Answer: Economic choices result in trade-offs.
Explanation:
The chart simply purports to show that when making economic decisions, you will have to accept trade-offs because resources are not infinite.
For instance, in order to expand, you will need to take on more financial risk. In that same vein, in order to serve more people, you will have to divide time between two stalls and might end up closing a stall.
Trade-offs simply have to be made.
Answer:
Explanation:
Annual worth: this will be the annuity payment equivalent to all the cashflow of the investment. Thus the PMT of the net present value
Cash Investment at F0: <em>230,000/2 = 115,000</em>
present value of 7,500 salvage value:
Maturity 7,500.00
time 7 years
MARR: 10% = 0.1
PV <em> 3,848.69 </em>
<u>Then, we need to calculate the present value of the loan discounted at 10%</u>
half the investment is finance: 230,000 / 2 = <em>115,000</em>
Then, this capitalize 2 year at 8% before the first payment:
Principal 115,000.00
time 2 year
MARR: 10% = 0.08000
Amount 134,136.00
Now we need to discount this loan at 10% which is our rate of return:
Maturity 134,136.00
time 2.00
MARR: 10% = 0.1
PV <em>110,856.20 </em>
Finally: we add this values to get the resent worth:
<em>115,000 + 110,856.20 - 3,848.69 = </em><em>222,007.51</em>
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Last step, we calculate the PMT of the present worth:
PV 222,007.51
time 7 years
MARR: 10% = 0.1
C $ 45,601.564
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