Answer:
$32,000
Explanation:
Net advantage = Annual operating cost
Net advantage = [(Old machine - New machine)*10 life] - New machine cost + Old machine cost
Net advantage = [($320000 - $240000)*10] - $800000 + $32000
Net advantage = [($80000)*10 - $768,000
Net advantage = $800,000 - $768,000
Net advantage = $32,000
So, the net advantage of replacing the old machine is $32,000
Answer:
a.) The proportional up movement , u, for the currency can be calculated using the following formula:
u = eStd Dev * Square root of t
u = e0.06*square root of 0.25
u = 1.0305
b.) Probability of up movement, p , = (a - d) / (u - d)
where a = ert where r = 0.025, t = 0.25
a = e0.025*0.25 = 1.0063
d = 1 / u = 1 / 1.3050 = 0.7663
p = (1.0063-0.7663) / (1.3050-0.7663)
p = 0.46
1-p = 1-0.46 = 0.54
c) Price of an American Call Option on the currency : we use binomial tree for that , as follows: The amounts below line indicate the option price and figures above line indicate the underlying asset price which is 0.55555
75 it depends on the persons background with education .
4,000,000 units should be sold a company
<u>Explanation:</u>
<u>Calculating the sales in units:</u>
It has been given that the toal market demand is $20 million, average quantity purchased by buyer per year is 2 units, price average is $50, and the desired share of the market is 10%.
Where:
Q = Total market demand,
N = number of buyers in the market, q = average quantity purchased by the buyer per year,
P = price of average unit
= $2,000,000,000
Market share = 
= 4,000,000 units
Hence, the company should sell 4 million units to achieve 10 percent market share.
