please show your work ... thank u Aspen Ski Manufacturing is opert ing at 80% of

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please show your work ... thank u

Aspen Ski Manufacturing is opert ing at 80% of their manufacturing capacity and has current revenues of $10,600,000. How high can their sales go (approximately) before they must consider adding additional fixed assets? a) S 12,500,000 b) S 10,600,000 c) $8,480,000 d) $12,720,000 e) $13,250,000 6) 9) You invested $1.400 in two different banks. Bank 1 pays 5 percent simple interest whereas Bank 2 pays 5 percent compounded annually. If you plan to invest the money for 20 years which bank would you choose and how much more money would you earn? a) Bank 1, $749.22 b) Bank 1, $830.11 c) Bank 2, $882.19 d) Bank 2, $901.15 e) Bank 2, $914.62

Explanation / Answer

6. At 80% capacity , the revenues are 10,600,000 .

Additional Fixed assets need to be added after the Aspen Ski Manufacturing attains 100% revenue

CCalculation of 1005 revenue =

At 80 % capacity --------------- revenue = 10,600,00

So 100% capacity -------------- revenue = (10,600,000 * 100)/80

= 13,250,000

Hence answer e $ 13,250,000 is correct

9. Formulae for Calculation of at Amount at Simple interest at Bank 1 is

A = P (1+ rt)

   P = $ 1400

r = 5% = 5/100 = 0.05

   t = 20 years

therefore. A = 1400 * ( 1+ 0.05*20)

= 1400 * (1 + 1)

= 1400 * 2

= $ 2,800

Formulae for Calculation of at Amount at Compound interest at Bank 2 is

A = P * ( 1+r/n)nt

P = $ 1400

r = 5% = 5/100 = 0.05

   t = 20 years

n = 1 as interest is compounded annually

Hence,

A = 1400 * ( 1 + 0.05/1)1*20

  = 1400 * (1.05)20

  = 1400 * 2.6533

= $ 3,714.62

Difference in amount of Bank 1 and Bank 2

= 3,714.62 - 2,800 = $ 914.62

Hence Bank 2 gives higher amount after 20 years when the interest is compounded annually

Hence option e is correct

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