Ashford Bus 640 (Managerial Economics) Entire Class Essays

5031 Words Jan 19th, 2015 21 Pages
ASHFORD BUS 640 (Managerial Economics) Entire Class
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Week 1 Economics of Risk and Uncertainty Applied Problems.

Please, complete the following 3 applied problems in a Word or Excel document. Show all your calculations and explain your results. Submit your assignment in the drop box by using the Assignment Submission button.

1. A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump-sum of $10mln, or in parts,
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3. An angel investor is considering investing in one of two start-up businesses and is evaluating the expected returns along with the risk of each option in order to choose the better alternative.

Business 1 is an innovative protein energy drink, which has ENPV of $100,000 with a standard deviation of $40,000.

Business 2 is a unique chicken wings dipping sauce with an ENPV of $60,000 and a standard deviation of $25,000.

a) Apply the coefficient-of-variation decision criterion to these alternatives to find out which is preferred by the angel investor, assuming that he/she is risk-averse.

b) Apply the maximin criterion, assuming that the worst outcome in Business 1 is to lose $5,000, whereas the worst outcome in Business 2 is to make only $5,000 in profit.

c) If you were the angel investor, what is your certainty equivalent for these two projects? Are you risk-averse, risk-neutral, or risk-lover?

Week 1 DQ1 Firm Objectives.

Why do some business firms pursue a triple-bottom-line outcome while others focus only on profit maximization? Please, use a real company example to illustrate your points

Week 1 DQ2 Decision Making Under Uncertainty.

To save on gasoline expenses, Edith and Mathew agreed to carpool together for traveling to and from work. Edith preferred to travel on I-20 highway as it was usually the fastest, taking 25 minutes in the absence of traffic delays. Mathew pointed out that traffic jams on the highway can lead

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