourner, that he may live with you. Do not take usurious interest from
him, but revere your God, that your countryman may live with you. You shall not
give him your silver at interest, nor your food for gain” (Leviticus
Search the internet for “Microloans” or
“Microcredit” and review the interest charged on these loans.
You must submit your thread by 11:59 p.m. (ET) on Thursday
of Module/Week 7 and your reply by 11:59 p.m. (ET) on Sunday of the same