Exercise1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Millionpesos to build and with estimated average annual predicted sales of 40.12 million pesos and yearly total operational cost of 15.07 million pesos. Averageannual inflation rate: 5 %, T-bill rate: 4.0%.Answer these questions:a) Would you pursue the said business?b) Why?Note: Please show all calculations.2. Planned Business 2: Upon initial collection of reliable data, another planned business, a chain of ten (10) motorcycle repair shops in NCR is predicted to lastfor 20 years and would be worth 240 Million pesos to build and with estimated an average annual predicted gross revenues of about 50.3 million pesos andyearly total operational cost of 19.70 million pesos. Average annual inflation rate: 4.2 %, T-bill rate: 3.0%.Answer these questions:a) Would you pursue the said business?b) Why?Note: Please show all calculations.3. Assuming, you only have enough resources for one business, which of the said businesses would you establish? Why?Please see next item on page 2.SHORT RUN PRODUCTIONShort run ProductionIn the short run, firms can for a time increase its output by adding units of labor/workers to its fixed plant. But by how much will output rise when it adds the labor and at what input level(VI) is profit at a maximum or loss at minimum and what would be the optimal output level? Let's find out by completing the table of data collected below.Php10,000.00Php 600.00VariableTP (Q) (InthousandsTR (Totalrevenue) =Qx PriceProfit (TR-TC) at Price=FixedPrice =Input (L) (inthousands)Input (K)MPAPTFCTVCTCMCAFCAVCATC Php 40.00PhP 40.001.5921.282.2945.23.1993.133.69101.1113.99106.814.39107.714.79103.47TR =Q x PriceProfit = TR - TCInstructions/Question:a. What output level should be produced at a price of Php 40.00 per unit ?b. What should be the number of laborers used'employed if the price is Php 40.00 to maximize profit/minimize loss?

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1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Million pesos to build and with estimated average annual predicted sales of 40.12 million pesos and yearly total operational cost of 15.07 million pesos. Average annual inflation rate: 5 %, T-bill rate: 4.0%. Answer these questions: a) Would you pursue the said business? b) Why?

1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Million pesos to build and with estimated average annual predicted sales of 40.12 million pesos and yearly total operational cost of 15.07 million pesos. Average annual inflation rate: 5 %, T-bill rate: 4.0%. Answer these questions: a) Would you pursue the said business? b) Why?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 10P

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