Q1

a) A project has an expense of NOK 90 million today and is expected to generate a profit of NOK 200 million in 20 years. Set up the expression for the present value of the project. Use the table below to find out if projects are profitable for (i) an interest rate of 3%, (ii) an interest rate of 5% b) A preventive health measure requires an investment of NOK 100 million today, but is expected to provide an annual gain of NOK 5 million in the foreseeable future. At what interest rates are the project profitable?

Q2

Explain with the help of a figure for a labor market what we mean by the employees paying part of a tax that is imposed on the companies that demand labor. For simplicity, you can look at a unit tax on labor. Explain in particular what determines how much of the tax is paid by the employees.