Question 1. Calculate the return on investment for the following five projects, total cost includes initial investment. Which projects should be invested in if the organization has a spending constraint of $7,000,000 and its cost of capital is 6%?
Total Total
Project Investment Revenue Cost ROI
A $3,000,000 $5,500,000 $5,000,000 ______
B $2,400,000 $4,000,000 $3,800,000 ______
C $1,350,000 $2,400,000 $2,300,000 ______
D $1,500,000 $3,200,000 $3,000,000 ______
E $2,000,000 $3,800,000 $3,700,000 ______
Question 2. Given the total output and price of $500 total output (in body table), the quantity of each input (in rows), the price of inputs (in columns), and a budget of $1,200,000, calculate marginal product and marginal revenue roduct for each input. Which resources in what quantities should be employed to maximize the value of the firm?
Low Skill High Skill Low Capacity High Capacity Building
Labor Labor Supplies Equipment Equipment & Land
Input $30,000 $50,000 $20,000 $100,000 $400,000 $500,000
1 64 120 50 250 1,000 1,350
2 130 220 98 475 - -
3 200 300 144 675 - -
4 266 360 186 850 - -
5 330 400 228 1,000 - -
3. Calculate average total cost, what is the most efficient (minimum ATC) output quantity given the costs belwo? What should be the cost to produce 900 units?
Total Total
Variable Step Fixed
Output Cost Cost Cost
0 $ 0 $100,000 $500,000
150 150,000 100,000 500,000
300 350,000 200,000 500,000
450 600,000 200,000 500,000
600 900,000 300,000 500,000
750 1,400,000 300,000 500,000