Question

[10 marks] The price-demand relationship is as follows (where P is the price per unit in Dollars and D is the monthly demand): p=\$ 40+\frac{2,500}{D}-\frac{31,250}{D^{2}} for D>1 The fixed costs

are $1,000/month and the variable cost is $50/unit. The optimal number of units that should be produced and sold each month to maximize the profit and the breakeven points are: i. 56, (25 and 125)ii. 56, (25 and 150)iii. 65, (50 and 125)iv. 65, (50 and 150) [7.5 marks] John is about to borrow $1,200 from his uncle. He has an option to repay the loan at the end of year 5 with 12.75% simple interest per year or with 9% interest per year,compounded annually. What is the difference of the total interest paid over 5 years between the two options? i. $118.65ii. $250.30iii. $347.81iv. $550.05 c. [7.5 marks] A remotely situated fuel cell has an installed cost of $2,000 and will reduce existing surveillance expenses by $350 per year for six years. The border security agency's MARR is 10%. What is the approximate minimum salvage value after six years that makes the fuel cell worth purchasing? i. $175.45ii. $450.75iii. $843 .00iv. $925.00 d. [7.5 marks] What is the CW, when i= 12% per year, of $2000 starting at year 1 repeating every three years and continuing forever; and $5,000 in year 10, repeating every 4 years thereafter, and continuing forever? i. $7,725.345ii. $10,611.102iii. $11,329.500iv. $13,475.116 i. 12%ii. 15%iii. 20%iv. 25%

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