1)Given: Total fixed cost = $420. Variable cost/unit = $20. Revenue/unit = $30.
ID: 1092121 • Letter: 1
Question
1)Given: Total fixed cost = $420. Variable cost/unit = $20. Revenue/unit = $30. The breakeven volume is most nearly?
2)Two new rides are being compared by a local amusement park in terms of their annual operating costs. The two rides are assumed to be able to generate the same level of revenue (thus the focus on costs). The Tummy Tugger has fixed costs of $12,000 per year and variable costs of $2.50 per visitor. The Head Buzzer has fixed costs of $5000 per year and variable costs of $3 per visitor. What is the break-even number of visitors per year for the rides to have equal annual costs?
3) The Rule of 78s is a commonly used method of computing the amount of interest when the balance of a loan is repaid in advance.
Adding the numbers representing 12 months gives1+2 + 3 + 4 + 5 + ... + 11 + 12 = 78If a 12-month loan is repaid at the end of one month, for example, the interest the borrower would be charged is 12/78 of the year's interest. If the loan is repaid at the end of 2 months, the total interest charged would be (12 + 11)/78, or 23/ 78 of the year's interest. After 11 months the interest charge would therefore be 77 / 78 of the total year's interest.
Helen borrowed $8,000 on January 1 at 8% annual interest, compounded monthly. The loan was to be repaid in 12 equal end-of-period payments of $700 each. Helen made the first four payments and then decided to repay the balance of the loan with the fourth payment. Thus she will pay the fourth payment plus an additional sum. Based on the Rule of 78s, this sum is most nearly?
4)Venus Computer can produce 24,000 personal computers a year on its daytime shift. The fixed manufacturing costs are $1.8 million and the total labor cost is $8,850,000. To increase its production to 48,000 computers per year, Venus is considering adding a second shift. The unit labor cost for the second shift would be 30% higher than the day shift, but the total manufacturing costs would increase only to $2.4 million from $1.8 million. The unit manufacturing cost for the original day-time shift is most nearly?
5)
SungSam, Inc. is designing a new digital camcorder that is projected to have the following per-unit costs to manufacture: Materials costs- $53; Labor costs- $24; Overhead costs- $97; Total unit cost- $174.
SungSam adds 30% to its manufacturing cost for corporate profit. What is SungSam's profit on each camcorder?
6) An inheritance will be $50,000. The interest rate for the time value of money is 8%. How much is the inheritance worth now, if it will be received in 20 years?
7)A man borrowed $1250 from a bank. He agreed to repay the sum at the end of 3 years, together with the interest at 6% per year. How much will he owe the bank at the end of 3 years?
8) A sum of $5,000 is invested for five years with varying annual interest rates of 9%, 8%, 12%, 6%, and 15%, respectively. The future amount after 5 years is most nearly equal to ?
9) What is the present value of a series of $2500 payments at the end of each year for 10 years at 5% compounded annually?
10) Pete borrows $15,000 to purchase a used car. He must repay the loan in 48 equal end-of-period monthly payments. Interest is calculated at 1 1/6 % per month. The amount of the monthly payment for this loan is most nearly.
11) Jerry bought a house for $250,000 and made a $50,000 down payment. He obtained a 30-year loan for the remaining amount. Payments were made monthly. The nominal annual interest rate was 5%. What was his monthly loan payment?
12) A new machine comes with 100 free service hours over the first year. Additional time costs $75 per hour. What is the average cost per hour for 175 hours?
13) A realtor sold a house on August 31, 2011 for $175,000 to a buyer in which a 20% down payment was made. The buyer took a 15-year mortgage on the property with an effective interest rate of 6% per annum. The buyer intends to payoff the mortgage owed in yearly payments starting on August 31,2012. How much of the mortgage will still be owed after the payment due on August 31, 2018, has been made?
14)A friend was left $50,000 by his uncle. He has decided to put it into a savings account for the next year or so. He finds there are varying interest rates at savings institutions: 8.375% compounded annually, 8.25% compounded quarterly, and 8.125% compounded continuously. He wishes to select the savings institution that will give him the highest return on his money. What interest rate should he select?
15) What is the present value at time zero of $10,000 paid into an account at the end of year one and annual deposits are increased each year by 5% for a total of 30 years. ( paid $10,500 end of year 2, $11,025 end of year 3, etc.) The account pays 8% per year.
16)
At what number of items is the manufacturer indifferent (breaks even) to making or buying given the following costs and purchase price?
Variable cost per unit to make= $5
Fixed cost to make=$500
Purchase price per unit=$12
17)
What is the present value of a series of $4000 payments at the end of each year for 7 years at 6% compounded annually?
18) If $24,725 is the loan pay off after 1 year and 6 months for a $23,000 loan, what was the simple annual interest rate charged?
19)
Which interest rate, when compounded, has the largest effective annual interest rate?
36% per year
20)
Which interest rate, when compounded, has the largest effective annual interest rate?
Interest Factor Calculator
36% per year
21
21) An interest rate is 1% per quarter. What is the effective annual interest rate?
22) Determine the breakeven resale price 15 years from now of an apartment house that can be bought today for $549,000. Its annual net income is $64,000. The owner wants a 10% annual return on her investment.
9% per quarter 3% per month 20% per semiannual period36% per year
20)
Which interest rate, when compounded, has the largest effective annual interest rate?
Interest Factor Calculator
9% per quarter 3% per month 20% per semiannual period36% per year
21
Explanation / Answer
1)
Let the breakeven volume be
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