2. Firm finance: The 331 travel agencvr is owned by ML Brown, he has hired a manager, Dr Blue. He pavs Dr Blue a wage w=600 francs. The firm's revenues are 500+1600|oglEl where E is Dr Blue's effort per period. Dr Blue like to surf so spending long hours at the travel agencv is not on her agenda. In fa=ct her disutilitv for effort is 0.5E2. 1. 2. Dr Blue knows that if she puts in below 20 units a vear M; Brown will fire her. Given the contract thev have, what does she do? What is the discounted present value of the firm if it last 10 years and the interest rate is 5%? Supplose Dr Blue is poor and comes to MLBrown with an offer to buv him out in a leveraged buyout for BBB-D francs with a coupon rate of 6%. Should he accept the offer? Note to answer this question you must first find Dr Blue's effort level if she were the owner of the leverage firm, then you must find the firm's profit net of interest costs Q then let Dr Blue deposit these profits in an interest bearing account so she can pav off the loan at the end. Suppose however that Mr Brown does not want to sell the whole firm, at what price should he be willing to sell Dr Blue half the firm? Would doing so improve profits? Going back to the pegjning contracts were complete what could ML Brown do