Joint costs are irrelevant in decisions regarding what to do with a product after split-off.
The reason for this answer is because they are not relevant for the decision to either sell or to process further.
The costs are the same. It does not matter if you are to sell at a split off or not. We can then regard it as either a past or sunk cost. In summary it means that they have being paid off already.
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- Monthly payment = $753.45
- Interest in first month = $85
First remove the amount paid as down payment:
= 20,000 - 3,000
= $17,000
The amount to be paid monthly is a constant amount which would make it an Annuity.
The $17,000 is the present value of this Annuity so the formula for present value of annuity can be used to find the annuity.
The payment is monthly so the rate and number of periods needs to be converted:
Rate = 6%/12 = 0.5%
Period = 2 x 12 = 24 months
Annuity is:
<em>Present value of Annuity = Annuity x ( 1 - (1 + rate) ^- number of periods) / rate </em>
17,000 = A x ( 1 - ( 1 + 0.5%)⁻²⁴) / 0.5%
17,000 = A x 22.5628662
A = 17,000 / 22.5628662
A = $753.45
The interest in the first month is:
<em>= Interest rate x Amount borrowed </em>
= 0.5% x 17,000
= $85
In conclusion, the monthly payments will be $753.45 and the interest in the first month will be $85.
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<span>Income elasticity is obtained by dividing the percentage change in the quantity demanded of a product with by the percentage change in income. </span>
When income fell by 6 per cent and sales of many fast food restaurants increase by 8 per cent, then the income elasticity for fast food would be:
8/-6 = -1.33
When income fell by 6 percent and sales of soda decreased by 12 percent, then the income elasticity for soda would be
<span>-12/-6=2 </span>
