Lobbying is a form of advocacy with the intention of influencing decisions made by the government officials and/or legislators. Lobbying is an integral part of the modern participatory democracy. It is legally protected because it is an important lever for a productive government and legislation, without which governments would struggle to sort out the many competing interests of their citizens. Thereby, lobbying can act as an educational tool for the government officials and legislators. In the U.S., lobbying is a very common activity and is described as a paid activity in which special interest groups hire professional advocates to argue for specific legislation in decision-making bodies of the government such as the U.S. Congress.

According to Weiser (2019), the operation scale of lobby groups in the U.S. is so huge that the total dollars spent in 2014 on lobbying interests totaled over $3.2 billion dollars and the total number of lobbyists employed reached almost 12,000. Alexander et al (2009) in a study found that lobbying has brought significant returns on investment, as much as 22,000% in some cases. Large American corporations usually spend hundreds of millions of dollars on lobbying, which eventually bring about considerable amounts of profits for large corporations in many cases. Examples of such corporations include many pharmaceutical companies, many insurance companies, as well as Boeing, AT&T and Exxon mobile.

Suppose you are working for the world's largest pharmaceutical company called Pfizer, which is a multinational pharma corporation, headquartered in Connecticut, USA. As one of the high officials working for this company, you have recently gotten to know a lobbyist who is able to connect you to some Senators and Congressmen and government officials, whose remarkable influence on the legislative process of approving medicines can eventually bring your company 50, 40, 30, 20, and 10 million dollars in net profits annually in the next five years, respectively.

a.Compute the monetary value of such a connection that you can make for your company.(i.e. How much is the highest amount of money that you should be willing to pay that person if you are 100% sure that he will be able to cause your company's profit to go up by the abovementioned amounts in the next 5 years?) (Throughout this question, consider the hurdle rate for your company to be 20% annually.)

b.If he asks you to pay him $120,000,000 right now tocomplete the job now for you, should you agree to pay that amount?

c.If you agree to pay this requested amount,how much economic profit OR economic loss would you cause your company to earn or have?

d.If he asks you to pay him $120,000,000 at the end of the 5th year in order for him to agree on completing the lobbying job right now for you,should you agree to pay that amount in 5 years?

e.In that case, if you agree to pay the requested amount at the end of the 5th year,how much economic profit OR economic loss would you cause your company to earn or have?