Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

answer 3,4,5 is needed (1) Pass me the water! An African family that consumes W galions of water every year, more or less the same

answer 3,4,5 is needed
image text in transcribed
(1) Pass me the water! An African family that consumes W galions of water every year, more or less the same amount every day. The price of water is P_W dollars per gallon. The water is in a store located far away, so they go to the store and purchase large amounts of gallons which they store in their house. Every time they drive their truck to the store to purchase water they use up w gallons of gas. The price of gas is Po Let m be the average amount of gallons they have in the house (m stands for mean) and M be the VALUE in dollars of those gallons (1) Imagine that the family decides to go to the store to buy water once a year. How many gallons will they purchase? What is the average amount of gallons they will have stored in the house? How many dollars will those gallons be worth? . (2) What if it decides to go four times a year? What is m in this case? What is M if the family decides to go to the store N times? The family has access to a bond market. All the dollars that it has invested in stored water could be earning the interest rate R. . (3) Is R nominal or real? (4) The total cost of purchasing water is the price times the quantity, plus the cost of going to the store N times, plus the interest lost. Write down the total cost as a function of M. (5) Find the M that minimizes the total cost of purchasing and storing water. (1) Pass me the water! An African family that consumes W galions of water every year, more or less the same amount every day. The price of water is P_W dollars per gallon. The water is in a store located far away, so they go to the store and purchase large amounts of gallons which they store in their house. Every time they drive their truck to the store to purchase water they use up w gallons of gas. The price of gas is Po Let m be the average amount of gallons they have in the house (m stands for mean) and M be the VALUE in dollars of those gallons (1) Imagine that the family decides to go to the store to buy water once a year. How many gallons will they purchase? What is the average amount of gallons they will have stored in the house? How many dollars will those gallons be worth? . (2) What if it decides to go four times a year? What is m in this case? What is M if the family decides to go to the store N times? The family has access to a bond market. All the dollars that it has invested in stored water could be earning the interest rate R. . (3) Is R nominal or real? (4) The total cost of purchasing water is the price times the quantity, plus the cost of going to the store N times, plus the interest lost. Write down the total cost as a function of M. (5) Find the M that minimizes the total cost of purchasing and storing water

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Bankers Handbook On Credit Management

Authors: Indian Institute Of Banking & Finance

1st Edition

9387957853, 978-9387957855

More Books

Students also viewed these Finance questions

Question

Identify conflict triggers in yourself and others

Answered: 1 week ago