1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Million pesos to build and with estimated average annual predicted sales of 40.12 million pesos and yearly total operational cost of 15.07 million pesos. Average annual inflation rate: 5 %, T-bill rate: 4.0%. Answer these questions: a) Would you pursue the said business? b) Why?
1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Million pesos to build and with estimated average annual predicted sales of 40.12 million pesos and yearly total operational cost of 15.07 million pesos. Average annual inflation rate: 5 %, T-bill rate: 4.0%. Answer these questions: a) Would you pursue the said business? b) Why?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Exercise
1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Million
pesos to build and with estimated average annual predicted sales of 40.12 million pesos and yearly total operational cost of 15.07 million pesos. Average
annual inflation rate: 5 %, T-bill rate: 4.0%.
Answer these questions:
a) Would you pursue the said business?
b) Why?
Note: Please show all calculations.
2. Planned Business 2: Upon initial collection of reliable data, another planned business, a chain of ten (10) motorcycle repair shops in NCR is predicted to last
for 20 years and would be worth 240 Million pesos to build and with estimated an average annual predicted gross revenues of about 50.3 million pesos and
yearly total operational cost of 19.70 million pesos. Average annual inflation rate: 4.2 %, T-bill rate: 3.0%.
Answer these questions:
a) Would you pursue the said business?
b) Why?
Note: Please show all calculations.
3. Assuming, you only have enough resources for one business, which of the said businesses would you establish? Why?
Please see next item on page 2.
SHORT RUN PRODUCTION
Short run Production
In the short run, firms can for a time increase its output by adding units of labor/workers to its fixed plant. But by how much will output rise when it adds the labor and at what input level
(VI) is profit at a maximum or loss at minimum and what would be the optimal output level? Let's find out by completing the table of data collected below.
Php
10,000.00
Php 600.00
Variable
TP (Q) (In
thousands
TR (Total
revenue) =
Qx Price
Profit (TR
-TC) at Price=
Fixed
Price =
Input (L) (in
thousands)
Input (K)
MP
AP
TFC
TVC
TC
MC
AFC
AVC
ATC Php 40.00
PhP 40.00
1.59
21.28
2.29
45.2
3.19
93.13
3.69
101.11
1
3.99
106.8
1
4.39
107.71
4.79
103.47
TR =Q x Price
Profit = TR - TC
Instructions/Question:
a. What output level should be produced at a price of Php 40.00 per unit ?
b. What should be the number of laborers used'employed if the price is Php 40.00 to maximize profit/minimize loss?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education