Answer:
3 units
Explanation:
Each unit sells at $3. We can calculate this by dividing $90 by 30 units = $3 per unit.
Since the total revenue with the sixth worker is $126, the total output = $126 / $3 = 42 units
Marginal product of the sixth worker = total output with six workers - total output with five workers = 42 - 39 = 3
Marginal product refers to the change in total output resulting from an increase in the number of inputs (workers in this case).
Answer: $80 million per year for 25 years
Explanation:
The option you should choose is one that will guarantee you the highest present value.
This means that you need to discount the annual payment of $80 million per year for 25 years to find the present value. As you did not include a rate, we shall assume a rate of 8% for reference purposes.
The annual payment is an annuity so the present value can be calculated by:
Present value of annuity = Annuity payment * Present value interest factor, rate, no. of years
= 80,000,000 * Present value interest factor, 8%, 25 years
= 80,000,000 * 10.6748
= $853,984,000
<em>The present value of the annual payment is more than the present value of the $850 million received today so the Annual payment should be taken. </em>
