Profits 510.000 $18.00o cost of tot the respeefoperating profits from an investm
ID: 1142188 • Letter: P
Question
Profits 510.000 $18.00o cost of tot the respeefoperating profits from an investment. The future operating profits are Svestpent ie pers. Refer to the table above. If the discount rate (Interest rate) i 2) The above table shows the future operating profits frosm shons above 5 percent and the cost of the investment 4o,000, what is the net present value of the investment? (4points each tor a total revenue of $60,000. If it produces a forty-first mower, its total revenue will be $61,500 and its total cost will be $51,200. Should Sam's INC produce the forty-first lawn-mower? (4points) 3) Sam's INC is producing forty lawn-mowers at a total cost of S50.ooo and is selling them for $1,500 that tuition at state universities should be kept low "to make heard saying tesidents of the state, regardless of income. Assuming that state Politicians are ote accessible to al consa, what condition will prevail if tuition is held below education equa lumivesities isb ely bequsble under these conditions? Explain why ( funding equilibrium points) is held constant, priceExplanation / Answer
2.) NPV = (-40000/((1+0.05)^0))+ (10000/((1+0.05)^1))+ (18000/((1+0.05)^2))+ (22000/((1+0.05)^3))
=-40000+9524+16327+19004=$4855
3). Since profit increases by producing 41 lawn movers it can continue with production
Q
P
TR
TC
MC
Profit
40
1500
60000
50000
10000
41
1500
61500
51200
1200
10300
4)
When tuition fee is held below the equilibrium price the demand would increase and more number of students would enrol leading to shortages as demand exceeds supply. This situation is referred as price control. The shortages include students who would like to enrol but because of non-availability of seats it leads to corruption which is termed as market failure.
Q
P
TR
TC
MC
Profit
40
1500
60000
50000
10000
41
1500
61500
51200
1200
10300
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