Question

Q1. Dr.Aleda Roth, a prolific author, is considering starting her own publishing company. She will call it DSI Publishing, Inc. DSI’s estimated costs are as follows: Fixed cost per year= $250,000; variable cost per book = $20; selling price per book = $30. In addition to those costs, Dr.Roth wants to pay herself a salary of $50,000 per year.

1. 1) How many books must DSI sell to break even? A. 15,000

   B. 25,000
   C. 30,000
   D. 125,000 Answer:_________

2) What is DSI’s BEP in dollars? A. $450,000

B. $750,000
C. $900,000
D. $3750,000 Answer:_________

3) Construct a graph with the revenue, total cost, and profit functions. Label the BEP.

4) How many books must DSI sell to achieve a profit of 40% of total cost? A. 210,000

B. 42,000
C. 15,000
D. 30,000 Answer:________

Q2. Because hula hoops have come back in style, Hoops Unlimited wants to enter the market quickly. It has three choices: (a) refurbish the old equipment at a cost of $600, (b) make major modifications at the cost of $1100, or (c) purchase new equipment at a net cost of $1800. If the firm chooses to refurbish the equipment, materials and labour would be $1.10 per hoop. If it chooses to make modifications, materials and labour would be $0.70 per hoop. If it buys new equipment, variable costs are estimated to be $0.40 per hoop.

5) Construct a graph with the total cost functions of those three choices.

6) Which alternative should Hoops Unlimited choose if it thinks it could sell more than 3000 hula hoops?

1. Option #1: Refurbish the old equipment at a cost of $600

2. Option #2: Make major modifications at the cost of $1100

3. Option #3: Purchase new equipment at a net cost of $1800

4. Option #1 or 2. Answer: __________

Q3. A department has ordered 8 new Dell computers at a cost of $2309 each. The order will not be delivered for 6 months.

7) What amount could the department deposit in a special 6- month CD paying 4.79% compounded monthly to have enough to pay for the machines at time of delivery? A. 18,035.68
B. 2,254.46

C. 18,039.94

Q4. A 1997 article in The New York Times discussed how long it would take for Bill Gates, the world’s second richest person at the time (behind the Sultan of Brunei), to become the world’s first trillionaire. His birthday is October 28, 1955, and on July 16, 1997, he was worth $42 billion. (Note: A trillion dollars is 1000 billion dollars.)

8) Assume that Bill Gates’s fortune grows at an annual rate of 58%, the historical growth rate through 1997 of Microsoft stock, which made up most of his wealth in 1997. Find the age at which he becomes a trillionaire. (Hint: Use the formula for interest compounded annually.)

8. 9) What rate of growth would be necessary for Bill Gates to become a trillionaire by the time on July 16, 2022, after he as turned 66?
   A. 0.135194
   B. 0.048452

   C. 0.078400
   D. 0.125826 Answer:________

A. 6.930287
B. 3.277231
C. 4.251433
D. 12.11524 Answer: ________

D. 2,254.99 Answer:__________

Answer 1