<span>The number of </span>union members peaked<span> in 1979 at an estimated 21.0 million. This was the priod before government create regulations that set a certain standard for payment that imposed for the companies. Before such standard was created, many companies openly gave wages below the standard of living, and many workers united in order to obtain fairness in their contract agreement</span>
Buyers in the business- to business markets are generally a lot more rational and know much more about the products they need than buyers in consumer markets.
For example, a corporation is looking for a vendor that supplies them with toilette paper, paper towels and soap. They will request the vendors information about all the products that they can offer including:
professional product lines (paper and soap dispensers),
Without mitigation: NPV= $ 42,000,000, IRR= 19,86%
To calculate the Net Present Value (NPV) we have to sum the present value of a project´s cash flows (positive and negative cashflows). To do so, we need: the number of periods of the project, the discount rate, cost of captal or WACC, and the future values of the cash flows. Then we apply the formula attached.
To calculate the Internal Rate of Return (IRR) we have to find the discount rate, cost of capital or WACC that makes the NPV equal to cero. That means we have to find a rate in which the investor do not create or destroy value, only recovers the investment. I attached the formula.
But, this is better if we use excel:
First we copy the cash flows of the two projects. To find the NPV we use the financial formula "NPV" in this way:
"=NPV(rate;cash flows from year 1 to year 5)+ cash flow of year 0"
To find the IRR we use the financial formula "IRR" in this way:
Assume that Jane always divides his income in College Station equally into two, i.e. $3,000 each, to buy x and y, the quantities of x and y he can buy in College Station can be calculated by dividing the $3,000 by the prices of x and y. This is calculated as follows:
CSqx = Quantity of x in College Station = $3,000 ÷ 1
= 3,000 units
CSqy = Quantiy of y in College Station = 3,000 ÷ 5
= 600 units
Jane's utility in College Station can be calculated by amending equation (1) and substituting 3,000 units for x and 600 units for y as follows:
Since Jane is guaranteed a salary in Dallas with which he would be able to buy exactly what he buys in College Station, this implies that the salary in Dallas will make him to be able to buy 3,000 units of good x and 600 units of good which he currently buys in College Station.
CSpx = 1, which is less than Dpx = 4
CSpy = 5, is equal to Dpy = 5
We need to calculate how much his Income will increase in Dallas to be able to buy 3,000 units of good x in Dallas given that its price is $4. Therefore, his income will increase by multiplying $4 by 3000 units and deduct $3,000 he was spending in College Station on x as follows:
IID = Increase in Income in Dallas = (3,000 * $4) - $3,000
= $12,000 - $3,000
Therefore, ID (Income in Dallas) is the addition of IDD and ICS (Income in College Station) calculated as:
ID = IID + ICS
= $9,000 + $6,000
With the ID of $15,000, Jane will be spending $12,000 to buy 3,000 units of good x in Dallas and continue to spend $3,000 to buy 600 units of good y in Dallas.
This will make Jan's utility in Dallas (DU) to be equal to 1,080,000,000 utils as obtained in equation (2) above.
Therefore, Jane's utility will remain the same based on the tangency rule which states that a consumer will choose a combination of two goods at which an indifference curve is tangent to the budget line, i.e. his income.