Q1.

(a) 250
(1)Return full gas tank
Cost = tank 250 x 8.5 x 0.97 100
Cost = $20.6125
(2) Return without filling. Cost 250 X 8.5 x 1.15 it. Cost $24.4375
(3) Accept fixed price of Cost = $40
Cost in case of return full gas tank is lowest So it would return it wilth Ja full gos tank.

(b) 400 Km
(1) Return with full -gas_ Cost tank 400 x 8.5 x 0.97 100 Cost $32.98
(2) Return Cost without filling 400 X8-5 x 1.15 100 Cost = $39.
(3) Accept fixed price of $40 Cost = $40 " Cost in case of return with full gas tank" is return full gas
lowest . This is wall

(c) 800 km
(a)Return with full gos tank Cost = 800 x8.5\100 x 0.9
Cost = $66.96
(2) Return Cost = without filling
Cost= 800 X 8.5 \100 x 1.15 Cost= $78.2
(3) Accept fixed price of $40
Cost =$40
• Cost in case of accepting fixed price is lowest So I wall choose to accept fixed price.

(d) Additional cost of stopping $30 x 15\60=7.5$

(1) Cost of returning full tank when travel

250 km= 20.6125$ +7.5
=28.1125$

(2) Cost is still lower than all other alternatives So answer will not change in part (1)

cost of returning full tank when travel

400 Km= 32.98$ + 7.5
= 40.48$

I'm part (C) were already choosing to return the full tank . So answer will not change in bart (c)
Q2.

Area A :

Gravel pit capacity = 16 million cubic meters

Board restriction to fill inert material is to lower bottom area fill = 2 million cubic
meters

Cost of inert material placed in Area A = $9.40/m 3

Preparation cost = 2 x 106 x $9.40 = $18,800,000

Area B:

Gravel pit capacity = 14 million cubic meters

Difference in the haul

0.20 x 0 = 0

0.60 x 8.04 = 4.82

0.20 x -3.21 = -0.64

Total haul = 4.18 (which is an average additional haul)

Cost of additional haul = (4.18/25) * $140

= 23.40$

Since Truck capacity is 20 m3, additional cost per cubic yard = 23.49/20 m3 = $1.17
per m3

So, for 14 million m3, Total cost = 14 x 106 x $1.17 = $16,380,000

Area B has lower cost than Area A. Hence Area B is preferred.

Q3.

Total cost (TC) ($) = Fixed cost + Variable (labor) cost

= 2,000,000 + 9,109,000 = 11,109,000

Unit manufacturing cost = TC / Units sold = $11,101,000 / 23,000 = $482.65

(b) When second shift is added,

TC ($) = 2,400,000 + (9,109,000 x 1.25) = 2,400,000 + 11,376,250 = 13,785,250

Unit manufacturing cost = TC / Units sold = $13,785,250 / 46,000 = $299.96

So, unit manufacturing cost will decrease

Q4.

(a) There are two points (0, 0) and (1000, 20) lying on the total revenue curve

The total revenue equation is y = (20 - 0)x/(1000 - 0), that is y = 0.02x

(b) There are two points (0, 10) and (1000, 20) lying on the total cost curve

The total cost equation is y - 10 = (20 - 10)(x - 0)/(1000 - 0), that is y = 0.01x + 10

(c) The breakeven level of x is x = 1000

(d) Since 1500 > 1000, if we sell 1500 units, we will have a profit

(e) Marginal cost is MC = 0.01 (* 10^4) dollars

Average cost is AC = 0.01 + 10/x = 0.01 + 10/1500 = 0.017 (* 10^4) dollars

Q6.
1. Now: PV = - Rs 100,000
2. Year 1: PV = Rs 25,000 / 1.08 = Rs 23,148.15
3. Year 2: PV = Rs 45,000 / 1.082 = Rs 38,580.25 Year 3: PV = Rs 65,000 / 1.083
= Rs 51,599.10
4. Adding those up gets:
5. NPV = - Rs 100,000 + Rs 23,148.15+ Rs 38,580.25+ Rs 51,599.10= Rs
13,327.49
Q7.