Your manufacturing company is currently producing just enought of its best-selling AwesomeGadgetX to me this years demand. The forcast for the nexy year is in, and its demand is expected to double (1 million new units per yr.) and stay at this level for the next 3 years. To handle the new 1 million units, your company can scrounge enough extra equipment and use current labor to handle most of the new parts and the final assembly. However, one part, SuperSickFeatureY (one needed in each unit), is at maximum production with your current equipment. Thus, you must either 1)acquire new equipment and new operators to make these critical parts your self or 2) contract with a 3rd party company, EvilSelloutCorpationZ, to buy the parts at a fixed rate over 3 years and have them delivered to your facility for final assembly. If your company's intrest rate is 10% determine how much it will cost per part to make them yourself, and the decide whether or not you should buy the parts from the 3rd party at $3.75/part. be sure to clearly show your work and you answers to the dilema.

Given

Cost to buy parts from 3rd part-$3.75 per part

Intial capital investment for equipment- $6,000,000

Annual operation & maintenance for equipment- $1,000,000

Annual Labor Cost for new employees- $500,000

Raw material cost for additional parts- $0.30 per part

Salvage value at year 3 of new equipment- $1,000,000

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Reid WolffLv2

20 Apr 2018

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Enrodes is a monopoly provider of residential electricity in a region of northern Michigan. Total demand by its 3 million households is given by Q=11 - P so that marginal revenue is MR=11 - 2Q. The total cost of Enrodes is given as C=16 +Q so that marginal cost is $1 per megawatt-hour. Consumers in this region of Michigan have recently complained that Enrodes is charging too much for its services. In fact, few consumers are so upset that they are trying to form a coalition to lobby the local government to regulate the price Enrodes charges.

If consumers are successful in their lobbying efforts and regulation is placed on Enrodes, calculate the price, output and profit of Enrodes under the following circumstances. Show your calculations in each case.

A. Regulator institutes average-cost pricing.

B. Regulator institutes marginal-cost pricing.

C. You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales ($150 million last year) and a low marginal cost of producing the product ($0.50 per pill), your company has yet to show a profit from selling the drug. This is, in part, due to the fact that the company spent $1.7 billion developing the drug and obtaining FDA approval. An economist has estimated that, at the current price of $1.50 per pill, the own price elasticity of demand for the drug is -2. Based on this information, what can you do to boost profits? Explain with proper calculations.

aquamarinebee468

Minicase: How much is Manchester United's brand worth?

In recent years, the valuation of sports teams has become an increasingly important financial topic. Part of the reason is the astronomical salaries that sports stars command. Additionally, some stars become celebrities outside of the arena also, with lucrative sponsorships, extravagant lifestyles, and an icon of the rich and famous David Beckham, the British soccer player is one prominent example. As a personal brand, Beckham was valued by Forbes at $20 million in 2013 (http://www.forbes.com/pictures/mlm45jemm/4-david-beckham/). Beckham came up with Manchester United, often cited as the world's most valuable soccer club. The Red Devils, as they are called, were bought by the Glazer family from the United States in a leveraged buyout in 2005. To cash in on its brand value and pay down debt, the new owners decided to go public in 2012. The IPO on the New York stock exchange offered shares at $14 apiece, making the capitalized value of the club about $2.3 billion. The shares did poorly at first but soared in 2013. By end of January, the share price stood at just under $17, with Manchester United's stock outperforming the S&P 500. The increase in its stock price pushed up Manchester United's value (equity plus debt) to $3.3 billion, the highest value of any team in the world. But in the ensuing Champions League tournament, Manchester did not perform all that well, and the club was overtaken by competitors. One was Real Madrid, a perennial foe. The Spanish team posted greater returns in its annual report for 2012-2013, with the highest returns of any team in sports ($650 million during the 2011-2012 season), and revenues up 62% over the last 3 years. Signing superstars Cristiano Ronaldo and, more recently, Gareth Bale has led to increasing income from advertising and sponsorships as well as attendance and television. The club has an equipment supply deal with Adidas worth $42 million a year. It has signed a new sponsorship deal with Emirates Airlines to put its name on the team's shirts, a contract worth $39 million annually for 5 years. As a result, the value of Real Madrid increased to $3.4 billion, narrowly beating out Manchester United. Real Madrid did better than Manchester United in the Champions League but was still beaten in the semifinals. In the final, two German teams met. Bayern Munich, a 10-time finalist, defeated Borussia Dortmund by a score of 2-1. As a result, the winning German club vaulted to first place in the soccer team brand ratings, as published by BrandFinance, a brand equity rating firm headquartered in London that covers brand equity sports ratings. BrandFinance calculates the value of the brand equity in terms of an equivalent royalty rate: if a team would license its name to a third party, how much would it be able to charge. This allows the company to focus only on brand equity, expressed in terms of dollar value. The brand equity rankings after the 2013 Champions League final from BrandFinance show the top three teams as follows:

