Pompeii's Pizza has a delivery car that it uses for pizza deliveries. The transmission needs to be replaced and there are several other repairs that need to be done. The car is the car or replace it with a new car. Pompeii's has put together the following budgetary items: Present Car New Car Purchase cost new $32,000 Transmission and other repairs $8,000 Annual cash operating cost 13,000 11,000 Fair market value now 5,000 Fair market value in five years 500 5,000 If Pompei's replaces the transmission of the pizza delivery vehicle, they expect to be able to use the vehicle for another 5 years. If they sell the old vehicle and purchase a ne in for another new pizza delivery vehicle. If they trade for the new delivery vehicle, their operating expenses will decrease because the new vehicle is more gas efficient and ti using a discount rate of 15%. (Click here to see present value and future value tables) A. Calculate the NPV on both Cars. Round your present value factor to three decimal places and the rest to nearest dollar. Present Car New Car

Price (dollars per unit) $110 $100- $90- $80- $70- $60- $50- $40- $30- $20- $10- en. Profit-maximization of your firm MC ATC MR Q Q S

1. Using LCM Method (Unequal Lives) solve the problem: Two location alternatives A and B, where one can lease either of the two. Which option is preferable? Present Cost (PC) Annual Lease Cost (AL) Deposit Return (DR) Lease Term (n) Interest Rate (i) LOCATION A $ 15,000 $3,500 $1,000 6 years 15% LOCATION B $18,000 $3,100 $2,000 9 years 15%

Task Description Precedence Time (days) cost($) crash time (days) Per day revised cost Preparation of drawings and permits - 14 72,500  10 10,000 Calling and letting of tenders - 68    166,750 66 23,000 Site preparation and excavation A 6 116,000  4 16000 Pouring the foundation A 24 250,000  24 - Framing C,D 40 145,000  30 20000 Plumbing and electrical work D 18 159,500  12 22000 Interior finished F 16 108,750  12 15000 Exterior finishes E,G 22 175,000  22 - Installing and commissioning new machines B,E 34 101,500  30 14000 Finishing touches and final work through H,I 32 64,000  32 - Calculate the minimum time and associate cost in which the project could be completed

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The figure below shows graphs of the fixed cost function, total cost function and the total revenue function for a certain commodity. 20 8000 7000 6000 5000 4000 Dollars ($) 3000 2000 1000 -10 -1000+ 10 20 30 40 Units (a) What is the break-even point? (x,y) e.g. (295,7650) (b) What are the fixed costs? $ TR Percent of capacity= 50 60 TC If the selling price per unit is $50, and the variable cost per unit is $40: FC 70 80 90 100 enter the answer in the form (c) If the maximum production capacity of the commodity is 110, express the break-even units as a percent of capacity? % (round to two decimal places if necessary)

$ per unit 100.00- 90.00- 80.00 70.00- -00 09 50.00- 40.00- 30.00- 20.00- 10.00- 0 10 20 30 MR 40 50 Quantity OK 09 70 MC=ATC D 09 90 100

Number of wells Total water output (in 1000s of liters/day TR TC AVR Profit 0 0 0 0 0 0 10 100 10000 600 1000 9400 20 200 20000 1200 1000 18800 30 280 28000 1800 933.3 26200 40 340 34000 2400 850 31600 50 380 38000 3000 760 35000 60 400 40000 3600 666.7 36400 70 400 40000 4200 571.4 35800 80 380 38000 4800 475 33200 90 340 34000 5400 377.8 28600 Use your graph and the data in your table to identify the economically efficient numberof wells (Hint: What is the profit maximizing number of wells?)

K L Q MPL APL (Q/L) VML (MPL*P) FC VC (L*150) TC 5 0 0 0 0         5 1 50 50 50 50 25 150 175 5 2 125 75 62.5 150 25 300 325 5 3 225 100 75 200 25 450 475 5 4 375 150 93.7 300 25 600 625 5 5 450 75 90 150 25 750 775 5 6 450 0 75 0 25 900 925 5 7 400 -50 57.14 -100 25 1050 1075 5 8 425 -75 53.12 -150 25 1200 1225 5 9 450 -25 50 -50 25 1350 1375 5 10 500 -50 50 -100 25 1500 1525 5 11 525 25 47.7 50 25 1650 1675   Define the Firm’s Variable Costs. Next, what is the VC in the Table above?

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