When each person specializes in producing the good in which he or she has a comparative advantage, total production in the econo
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Answer:
The question is not complete, below is the complete question:
Suppose that you open a mutual fund account with a deposit of 500 dollars. 5 months later, the fund balance is 600 dollars, and you withdraw 216 dollars. A year after the account was opened, your balance is X dollars. If the dollar weighted and time weighted rates of return were the same, what is the rate of return? (Assume simple interest for the dollar weighted calculation.) Answer should be a percent!!!
Answer:
The rate of return is 48% on deposited fund.
Explanation:
The rate of return on investment is the percentage increase on an amount invested for a particular period of time, and to calculate this, we will use the simple interest formula:
I = P × R × T
Where:
P = principal = $500
R = rate in decimal ( %rate/100)
T = time = 5 months = 5/12 years
I = interest = Principal - final balance = 600 - 500 = $100
∴ 100 = 500 × R/100 × 5/12
100 =
120,000 = 2500R
∴ R = 120,000 ÷ 2500 = 48%
Therefore rate of return (R) = 48%
For a clearer understanding of the concept of interests, let us calculate for the balance after one year (X) as shown below:
I = P×R×T
T = 1 because, X is the balance after one year.
I = 500 × 48/100 × 1
I = $240
therefore the final amount after one year = interest + principal
= 240 + 500 = 740
but we were told that $216 was withdrawn at 5 months, hence the balance after one year = 740 - 216 = $524
Answer:
a) $3
b) $2
c) 1449
Explanation:
Given:
The cost for a carton of milk = $3
Selling price for a carton of milk = $5
Salvage value = $0 [since When the milk expires, it is thrown out ]3
Mean of historical monthly demand = 1,500
Standard deviation = 200
Now,
a) cost of overstocking = Cost for a carton of milk - Salvage value
= $3 - $0
= $3
cost of under-stocking = Selling price - cost for a carton of milk
= $5 - $3
= $2
b) critical ratio =
or
critical ratio =
or
critical ratio = 0.4
c) optimal quantity of milk cartons = Mean + ( z × standard deviation )
here, z is the z-score for the critical ration of 0.4
we know
z-score(0.4) = -0.253
thus,
optimal quantity of milk cartons = 1,500 + ( -0.253 × 200 )
= 1500 - 50.6
= 1449.4 ≈ 1449 units