1. Bayern Munich - Brand value: $868 million
2. Manchester United - Brand value: $845 million
3. Real Madrid - Brand value: $627 million.

The estimated value of Bayern Munich using the enterprise value (equity and debt) calculation used for the Manchester United and Real Madrid above is about $1.3-1.5 billion. That is, the enterprise values of the three teams as of late summer 2013 are as follows:

1. Real Madrid - Team value: $3.4 billion
2. Manchester United - Team value: $3.3 billion
3. Bayern Munich - Team value: $1.3-1.5 billion

In fact, Bayern Munich is also beaten by one arch-rival, Barcelona, at $2.6 billion, and is virtually tied by London's Arsenal.

Questions:
1. Why is there a difference between the stock market valuation of a sports team and its brand value?
2. If brand equity represents allegiance to a brand, what would you say determines the brand equity of a soccer team (or any sports team)?
3. What factors would you say determine the value of a soccer team (or any sports team)?
4. Use the difference between your answers in Questions 2 and 3 to explain why Bayern Munich could lead in brand equity but still not be the most valuable team.

tealcattle121

Greener Grass Company (GGC) competes with its main rival, Better Lawns and Gardens (BLG), in the supply and installation of in-ground lawn watering systems in the wealthy western suburbs of a major east-coast city. Last year, GGCÃ¢â¬â¢s price for the typical lawn system was $1,995 compared with BLGÃ¢â¬â¢s price of $2,100. GGC installed 9,130 systems, or about 55% of total sales and BLG installed the rest. (No doubt many additional systems were installed by do-it-yourself homeowners since the parts are readily available at hardware stores.) GGC has substantial excess capacityÃ¢â¬âit could easily install 25,000 systems annually, as it has all the necessary equipment and can easily hire and train installers. Accordingly, GGC is considering expansion into the eastern suburbs, where the homeowners are less wealthy. In past years, both GGC and BLG have installed several hundred systems in the eastern suburbs but generally their sales efforts are met with the response that the systems are too expensive. GGC has hired you to recommend a pricing strategy for both the western and east Â¬ern suburb markets for this coming season. You have estimated two distinct demand functions, as follows:

Qw = 1,035.548 - 6.07164Pgw + 2.83Pbw + 2,100Ag - 1,500Ab + 0.2348Yw

for the western market and

Qe = 49,714.29 - 30.7692Pge + 6.984Pbe + 1,180Ag - 950Ab + 0.0825Ye

for the eastern market, where Q refers to the number of units sold; P refers to price level; A refers to advertising budgets of the firms (in millions); Y refers to average disposable income levels of the potential customers; the subscripts w and e refer to the western and eastern markets, respectively; and the subscripts g and b refer to GGC and BLG, respectively. GGC expects to spend $1.5 million on advertising this coming year and expects BLG to spend $1.2 million on advertising. The average household disposable income is $55,000 in the western suburbs and $25,000 in the eastern suburbs. GGC does not expect BLG to change its price from last year, since it has already distributed its glossy brochures (with the $2,100 price stated) in both suburbs, and its TV commercial has already been produced. GGCÃ¢â¬â¢s cost structure has been estimated as TVC = 755.363Q + 0.005Q² where Q represents single lawn watering systems.

a. Derive the demand curves for GGCÃ¢â¬â¢s product in each market.

b. Plot graphically the demand and MR curves for each market, and also show GGCÃ¢â¬â¢s combined marginal revenue curve (Ã®âMR) and its MC curve. Show graphically the quantities that should be produced and sold, and the prices that should be charged, in each market.

c. Confirm your quantity and price results algebraically.

d. Calculate the price elasticities of demand in each market and discuss these in relation to the prices to be charged in each market.

e. Add a short note to GGC management outlining any reservations and qualifications you may have concerning your price recommendations.