{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Lecture6 - Lecture Conclusion of Nonlinear Break-Even...

Info icon This preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture 1/28/08 Conclusion of Nonlinear Break-Even Example Time Value of Money a. Future Value of an investment b. Present Value c. Future Value of a Sequence of Deposits
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Break-Even Points Plots of Total Costs and Revenue -$500.00 $0.00 $500.00 $1,000.00 $1,500.00 $2,000.00 $2,500.00 $3,000.00 $3,500.00 0 20 40 60 80 100 Production Quantity Costs and Revenues Total Profit Total Cost Revenues Break – Even Points
Image of page 2
Minimum Average Cost Marginal and Average Costs and Revenues $20.00 $25.00 $30.00 $35.00 $40.00 20 40 60 80 100 Production Quantiy Costs and Revenues Average Cost Marginal Cost Marginal Revenue Average Cost is a minimum at Q where Marginal cost=Average Cost
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Non-linear Total Cost Example (c) Find weekly production level Q* that minimizes the average cost A(Q) A(Q)=TC(Q)/Q=( 250+20Q+.10Q 2 )/Q A(Q)=250/Q + 20 + .10Q If Q* minimizes A(Q) then A´(Q*)=0 A´(Q*)=-250/(Q*) 2 +.10 =0 (Q*) 2 = 2500 => Q*=50 Marginal and average costs are equal at Q*=50
Image of page 4
Time Value of Money Notation . A= Investment amount at the start of a time period($) p= Periodic interest rate expressed as a decimal FV=Future value of an investment, value at the end of a time period.
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern