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Froeb et al.’s Chapter 4:
a. Individual problems: 4-5 and 4-6.
Discussion Question 9: How is the concept of a normal return on
investment related to the distinction between business and economic
profit?
Problem 6: Determine which of the two investment projects of Problem
5 the manager should choose if the discount rate of the firm is 20
percent.
Problem 9: A woman managing a photocopying establishment for
$25,000 per year decides to open her own duplicating place. Her
revenue during the first year of operations is $120,000 and her
expenses are as follows:
Salaries to hired help
45,000
Supplies
15,000
Rent
10,000
Utilities
1,000
Interest on bank loan
10,000