1. A. Accounting Profit:
Solution
= 8,000(25) – 30,000
= 200,000 – 30,000
Answer: P170,000
B. Economic Profit:
Solution
= 8,000 (25) – 30,000 – 80,000
= 200,000 – 110,000
Answer: P90,000
2. A. Present Value of the cost savings if the machine
Solution:
50,000 60,000 75,000 90,000 90,000
+
+
+
+
1.08
1.082
1.083
1.084
1.085
Answer: P284,679
B. NPV = 284,679 – 300,000
= (P15,321)
Answer: Reject the proposal because the net present value is less than the cost of the machine.
3. A. Value of the TV station
Solution
(1 + 0.1)
(200𝑀)
(0.1 − 0.5)
Answer: P4,400M
4. A. Level of Q that maximizes net benefits
Solution:
R(Q) = 3000Q – 8𝑄 2
C(Q) = 100 + 2𝑄 2
MB(Q) = 3000 – 16Q
MC(Q) = 4Q
3000 – 16Q = 4Q
3000 = 20Q
Answer: Q = 150
B. Marginal Benefit
Solution
MB(Q) = 3000 – 16(150)
Answer: MB(Q) = P600
C. Marginal Cost
Solution
MC(Q) = 4(150)
Answer: MC(Q) = P600
D. Maximum Benefits
Solution
MNB = 3000(150) – 8(150)2 – 100 – 2(150)2
Answer: MNB = P224,900
E. Another word for net benefits
Answer: Profit