Question
1. A firm sale a product whose data in two periods is as follows. Assume that the price, unit variable cost and fixed costs are
1. A firm sale a product whose data in two periods is as follows. Assume that the price, unit variable cost and fixed costs are the same in the two periods. Required i. Determine the fixed costs [3 Marks] ii. ii. Determine the breakeven sales revenue [2 Marks] 2. Find the future value of an ordinary annuity of Sh. 35,000 at a compounding rate of 6 % per annum after 9 years. [3 Marks] 3. A machine costs a company Sh. 100,000 and its effective life is estimated to be 20 years. If the scrap is expected to realize Sh. 50,000 only. Find the sum to be invested every year at 5% per annum compound interest for 20 years, to replace the machine which is expected to cost them 25% over its present cost. Assume that the sale of the scrap would be utilized for meeting the cost of the machine. [4 Marks] 4. Five years ago, Adib had saved kshs. 10,000 in an account that pays 6% interest compounded monthly. Now he intends to add another Ksh. into the account. Determine the value of if the account will amount to Kshs. 30000 in 10 years' time. 3 Marks
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