A perpetuity pays $100 each and every year forever. the duration of this perpetuity will be:_________
1 answer:
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<h2>Hello!</h2>
The answer is: d. total costs
<h2>Why?</h2>The total costs are the sum of all the costs needed to produce a good or a service. It includes both fixed and variable production costs to show us the measure of a total cost.
We can calculate the total costs using the following formula:
Fixed costs are all the constant costs. Fixed costs can be the salary of its workers (since they are based in hours worked), structure and good/actives insurance, taxes among others.
Variable costs are all the costs that can change thru the time, depending on the production volume. For example, if the production increases, the variable costs will increase too, also, if the production decreases, the variable costs will decrease too.
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The current lot size of 235 is too large.
We use the given data to find the Economic Order Quantity or EOQ and then compare it to the lot size of 235.
Economic Order Quantity is used to arrive at the optimum purchase order for goods (in number of units) while minimizing ordering and handling costs.
The formula for calculating EOQ is:
Q = ,
where :
Q is the order lot in number of units
D is the annual demand for the product
S is ordering cost per order (in $)
H is holding cost per unit (in $)
We can arrive at the annual demand for the product as follows:
Annual Demand = No. of units sold per week * No. of weeks the store operates
Annual Demand = 50*52 = 2600 units
Order cost = $20
Holding Cost = Holding Cost (in %) * Selling Price
Holding Cost = 20%*$40 = $8
Substituting the above values in the EOQ formula, we get,
Q = = 114.02 units.
Comparing the EOQ we just calculated and the given lot size, we arrive at the answer above.