Homework answers / question archive /
1) A firm wishes to provide a sinking fund in order to replace equipment that has a life span of 10 years

#### 1) A firm wishes to provide a sinking fund in order to replace equipment that has a life span of 10 years

######
Accounting

Share With

1) A firm wishes to provide a sinking fund in order to replace equipment that has a life span of 10 years. If the cost of the equipment will be £1m in 10 years' time, what annual amount does it need to put aside in an account paying 7% p.a.?

Reminder: Depending on the precision you use for your computation, there could be a small difference in the last digit or two Note 1m = 1 million

Select one:

a. 50,217

b. 63, 357

C. 70,025

d. 72,378

e. 59,812

2) You decide to take out a 20-year mortgage for £65 000 at an annual interest rate of 7.5%. What would be the annual repayment?

Select one

a. 7271

b. 83225

C. 5806

d. 6854

e. 6376

3. A manufacturer produces two products, P and Q, which when sold earn contributions of £600 and £400 per unit respectively. The manufacture of each product requires time on a lathe and a polishing machine. Each unit of P requires 2 hours on the lathe and 1 hour on the polishing machine, while Q requires 1 hour on each machine. Each day, 10 hours are available on the lathe and 7 hours on the polishing machine. Determine the number of units of P and that should be produced per day to maximise contribution.

1. Let C be the total contribution. Which one is the correct line for the objective function?

Select one

a. Max. C = 2P+Q

b. Min. C = 2P+Q o

C. Max C = 600P + 4000

d. Min. C = 600P + 4000

e. Max. C = P +Q

2. Choose the line for the constraint regarding the lathe

Select one

a. P+Q S 10

b. 2P+Q57

c 2P+Qs 10

d. P+20 7

e. P+2Q 10