Value both the freehold and leasehold interests in a shop premise which has just been let on a 18 year lease at a rent of $60,000 p.a. for the first 6 years, $80,000 for the next 6 years and $100,000 for the remainder of the term. The current full rental value of the shop is $100,000 p.a. The freehold yield in the market is found to be 4%, whereas a half-percentage should be deducted from the yield to reflect the lower risk of the more-secured rental to be received. In regard to the leasehold interest, since the risk of leasehold interest is generally higher than 3 that of freehold interest in the market, the difference is reflected by a one-percentage higher compared to the freehold yield found in the market. Furthermore, the leasehold interest may also help generate a 2.5% return by use of a sinking fund.

please refer to other related questions too. I have posted these questions to be solved separately. you can solve it as one unit or separate in parts. if you want to solve it in parts please check the all four parts. i hope this update will help you.

1- Consider the overlapping-generation model. Assume that the initial old generation has a utility function of the form u(cl) = ln(cl), and that all the other generations have a utility function of the form uc1, c2) = In(cl) + Bln(c2) where B is a real number in (0,1). a) Define a competitive equilibrium for this economy. b) Define a monetary equilibrium for this economy. c) Assume that the horizon is finite. Show that fiat money is not valued in any period in a monetary equilibrium. Explain. d) Assume that the horizon is now infinite. i. Define a stationary monetary equilibrium for this economy. ii. Find the level of consumption for every generation in the stationary monetary equilibrium. iii. Find the demand for fiat money in the above equilibrium. iv. What is the equilibrium rate of return of money in the above equilibrium? V. Justify that the Quantity Theory of Money holds true in this economy. vi. What is the economic interpretation of the coefficient in the above utility function? Why is it irrelevant for the initial generation? 2- Consider a 2 period OLG economy with money creation at rate z and no population growth. The government raises revenue to finance government expenditure, Gt = 900 units of consumption goods only through seignoriage. Assume that the utility function is u(cl,c2)=min(cl,c2), which dictates a perfectly constant consumption path. Agents are endowed with y = 90 units of consumption goods when young and 0 when old. a) Use the money market equilibrium to derive the equilibrium rate of return of money. Now suppose z=2. Use the utility function and the budget constraint to find the level of optimal consumption for every generation in the stationary monetary equilibrium and illustrate it on a graph. What is the demand for fiat money in the above equilibrium? What's the level of utility for the consumer? b) Consider that instead of seignoriage the government introduces a distortionary tax to raise revenues (to finance the same level of government purchases). That means the government will impose a proportionate tax at rate t, i.e. the government collects t units of the young agents' endowment. What is the new equilibrium rate of return for money? What is the level of tax that supports this policy? Give your | answer in percentage points. Hint: You should probably think about the government budget constraint here, in particular about the revenue part with proportionate taxation. What is the level of optimal consumption for every generation and the demand for fiat money in this new equilibrium? What's the level of utility for the consumer? Are people better off or worse off? Use your graph in part a to explain your answer. Provide the economic intuition behind your answer. 3- Suppose there are three types of people in the model of two countries and two currencies. Type a people can hold only the money of country a, type b people can hold only the money of country b, and type c people can hold the money of either country. Every person wants to hold 10 goods worth of money. There are 300 type a people, 200 type b people, and 100 type c people. There are 100 units of currency a money and 200 units of country b money. a) Find the range of stationary equilibrium values for V, V, and e. b) Now suppose that 100 type a people and 100 type b people become type c people (able to hold the money of either country). Now find the range of stationary equilibrium values for V, V, and e. Has the range of equilibrium exchange rates expanded or contracted? Explain this change. 4- Consider an overlapping generations economy where young people have an endowment y = 100. The population grows at rate n = 1.1025. People can save in the form of two assets, fiat money and capital. The stock of fiat money grows rate z = 1.05. Capital is transformed into output according to the schedule f(k) = 10/k. This means that the marginal product of capital is the slope of this function: 5 S'(k) - a) Assume people want to consume half of their endowments and save the remainder. What is the rate of return on fiat money? If people save using both assets what must the rate of return on capital be? b) Determine the amount each individual saves in the form of capital. How much do people save in the form of fiat money? c) Compute period t + l's GDP if population in period t is N =100 1- Consider the overlapping-generation model. Assume that the initial old generation has a utility function of the form u(cl) = ln(cl), and that all the other generations have a utility function of the form uc1, c2) = In(cl) + Bln(c2) where B is a real number in (0,1). a) Define a competitive equilibrium for this economy. b) Define a monetary equilibrium for this economy. c) Assume that the horizon is finite. Show that fiat money is not valued in any period in a monetary equilibrium. Explain. d) Assume that the horizon is now infinite. i. Define a stationary monetary equilibrium for this economy. ii. Find the level of consumption for every generation in the stationary monetary equilibrium. iii. Find the demand for fiat money in the above equilibrium. iv. What is the equilibrium rate of return of money in the above equilibrium? V. Justify that the Quantity Theory of Money holds true in this economy. vi. What is the economic interpretation of the coefficient in the above utility function? Why is it irrelevant for the initial generation? 2- Consider a 2 period OLG economy with money creation at rate z and no population growth. The government raises revenue to finance government expenditure, Gt = 900 units of consumption goods only through seignoriage. Assume that the utility function is u(cl,c2)=min(cl,c2), which dictates a perfectly constant consumption path. Agents are endowed with y = 90 units of consumption goods when young and 0 when old. a) Use the money market equilibrium to derive the equilibrium rate of return of money. Now suppose z=2. Use the utility function and the budget constraint to find the level of optimal consumption for every generation in the stationary monetary equilibrium and illustrate it on a graph. What is the demand for fiat money in the above equilibrium? What's the level of utility for the consumer? b) Consider that instead of seignoriage the government introduces a distortionary tax to raise revenues (to finance the same level of government purchases). That means the government will impose a proportionate tax at rate t, i.e. the government collects t units of the young agents' endowment. What is the new equilibrium rate of return for money? What is the level of tax that supports this policy? Give your | answer in percentage points. Hint: You should probably think about the government budget constraint here, in particular about the revenue part with proportionate taxation. What is the level of optimal consumption for every generation and the demand for fiat money in this new equilibrium? What's the level of utility for the consumer? Are people better off or worse off? Use your graph in part a to explain your answer. Provide the economic intuition behind your answer. 3- Suppose there are three types of people in the model of two countries and two currencies. Type a people can hold only the money of country a, type b people can hold only the money of country b, and type c people can hold the money of either country. Every person wants to hold 10 goods worth of money. There are 300 type a people, 200 type b people, and 100 type c people. There are 100 units of currency a money and 200 units of country b money. a) Find the range of stationary equilibrium values for V, V, and e. b) Now suppose that 100 type a people and 100 type b people become type c people (able to hold the money of either country). Now find the range of stationary equilibrium values for V, V, and e. Has the range of equilibrium exchange rates expanded or contracted? Explain this change. 4- Consider an overlapping generations economy where young people have an endowment y = 100. The population grows at rate n = 1.1025. People can save in the form of two assets, fiat money and capital. The stock of fiat money grows rate z = 1.05. Capital is transformed into output according to the schedule f(k) = 10/k. This means that the marginal product of capital is the slope of this function: 5 S'(k) - a) Assume people want to consume half of their endowments and save the remainder. What is the rate of return on fiat money? If people save using both assets what must the rate of return on capital be? b) Determine the amount each individual saves in the form of capital. How much do people save in the form of fiat money? c) Compute period t + l's GDP if population in period t is N =100