For the population of firms in the chemical industry, let rd denote annual expenditures on research and development, and let sales denote annual sales (both are in millions of dollars).

a. Write down a model (not an estimated equation) that implies a constant elasticity between rd and sales. Which parameter is the elasticity?
b. Write out the estimated equation in the usual form. What is the estimated elasticity of rd with respect to sales? Explain in words what this elasticity means.

What is private equity investing? who participates in it and why? how is palamon positioned in the industry? how does private equity investing compare with public market investing? what are the similarities and differences between the two? why is palamon interested in teamsystem? does it fit with palamon’s investment strategy? how much is 51% of teamsystem’s common equity worth? use both a discounted cash flow and a multiple-based valuation to justify your recommendation. what complexities do cross-border deals introduce? what are the specific risks of this deal? what should louis elson recommend to his partners? is it a go or not? if it is a go, what nonprice terms are important? if it’s not a go, what counterproposal would you make?