History homework help

Problem set 1Problem 1 (10 points): You are offered an investment opportunity in which you will receive $25,000 in one year in exchange for paying $23,750 today. Suppose the risk-free rate is 6% per year. Should you take this project? The NPV for this project is closest to:(1) Yes; NPV = $165(2) No; NPV = $165(3) Yes; NPV = -$165(4) No; NPV = -$165Explain your answer below.Problem 2 (10 points): A specialist dermatology and cosmetic surgery chain is considering opening a clinic in Germany that requires an investment of $250,000 today and will produce a cash flow of 208,650 Euros in one year with no risk. Suppose the risk-free rate of interest in Germany is 7% and the current competitive exchange rate is 0.78 Euros to 1 Dollar. What is the NPV of this project? Would you advise them to take the project?(1) NPV = 0; No(2) NPV=$2,358; No(3) NPV=$2,358; Yes(4) NPV=$13,650; YesExplain your answer. Problem 3 (10 points): Alison inherited her father’s MD office, but she is not a physician and has no interest in running it. A local doctor who just got her degree and wants to settle back in town is offering to buy the office. In exchange, Alison has been offered an immediate payment of $100,000. She will also receive payments of $50,000 in one year, $50,000 in two years, and $75,000 in three years. The current market rate of interest for Alison is 6%.Suppose that a second doctor approaches Alison and offers her $250,000 today for the business. Should she accept this offer or should she stick with the original offer of $100,000 and the series of payments over three years? Why?Problem 4 (10 points): Which of the following reimbursement and consumer copayment schemes would have the greatest and lowest likelihood of producing high-cost, low-benefit medicine? Explain your answers below. A. Fee-for-service plan with 40 percent consumer co-insurance. B. Prepaid health plan with 40 percent consumer co-insurance – assume the physician receives a fixed fee per patient (pre-paid) and the patient has to pay 40% of any cost of usage.C. Fee-for-service plan with no consumer cost sharing.D. Fixed-salary plan with no consumer cost sharing -assume physicians are paid a fixed salary independent of how many patient they see and how often they see the patients.E. Prepaid health plan with no consumer cost sharing – assume physicians are paid a pre-determined flat fee per patient and the patient does not have to pay any additional costs of usage. F. Fixed-salary plan with 40 percent consumer cost sharing.Problem 5 (10 points):Explain the effect of the following changes on the quantity demanded of health insurance.A. A reduction in the tax-exempt fraction of health insurance premiumsB. An increase in buyer incomeC. An increase in per capita medical expendituresD. New technologies that enable medical illnesses to be predicted more accurately.E. A tendency among insurance buyers to become less risk averse, on average.