Discuss why it is important for economists to study customer behaviors and choices?

How are businesses affected by the economics systems in which they operate

The question is complete please.

(II points) AHA decided to proceed with acquiring Eureka and has recently completed the acquisition. AHA plans to leave Eureka's current leadership in place and expects that the company will continue to operate independently from AHA. AHA has noted that Eureka does not have a retirement program and plans to implement a cash balance plan for the new company. The plan provisions will be identical to AHA's plan except for the level of the minimum interest crediting rate. You have been asked to help develop the new Eureka plan. (a) (3 points) You use a Monte Carlo model to simulate the NPV of the guarantee (amounts in 000s) under alternative minimum interest crediting rate scenarios. 10,000 interest rate simulations were performed, with the following results: Minimum Interest Crediting Rate Select Ranked 4.00% 4.50% 5.00% Observations 8,500 92.333 95,000 99.750 9,000 95.941 98,809 101,745 9.500 97.850 102,743 106.832 Minimum Interest Crediting Rate Average of Ranked Observations 4.00% 4.50% 5.00% 8,501-9.000 95.000 97.850 102.743 9.001-9,500 96.900 100,786 104.797 9,501-10,000 99.807 105.825 110.037 Eureka intends to invest an amount based on the simulated guarantee NPVs in risk-free assets and the remainder of the available assets in other investments. AHA's CFO. B.G. Bucks, has two goals: 1) Invest the assets such that the expected annual return exceeds 4.00%. 2) Set the minimum interest crediting rate at the highest possible level while still being able to fund the 90% Vak level in risk-free assets.In your calculations, you assume the following: Annualized Risk-Free Rate of Return: 2.00% Annualized Rate of Return of Other Investments: 8.00% . Total Assets Available for the Trust: 150.000,000 (i) Determine the minimum interest crediting rate that meets Bucks' goals. Show your work. (ii) The Investment Officer, Steve Marlin, is more sensitive to the potential severity of failing to fund the NPV of the guarantee and would prefer to be able to fund the 90% CTE level in risk-free assets. Marlin accepts Bucks' expected annual return objective of exceeding 4.00%. Determine the minimum interest crediting rate that meets Marlin's goals. Show your work. (b) (/ point) Eureka's VP of HR is concerned that the salary scale assumed in the simulation is significantly lower than the actual average rate of salary increase the company has observed. Describe qualitatively how the selected minimum interest crediting rate in (@)(i) would change if the simulation were redone to reflect the company's actual average rate of salary increase. (9) (2.5 points) Assume that AHA implemented the Eureka plan on January 1. 2020. You are provided with the following excerpts from the Eureka's most recent accounting report as of January 1, 2025 (amounts in 000s). Operating Assets 500,000 Pension Assets: Market Value Beta Pension Assets 205,000 Debt 100,000 Total Assets 705,000 Equity 105.000 Total 205,000 Liabilities 200,000 Pension Liability 205.000 Market Risk Premium 4.00% Total Liabilities 405,000 Risk-Free Rate 3.00%Eureka has stated that its Weighted Average Cost of Capital (WACC), ignoring the pension plan, is 8.00%. Eureka's CEO is planning to undertake a project that will require an investment of 50.000.000 today and will pay off 105,000,000 at the end of 10 years. (i) Calculate the company's equity beta prior to the investment, assuming that the beta for liabilities is 0. Show your work. (ii) Recommend whether or not the CEO should undertake the project based on a WACC approach. Justify your answer. (2.5 points) Eureka's CEO has heard a lot about offering lump sum windows as a method of de-risking a pension plan. He has stated at a recent strategy meeting that the company would not benefit from doing so. (i) Critique the CEO's statement. (ii) Propose one alternative strategy that the company could implement under each of the following categories to de-risk the plan: Plan Design Funding/Investment Policy Liability Management (2 points) AHA was provided with Eureka's January 1, 2025 funding report which included the following disclosures to comply with ASOP $1. . A decrease in interest rates would significantly erode the funded status of a traditional defined benefit plan. Enclosed in the appendix are the numerical results of scenario tests, sensitivity tests, and stochastic modeling to evaluate the impact of varying inflation rates on the funded status. . The company has approved the use of an 11% discount rate for use in determining the pension liability. . The financial results shown exclude the impact of the intended acquisition of BKT. a major competitor of Eureka, which will be announced at the end of next fiscal year. Critique each of the statements included in the disclosure with respect to its compliance with ASOP 51