Exams from Previous Semesters

# Fall 2014 Final Exam Solution

Here are the final numerical results for each section of the exam. You can use them to check your work if you do the exam for practice. If you have trouble with the problems, or don't get the answers shown here, stop by during office hours or make and appointment and we can go over them.

### Question 1

NPV for L=$70M, NPV for P=$89M. Policy P is better because its NPV is higher.

### Question 8

(a) PV of CS in the US during the patent period=$179k; PV of CS in the US after=$434k; PV to the US overall=$613k; PV to the rest of the world (ROW) after=$3.769M; total PV of CS=$4.382M; expected PV of CS=$1.753M.

(b) Minimum X to induce the firm to proceed: $641k. Expected value of the policy to the philanthropist=$1.251M.  The philanthropist would want to proceed with the policy: it could offer the firm enough to induce it to go forward and still come out ahead.

URL: https://wilcoxen.maxwell.insightworks.com/pages/4095.html
Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 04/20/2016