^[16] The markup on an item is $50. If the margin was 40%, what was the cost?

 

^[17] The price of an item is reduced for quick sale from $950 to $760. Compute the rate of markdown.

 

^[18] You are taking a holiday in Britain. You are taking 850 US dollars with you. How many British pounds can you buy with this money?

Rates:

• 1 USD = 1.38358 CAD
• 1 British pound(£) = $2.21824 CAD

 

^[19] A manufacturer of major appliances provides the following information about the operations of the refrigeration division:

• Fixed costs per period are $26,880
• Variable costs per unit are $360
• Selling price per unit is $640, and
• Capacity is 150 units.

Compute the break-even point:

(a) in units.

(b) as a percent of capacity.

(c) in dollars.

 

^[20] Find the cost-equation for shipping one ton of a product if we know that it costs $500 to ship it a distance of1,000 kilometres and $750 to ship it 2,000 kilometres. Assume that the relationship between cost of shipping and distance shipped is linear. What would it cost us to ship one ton of the product 1,500 kilometres? Check your answer by putting the two points back into the equation.

 

^[21] The High Tech computer shop assembles and sells computers. After reviewing their accounting data, the following was determined.

• Fixed costs: $100,000 per year
• Variable costs $1,450 per computer
• Selling price per computer: $2,450
• Capacity is 1,000 computers per year

(a) How many computers must it sell per year to break even?

(b) What is the total yearly sales (revenue) required to break even?

(c) Determine the computer shop’s yearly profit if it sells 250 computers per year.

(d) How many computers would need to be sold to make a $25,000 profit?

(e) If the variable costs increase to $1,600 per computer, what should you increase the selling price to if you want to earn a profit of $25,000 from the sale of 125 computers?

 

^[22] A small production company has 3 choices when renting a mobile crane for short periods:

• Choice A: It can pay $200 per hour used.
• Choice B: Pay an annual fee of $5,000 and pay only $100 per hour used.
• Choice C: Pay an annual fee of $12,000 and pay only $50 per hour used.

(a) Write the cost functions for each alternative.

(b) Calculate the points of indifference (where the costs are equal).

• • 1. 1. between alternative A and B
       2. between alternative B and C

(c) Determine the range of hourly usage where the three alternatives would be preferred.

 

^[23] You take out a loan for $10,000. The most you can afford to pay is $425 per month at the end of every month. If the interest rate on the loan is 7% compounded monthly, how many months will it take you to pay off the loan? (No decimal answers!)

 

^[24] Kate made $600 monthly deposits at the end of every month for 5 years into an RRSP, paying 8% compounded monthly. Immediately after the end of the 5th year, the rate is reduced to 6% compounded quarterly.

(a) If neither deposits nor withdrawals were made during the next 10 years, how much would Kate have in her account at the end of 15 years?

(b) How much interest did Kate earn over the entire 15 year period of time?

 

^[25] You have just turned 30 years old. Starting today, you will make monthly contributions of $600 into a RRSP for 25 years. One month after your 55th birthday, you will begin taking monthly withdrawals, with your last withdrawal on your 70th birthday.

(a) Find the size of these withdrawals if the interest rate is 6.5% compounded monthly.

(b) How much interest did you earn over the entire 45 years?

 

^[26] Barney wants to start saving for his retirement. Starting today, he will make monthly deposits to his RRSP for 20 years. One month after his last deposit, he wants to withdraw $4,000 per month for 10 years. Assume the invested funds earn 6% compounded monthly for the entire time.

(a) How much must Barney deposit into his RRSP per month to achieve his goal?

(b) How much interest will Barney earn over the 30 years?

 

^[27] If you agree to make a payment of $1,500 in 3 months at 6% simple interest, how much money are you borrowing today?

 

^[28] You borrow $6,000 on November 15, 2021, at 8% simple interest. How much do you owe the bank when you pay off the debt on March 15, 2022? What is the cost of financing?

 

^[29] You borrowed $3,000 from the bank some time ago at 6% simple interest. You paid off the loan today with one payment of $3,360. How many months ago did you borrow the $3,000?

 

^[30] A debt of $6,000 was due 6 months ago, and a debt of $14,000 is due 5 months from today. Instead, the borrower agrees to make 2 equal payments, to be made 3 months and 8 months from today, with simple interest allowed at 12%. What is the size of the payments? Use 5 months as the focal date.

 

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