1. ABC Taxi has an average fixed cost of $12,000 a year for each car. Each mile driven has variable cost $.30 and collect fares of $.70. How many miles a year does each car have to travel before making profit?

2. a. ABC company is contemplating adding a new line of product, which will require leasing new equipment for a monthly payment of $12,000. Variable costs would be $15.00 per product, and selling price per product is $40. What would be profit or loss if business sell 600 of these products? b. If 800 quantity of products can be sold, and a profit target is $10,000, what price should be charged for each product?

3. On February 28, 2 a bank offered a $10,000 certificate of deposit (CD) for 4 years at 3.50% interest. How much money you will have after 4 years if interest is compounded a. Annually b. Semiannually

4. Find the present value of $10,000 due in the future under each of the following conditions: a. 6% interest rate, semiannual compounding, discounted back 4 years b. 6% interest rate, quarterly compounding, discounted back 4 years

5. Project Y has initial cost of $7,000, and the discount rate for each project is 6%. Expected cash flow is given below for project: Year Project Y 1 2,000 2 2,500 3 3,000 Calculate NPV for this project. Is project Y is profitable? 6. A company has fixed cost of $40,000. Each product has a variable cost of $6 per unit, and company sells each product for $10. Last year a company made 10,000 units of products. What was its average cost for last year? How many needs to make this year in order to reduce Average Cost by 15%.