First calculate the effective interest rate because the
problem says that the interest is compounded semi-annually. The formula for
effective interest rate is ieff= [(1+i/n)^n] – 1. The calculated effective
interest rate is 10.25%. The value of the investment in 5 years could be
calculated using the equation, FV= PV (1+i)^n. The value of the investment then would be $244,334.194.
The aggregate difference between the average total cost (ATC) and average variable cost (AVC) for all units of production is the total fixed cost.
Total fixed cost is the total amount of money a company must pay to keep its operations running, regardless of how many products it produces or sells. The total fixed cost remains constant regardless of production or lack thereof. Fixed costs are those that persist even when output is zero. Many of these expenses are referred to as overhead.
Total fixed costs are the sum of all a company's consistent, non-variable expenses. Assume a company pays $10,000 per month for office space, $5,000 per month for machinery, and $1,000 per month for utilities. In this case, the total fixed costs for the company would be $16,000.
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