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Professor Kremepuff's New, User-Friendly Textbook Has Just Been Published

question 1

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Professor Kremepuff's new, user-friendly textbook has just been published.This book will be used in classes for two years, after which it will be replaced by a new edition.The publisher charges a price of p₁ in the first year and p₂ in the second year.After the first year, bookstores buy back used copies for p₂/2 and resell them to students in the second year for p₂.(Students are indifferent between new and used copies.) The cost to a student of owning the book during the first year is therefore p₁ - p₂/2.In the first year of publication, the number of students willing to pay $v to own a copy of the book for a year is 60,000 - 1,000v.The number of students taking the course in the first year who are willing to pay $w to keep the book for reference rather than sell it at the end of the year is 60,000 - 5,000w.The number of persons who are taking the course in the second year and are willing to pay at least $p for a copy of the book is 45,000 - 1,000p.If the publisher sets a price of p₁ in the first year and p₂ <= p₁ in the second year, then the total number of copies of the book that the publisher sells over the two years will be

Definitions:

Operating Activities

The day-to-day activities of a business that are directly related to its principal revenue-generating operations, such as sales and service delivery.

Indirect Method

A cash flow statement reporting approach that adjusts net income for changes in non-cash accounts to compute cash flow from operating activities.

Comparative Balance Sheet

A financial statement that displays a company's financial position at different points in time side-by-side, facilitating period-to-period comparison.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, reflected in the cash flow statement.