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Task 3 (10 marks) (a) If you are the awner of a small transport company and wish to purchase a truck. The seller offers you
Task 3 (10 marks) (a) If you are the awner of a small transport company and wish to purchase a truck. The seller offers you three options: 1. pay $200,000 now and nothing more 2. pay $100,000 now and $120,000 in five years 3. pay nothing now and $240,000 in five years If the interest rate is 5%, which aption will you choose? What is the fixed cost per month of keeping the truck for five years if you spread it out evenly over the five years? If your variable cost per trip is $B, what price should you charge if it wishes to have mark up of 25% ? What is the break-even quantity? (b) Refer to the following costs for a competitive firm selling a product for $200 per unit and has a fixed cost of $600. What is the marginal cost of the 7th unit? How many units should the firm produce to maximise profits? What is the total cost of production at profit maximising output? What is the total revenue at the profit maximising output? What is the profit
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