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HW Unit 1: Introduction (60 points)
1. “Give Fees an Inch and They’ll Take a Mile” from the Wall Street Journal, 3/14/2014 - corresponds to Ex 1 in Unit 1
In a recent bulletin the Securities & Exchange Commission (S.E.C.) noted that, while investment fees may seem inconsequential at first, “over time they can have a very profound impact on investment returns.” To illustrate, the S. E. C. considered the impact of fees in a simple situation: a 1% annual fee on a $100,000 portfolio that grew 4% annually over 20 years. The S. E. C. claimed that this investment would grow to about $180,000 over 20 years, whereas without fees it would have grown to about $220,000. Use Excel to answer the following:
(a) What exactly does the investment grow …show more content…

(another 5 points)

3. The Break Even Company (20 points)
The Break Even Company hopes to break even in the first year producing their new product. The price of its product is $10 per pound; its variable cost is $5 per pound; and its fixed cost is $50 per day.
(a) Give the algebraic expression for profit. Be sure to define your variables. (5 points)
(b) Using your model in part (a), how many pounds per day does it need to sell to break even? (5 points)
(c) Construct an Excel model for this problem and use it to find the profit for 20 pounds per day. (5 points)
(d) Using your Excel model, use GOAL SEEK to find how many pounds per day that the company needs to sell to break even? (5 points)
4. One Product Company - corresponds to Ex 3 in Unit 1 (15 points)
Suppose that the quantity sold of a product at the One Product Company depends on the price that it charges for the product. Specifically, as its price gets higher its sales decreases according to the following Sales Response Curve:
# units sold = 115 – price/40 (This is valid for prices between 0 and $4600.) The variable cost for making the product is $1,000 per unit and its fixed cost is $10,000.
(a) Give the algebraic expression for profit. Be sure to define your variables. (5 points)
(b) Using your algebraic model in part (a), what profit will the Company make if it sells at a price of $2000? (for practice only – don’t hand in)
(c) Using your algebraic model, what price should the company

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