# Spring 2016 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

NPVs: C = $7.01 M, U =$8.84 M. U is best.

### Question 4

EVs: proceeding without a test = $270 M, testing =$400 M. Testing is better.

### Question 5

P = $20, Q = 115, profit =$150.

### Question 6

P = $230, Q = 75, profit =$11,250.

EV = -$74,950. Firm does not proceed. ### Question 8 During: CS =$5,625, externalities = $4,000, total =$9,625; PV of total = $119,949. After: CS =$22,500, externalities = $8,000, total =$30,500; PV of total = $229,903. Total PV =$349,851. Expected PV = $87,463. ### Question 9 Expected NPV to firm =$8,040. Expected NPV to goverment = \$4,473. Both would want to proceed.

URL: https://wilcoxen.maxwell.insightworks.com/pages/4183.html
Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 05/16/2016