Thomas more company incurred the following costs during the
current year in connection with its research and development activities.
cost of equipment acquired that will have alternative
uses in future r& d projects over the next 5 years
(uses straight-line depreciation) $280,000
materials consumed in r& d projects 59,000
consulting fees paid to outsiders for r& d projects 100,000
personnel costs of persons involved in r& d projects 128,000
indirect costs reasonably allocable to r& d projects 50,000
materials purchased for future r& d projects 34,000

instructions

compute the amount to be reported as research and development expense by more on its current year
income statement. assume equipment is purchased at the beginning of the year.

Match the different financial tasks to their corresponding financial life cycle phases wealth protection, wealth accumulation and wealth distribution

Brian has just finished college. he wants to set up a small business to make and sell fireworks. he registers his company and acquires a license from the government. he finds that most of his competitors are selling fireworks at an extremely low price. he would like to make more money, so he decides to innovate and develop better fireworks. he sells his fireworks at a higher price, and they are a huge hit with the customers. after a few years, he earns enough profit to set up a bigger fireworks factory that complies with the government’s health and safety regulations. he even starts exporting fireworks overseas. which type of economy does this scenario describe?

3. saving two consumers, larry and jeff, have utility functions defined over the two periods of their lives: middle age (period zero) and retirement (period 1). they have the same income in period 0 of m dollars and they will not earn income in period 1. the interest rate they face is r. larry’s and jeff’s utility functions are as follow. = 0.5 + 0.5 and = 0.5 + 0.5 for each person is between zero and one and represents each consumer’s temporal discount econ 340: intermediate microeconomics. ben van kammen: purdue university. rate. a. write the budget constraint that applies to both jeff and larry in terms of consumption in each period and ), interest rate, and m. b. what is larry’s and what is jeff’s marginal rate of intertemporal substitution? c. what is the slope of the budget constraint? d. write each consumer’s condition for lifetime utility maximization. e. re-arrange the conditions from part (d) to solve for the ratio, . f. if > which consumer will save more of his middle age income? g. if > 1 1+ , in which period will larry consume more: = 0 or = 1?