Math Help Forum - Business Math

Allocation rates calculations

clmish — Thu, 19 Nov 2009 21:32:50 GMT

A smart math person can help here with the need to change units of measure in inputs to an allocation rate calculation (to spread expenses among business units (BU's).
NOW: Calculate a moving 12-mo avg and divide it by sum of all BU's 12-mo avgs.
NEW: Divide input by BU by total input by month, then calculate 12-mo avg of these ratios (for a given month and for 12-mo avgs, they add to 1.0)

With current data (see attachment), the differences in the results are immaterial, but if there is a significant change in the typical values, the methods differ greatly in results. We need to go from a non-financial input to a financial one (from 1000's to millions), so that's why we thought to compute the ratios first, then average them, because it seemed it would not matter what the denominators were, but the averaging process throws in bigger errors than we can accept.

Some other ways to handle this change would be good, but we already considered restarting the averaging at the first period of the changeover (1st month would have 1 month of data, 2nd would average 2 mos., etc.).

Thanks in advance.

Attached Files

Mass Method ver 12.2 TEST 111909.xls (23.0 KB)

Total Cost Funtion

poakceor — Thu, 19 Nov 2009 06:40:24 GMT

I'm newbie in economics and its really not my thing, anyways as the title says i'm having problem with this question plz help!

Total Cost Function

C = x^2/25 + 3x + 200
(i) Expression of average cost & Marginal cost
(ii) Evaluate their value at an output of 25 units.

Step by step solution would be preferred for better understanding (Nod)

Thank you!

Help with simple microeconomic problems

messianic — Thu, 19 Nov 2009 00:02:25 GMT

I'd appreciate any help on these problems. I'm interested in understanding how to solve it rather than the solution.

1.) Charlie�s utility function is xy. The price of x used to be $1, the price of y used to be $2, and his income used to be $40. If the price of x increased to $5 and the price of y stayed constant, the substitution effect on Charlie�s x consumption would reduce his consumption by:

2.) Cindy consumes goods x and y. Her demand for x is given by x(px,m) = .05m - 5.15p where px is price of x and m is income. M is 419, the price of x is 3 and the price of y is 1. If the price of x rises to $4 and if we denote the income effect on her demand for x by DI and the substitution effect for her demand for x by DS, then what are the values for DI and DS/

3.) Ernest's income elasticity of demand for natural gas is 0.4. His price elasticity of demand for natural gas is -0.3 and he spends 10% of his income on natural gas. What is his substitution price elasticity?

Choice of Two Options for Paying off a Loan

serrero — Wed, 18 Nov 2009 15:09:27 GMT

"You can pay off a loan by paying the entire amount of �10,000 now or you can pay �5,000 now and �5,000 at the end of five years. Which is preferable when the nominal continuously compounded interest rate is:

a. 2.5%
b. 5%
c. 7.5%"

I thought this was a cash flow problem when I first looked at it but after going to the library and trying to read some finance books I have confused myself and think I am wrong and am not sure where to start. Is there anyone who can help me with part a (I will be able to do parts b and c if i can do part a!)?

math Review help

Cdawson — Wed, 18 Nov 2009 01:16:38 GMT

A credit card is used to purchase a large T.V for 2599$ including tax, but the debt is not paid off until 3 months after the first due date. the credit card has an annual interest rate of 26% Determine the interest paid.

Brownian motion. Asset pricing. Portfolio dynamics in continuous time

anna30 — Tue, 17 Nov 2009 13:48:25 GMT

Hey!
Could anyone advice on the following problem, please?:

The US company BLUECHIP INC has a stock whose price (in USD) evolves according to

dS(t)/S(t)= μdt + σdz(t);

where μ and σ are constants, and z(t) is a standard Brownian motion.

A broker firm has introduced a new type of derivative, which they call a "quadratic log." At maturity (T), the holder of a quadratic log will receive the amount USD ln[S(T)^2].

