You are given the following information concerning the initial cost of capital of starting a business, the licensing fees and other permits costs of starting the business, and income per capita in three countries, one rich and two poor.

(a) Suppose that a business earns a 10 percent annual return on the combined costs of initial capital and licensing fees and other permits. Compute the annual income earned by a business in each country.
(b) Compute the licensing fees and other permit costs as a percent of income in each country.
(c) Compute how long (in years) that it takes in each country for a business to earn enough to pay the licensing fees and other permit costs to start a business.
(d) Based on your answers to parts b and c, discuss how much of a barrier licensing fees and permit costs are to starting a business in these three countries. If your job is to suggest reforms in each of the poor countries that would encourage new businesses, how should any reforms take into account that these licensing fees and other permits are a source of government revenues in these countries?

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Country A Country B Country C Initial capital costs $10,000 $1,000 $1,000 200 Licensing fees and 200 100 other permit costs In come per capita 20,000 2,000 2,000