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In one of our class lectures we calculated the stock price of the chip company that was introduced in Samuelson chapter 2. During that lecture
In one of our class lectures we calculated the stock price of the chip company that was introduced in Samuelson chapter 2. During that lecture we assumed that the chip company's objective was profit maximization and we calculated the stock price in that lecture as $17.01 per share. When a company changes their high level objective they change their profits, which impact the stock price. Assume the chip company changes from a profit maximizer to a revenue maximizer. What is the new stock price, assuming everything else in the problem stays the same? As a reminder of the problem we did in class we assumed the chip plant's life span was 3 years. There are 1 million shares outstanding. Interest rates are 4%. The company's demand curve was Q = 8.5 - 0.05 P. The cost curve was TC = $100 + 38Q. Profits are earned at the end of each year. Use the editor to format your
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