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Margarita [4]
3 years ago
5

A monopolistic seller of sports cars has traced out the following demand curve: 10 customers have willingness to pay (WTP) of $1

00K each, another 10 customers have WTP of $150K each, another 10 customers have WTP of $200K each; and a further 15 customers have WTP of $250K. Each sports car costs $50K to produce, but the production process requires a fixed machinery investment of $1.5M as well. The seller is considering setting one of the following prices: I. A price of $150K II. A price of $200K III. A price of $250K What is the order of the profits, from greatest to least, generated by these three pricing schemes?1) II > I > III2) III > I > II3) I > II > III4) II > III > I
Business
1 answer:
Romashka [77]3 years ago
8 0

Answer:

The answer is: 1) II > I > III

Explanation:

<u>Pricing scheme I: $2 million profit</u>

  • Price $150,000
  • Contribution margin = $150,000 - $50,000 = $100,000
  • 35 units sold x $100,000 = $3.5 million
  • profit = $3.5 million - $1.5M = $2 million

<u>Pricing scheme II: 2.25 million profit</u>

  • Price $200,000
  • Contribution margin = $200,000 - $50,000 = $150,000
  • 25 units sold x $150,000 = $3.75 million
  • profit = $3.75 million - $1.5M = $2.25 million

<u>Pricing scheme III: $1.5 million profit</u>

  • Price $250,000
  • Contribution margin = $250,000 - $50,000 = $200,000
  • 15 units sold x $200,000 = $3 million
  • profit = $3 million - $1.5M = $1.5 million

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A merchant purchased a jacket for $60 and then determined a selling price that equaled the purchase price of the jacket plus a m
JulsSmile [24]

Answer:

Gross profit will be $4

Explanation:

We have given that merchant purchased a jacket for $60

So purchased price = $60

Let the markup price is x

Now according to question selling price = x+60

Now it is given that marked up price is 25 % of the selling price

So x=(x+60)\times \frac{25}{100}

X = 20

So selling price = 60+20 =80

Now there is discount of 20%

So price after discount = 80-\frac{80\times 20}{100}=$64

So gross profit = $64 -$60 = 4

7 0
3 years ago
Explain why technological advance and environmental problems are sometimes connected
Jobisdone [24]
<span>Technological advances and environmental problems are sometimes connected because </span>new production technologies can have a far greater environmental impact than the ones they replace. An example is farm technologies which can cause environmental pollution.
7 0
3 years ago
Fifteen families live in Willow Canyon. Although several water wells have been drilled, none hasproduced water. The residents ta
vladimir1956 [14]

Answer:

Initial Investment, P = $100, 000

Recurring Cost, A=$6200

(a)  Calculate the internal rate of return for infinite life,

A= P(i)

6200=100000(i)

i = 6200/100000  

i =6.2%

(b)  Calculate the internal rate of return for 100 years,

P = A(P/A, i, 100)

100000 = 6200 (P/A, i, 100)

(P/A, i, 100) = 16.129

For i = 6%

(P/A,6%,100) = 16.618

For i = 7%

(P/A ,7%,100) = 14.269

i = [(6 - 7) / (16.618 - 14.269)] (16.129 - 16.618) +6

i = 6.2%

Thus, IRR = 6.2%

(c) Calculate the internal rate of return for 50 years,

P = A(P/A ,i , 50)

100000 = 6200 (P/A, i, 50)

(P/A, i, 50) = 16.129

For i = 6%

(P/A, 6%, 100) = 15.762

For i = 5%

(P/A , 5%, 100) = 18.256

i = [(5 - 6) / (18.256 - 15.762)] (16.129-15.762)  + 6

i = 5.853%

Thus, IRR = 5.853%

(d)  

In all cases internal rate of return is greater than 4%, which is minimum interest rate that one can earn. So they should consider to install the pipeline.

6 0
3 years ago
Sheffield Corp. purchased machinery for $381,150 on January 1, 2018. It is estimated that it will have a useful life of 10 years
aniked [119]

Answer:

Accumulated depreciation balance on 31 December 2019 = $73,326

Explanation:

Total Cost of the machine = $381,150

Salvage value = $18,150

Therefore value to be depreciated = $381,150 - $18,150 = $363,000

Life of asset = 10 years.

Units to be produced = 290,400

Working hours = 25,000

Under the units of output activity method the asset shall be depreciated based on output, but here the output of machinery is 25,000 hours in its life thus, depreciation shall be charged based on number of hours and not on units.

Therefore accumulated depreciation on December 31 2019 shall be based on total hours of 2018 and 2019

= 2,650 + 2,400 = 5,050 hours

Depreciation = \frac{363,000}{25,000} \times 5,050 = $73,326

Accumulated depreciation balance on 31 December 2019 = $73,326

5 0
3 years ago
A bank has $500 in checking deposits. Interest and noninterest costs on these accounts are 6%. This bank has $250 in savings and
defon

Answer:

<em>13.29%</em>

<em>Explanation:</em>

Answer :- Amount in checking deposit= $500 million-15%= $425 million

Amount in saving and time deposit= $250 million-4%= $240 million

Amount in equity capital = $ 250 million

banks before tax cost of funds=

checking deposit = $425*6/100= $25.5 million

Saving and time deposit= $ 240*14/100= $ 33.6 million

equity capital=$250 *25/100= $ 62.5 million

Weighted average cost of funds (WACC)= $25.5+33.6+62.5/($425+240+250)

=$121.6/915= 0.1329 or 13.29%

5 0
3 years ago
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