Name Future Operating Profits $10,000 Year 18,000 The above table shows the futu
ID: 1132070 • Letter: N
Question
Name Future Operating Profits $10,000 Year 18,000 The above table shows the future operating profits from an investment. The future operating profits are carme of each of the respective years 1) Refer to the table above. If the discount rate (Interest rate) is 4 percent and the cost of the D) $5,815 32 2) What is the marginal cost associated with producing three units of the control variable, Q Net Marginal Marginal Marginal investment is $40,000, what is the net present value of the investment? B) $44,469.77 A) S45,815.32 C) S6.221.77 (identify point E in the table)? Control Total Variable Benefits Total Costs cro 100 Benefit CostNet Benefs 0. 800 L 900 100 1,700 2.400 1.800 2.000 2.000 1,800 1,400 1.500 100 3.500 3,900 4,200 4.400 200 4.300 3,500 B) 200 l0 4,500 C 50 A) 300Explanation / Answer
1. Ans: $5,815.32
Explan Ans ation:
NPV = -40,000 + 10,000(P/F, 4%, 1) + 18,000(P/F, 4%, 2) + 22,000(P/F, 4%, 3)
= -40,000 + 10,000(0.9615) + 18,000(0.9246) + 22,000(0.8890)
= -40,000 + 9615 + 16,642.8 + 19558
= $5815.8
The answer will be $5815.32. The difference in calculate value and the options is due to the difference in the table value.
2. Ans: 300
Explanation:
MC of third unit = Change in TC / Change in Q
= (600 - 300) / (3 - 2)
= 300
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