You and one of your classmates are considering setting up a prescription delivery servicefor local residents in Mount Pearl. In order to start the business you will need to purchasea car for $6000, which you expect you will be able to sell for $3000 at the end of every twoyears (you'll have to purchase a new equivalent car at that time). Insurance costs are $600for each six months of operation, starting immediately, and advertising costs (flyers,newspaper ads, etc.) are estimated to be $100 per month. The big question is how manycustomers you will have, but you are figuring on setting a fee of $2 per delivery, which willbe payable by your clients at the end of each month. Assuming a stable interest rate of8% per year, compounded monthly, what is the break-even number of deliveries permonth? (NOTE: All calculations should be performed using 4 significant figures.)Solution:Let D = the number of deliveries per month; % monthly interest is i = 8%/12 = 0.6667%{interest factors for 0.6667% are attached}Using the Capital Recovery Formula for the vehicle cost, set up an equation for theEquivalent Monthly Worth (EMW) of the project as:EMW = (Monthly Revenues) - (Monthly Costs)=($2. D)-(vehicle cost+ advertising cost + insurance cost)= ($2.D)-([(P-S)(A/P, I, N) + Si] + ad. cost + insurance cost)where the vehicle cost is: (P-S)(A/P, i, N) + Si= (6000-3000)(A/P, 0.6667%, 24) + 3000(0.006667)= (3000)(0.04523) +20= 135.69 + 20 = 155.69and the Monthly Costs are: (vehicle cost + ad. cost + insurance cost)= 155.69 + 100+600(A/P, 0.6667%, 6)= 255.69 + 600(0.17058) = 255.69 + 102.35 = 358.04Now the EMW = ($2. D) - (vehicle cost + ad. cost + insurance cost) = ($2D) - ($358)Next, we set the EMW equal to 0 and solve for D: 0 = 2D - 3582D = 358The break-even number of deliveries per month is D = 179.or: D= 358/2 = 179NOTE: The Maple TA solution shows a table of values and suggests plotting a curve or using linearinterpolation to come up with the solution to the EMW equation formed. However, we cancalculate the factors for (A/P, 1, 24) and (A/P, i, 6) to make this solution much easier. You and one of your classmates are considering setting up a prescription delivery service for local residents in Mount Pearl. Inorder to start the business you will need to purchase a car for $7,200 which you expect you will be able to sell for $3,600 at theend of every two years (you'll have to purchase a new equivalent car at that time). Insurance costs are $560 for each six monthsof operation, starting immediately, and advertising costs (flyers, newspaper ads, etc.) are estimated to be $110 per month.All calculations are performed using 4 significant figures.The big question is how many customers you will have, but you figuring on setting a fee of $2 per delivery, which will be payableby your clients at the end of each month.Assuming a stable interest rate of 6% per year, compounded monthly what is the break even number of deliveries per month?

Equivalent Annual Cost refers to the cost per year incurred in operating and maintaining a certain…

You and one of your classmates are considering setting up a prescription delivery service for local residents in Mount Pearl. In order to start the business you will need to purchase a car for $7,200 which you expect you will be able to sell for $3,600 at the end of every two years (you'll have to purchase a new equivalent car at that time). Insurance costs are $560 for each six months of operation, starting immediately, and advertising costs (flyers, newspaper ads, etc.) are estimated to be $110 per month. All calculations are performed using 4 significant figures. The big question is how many customers you will have, but you figuring on setting a fee of $2 per delivery, which will be payable by your clients at the end of each month. Assuming a stable interest rate of 6% per year, compounded monthly what is the break even number of deliveries per month?

You and one of your classmates are considering setting up a prescription delivery service for local residents in Mount Pearl. In order to start the business you will need to purchase a car for $7,200 which you expect you will be able to sell for $3,600 at the end of every two years (you'll have to purchase a new equivalent car at that time). Insurance costs are $560 for each six months of operation, starting immediately, and advertising costs (flyers, newspaper ads, etc.) are estimated to be $110 per month. All calculations are performed using 4 significant figures. The big question is how many customers you will have, but you figuring on setting a fee of $2 per delivery, which will be payable by your clients at the end of each month. Assuming a stable interest rate of 6% per year, compounded monthly what is the break even number of deliveries per month?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Solar panels on your house will save you $2,000 per year in electricity expense. The panels will last for 10 years, How would you figure out the most you are willing to pay for the panels? Assume the panels will require no maintenance and that the savings remains at $2,000 per year.
Give typing answer with explanation and conclusion Rachel is purchasing a new camera that costs $2000 . Rachel uses a credit card that has an APR of 16.77% . How much will she pay in total to pay off the purchase if she makes monthly payments of $50 ? Round the number of monthly payments up to the nearest whole number. Round your final answer to the nearest whole number, if necessary.
You are in the market to buy a used car. Your monthly budget allows for a $300 per month car payment and you want to finance for 4 years. The current APR for a used car is 3%. a) Calculate the amount of loan you can afford. b) Complete the table below. Year 0 After 1 month After 2 months After 6 months After 1 year Loan Balance Interest Paid
You opened a savings yesterday by depositing $10,000. You would like to be able to withdraw $2,000 per year for each of the next 4 years of college and still have $3,000 left in the account when you graduate. What interest rate does this account need to earn? (HARD)
Please see attachment and type out the correct answer within 40 to 50 minutes n give proper explanation of each n every option . Will give you thumbs up only for the correct answer.thank you
Every year you pay your neighbor $150 to clean the gutters at your house. You saw an ad on late night TV for a new product--GutterSnipe--which sits in the gutters and prevents leaves getting in. Your interest rate is 8%, compounded daily, and you plan on being in the house another 10 years. You assume that any potential buyer won't be interested/notice that you have installed GutterSnipe on your house. What is the most you would be willing to pay to buy GutterSnipe for your house? $978 $965 $1010 $992
When is it necessary to use factorial design
Not using exel
Josh is required to pay P57,000 in 15 days or P60,000 in 60 days. Find theannual rate of interest
Sam has the option of purchasing a car for $30,000 or leasing it for a $375 payment made at the beginning of each month for 4 years. The interest rate is 2.7% compounded semi-annually, a down payment of $7,500 is required and the residual value is $7,000 payable at the end of the lease. Should Sam lease or buy? What is the economic advantage of the better choice? Correct your answer to 2 decimal places
Directions: Looking at the chart below, calculate the monthly interest rate and monthly interest owed on a $5,000 loan for each of the options below. Monthly Interest (loan amount * monthly rate) Amount Financial Monthly Rate (APR/12) Borrowed APR/APY Institution $1,000 $1,000 $1,000 $1,000 $1,000 Bank Loan 5% Credit Union Loan 3% Credit Card 11% Pay Day Loan 18% Title Pawn Loan 21% Part III: Simple v Compound Interest Directions: Use the given scenario to complete the questions. Simple Interest Scenarios: 1. Abigail is saving $1,000 at 4% interest for 3 years, calculated as simple interest. At the end of the three years, how much interest will she have earned? 2. Elijah is borrowing $10,000 at 3.5% interest for 10 years, calculated as simple interest. At the end of the ten years, how much will he owe? 3. Adeline is saving $5,000 at 2.05% interest for 5 years, calculated as simple interest. At the end of the five years, how much will she have in total? 4. Santiago is borrowing $9,000…
your realized income is $2,943.20/month. how much are your fixed expenses each month? how much could you save per month if you take off 25% of your discretionary monies and put it in a savings account?