Question

5. (a) Assume p = f(q) = (q + 3)e-9 is a demand function where q> 0 is quantity. Find all values of such that the (point) elasticity of demand is elastic. [9 points) (b) In this question assume all money is in units of $1,000's. An initial investment of 47 in a small business is guaranteed to produce the following cash flows: 5 at the end of Year 1; 14 at the end of Year 2; F at the end of Year 4. Interest is 4% APR compounding quarterly. The letter F represents the cash flow pay- ment amount that makes the business "neutral" (i.e. the business has no loss and no profit). Solve for F. [5 points)