Determine the arbitrage free price (in USD) at time t that belongs to[0; T) of a quadratic log, given that the price of the BLUECHIP stock is USD s. Assume a constant instantaneous US interest rate r.

Start "from scratch" by forming a replicating portfolio and show every
step in your calculations.

thanks in advance.

Net Present Value

djcomlab — Mon, 16 Nov 2009 23:34:23 GMT

Acme Co. wants to build a new facility that requires an initial investment of $1 million and will reduce costs by $100,000 forever. The company has a total value of $600,000 and outstanding debt of $400,000. What is the NPV of this project if the company has an after tax cost of debt of 6% and a cost of equity of 9%?

problems with markdowns

Loisnl — Sun, 15 Nov 2009 19:41:53 GMT

how do I get the rate of markdown when the only information I have is the rate of markup on cost which is 45%. I don't have any cost price or selling price

Simple GDP Proof with One-Variable Calculus - Macroeconomics

scherz0 — Sun, 15 Nov 2009 16:05:32 GMT

Hello everyone,

I am having trouble understanding my professor's proof below and have written two questions. Thank you for your help!

---

---

1. Blue highlight: I do not see how implies . Could someone please explain this?

2. Orange highlight: What exactly is the goal of these expressions? Is my instructor simply showing that for ?

3. Purple highlight: Could you please explain how the result follows from f(1) = 0" title="f(t) > f(1) = 0" style="border: 0px; vertical-align: middle;" />?

Thanks!

increasing annuities

mukrosa — Sat, 14 Nov 2009 07:51:18 GMT

rent on a property is payable continously for 5yrs.The rent in first yr is 3000 and thereafter annual rent increases 500 per annum.Calculate present value at start of five yr period using an annual effective rate of interest of 6%(Cool)

Nonconstant Growth (FINC 3105)

jlhicks — Thu, 12 Nov 2009 22:01:05 GMT

I need a little bit of help with this problem.

Stag Corp. will pay dividends of $4.75, $5.25, $5.75, and $7 for the next four years. Thereafter, the company expects its growth to be at a constant rate of 7 percent. If the required rate of return is 15 percent, what is the current price of the stock?

For the most part I understand the nonconstant growth formula and how to calculate when dividends are constant but I am completely confused with this problem. Thank you.

Calculating the GDP and Net Domestic Income

memoIhad — Thu, 12 Nov 2009 21:13:21 GMT

Hello everyone. Hopefully I'm posting in the right section. I am currently studying for an ecomomics test I have and there is a question which I'm not sure if I'm doing correctly.

The Question:
Derive the increase in GDP and in Net Domestic Income if the following activities were to occur in Country A. This year Country A imported 100 additional computers at an import price of $3,000 each. Fifty of the computers were sold to consumers in Country A for $4,000 each [the mark-up was represented by sales commissions of $600, corporate profits before taxes of $300 and indirect taxes [sales taxes] of $100]. Country A exported 30 of these computers at an export price of $3,500 [the mark-up being divided between sales commissions of $400 and corporate profits of $100]. The final 20 computers were left in inventory at their import price. In addition, calculate the specific changes in each affected component in the final goods statement [only] for Country A for the year as a result of this set of economic transactions e.g., changes in consumption, exports etc.. Show all your work!

Answer:
First I figured that I need to use one of the 3 approaches to calculate the GDP. There's the sum of final goods and services approach (expenditure), then factor income approach and finally the value added approach. The only equation I'm sure off and the one I think fits in this situation is the expenditure approach which is:
GDP = Consumption + Investment + Government Purchases + (Exports-Imports).

These are the numbers I concluded:
C= $200,000 since 50 computers were sold @ $4000/each
I=$60,000 since 20 computers were left in storage valued at $3000/each
G=$5,000 since $100 sales taxes from 50 computers sold
Net exports=-$195,000 since imports were 100x3000=$300,000 while exports were 30x3500=$105,000 so 105,000-300,000=$-$195000

So plugging all this into the formula would be:
$200,000+$60,000+$5,000+(-$195,000)=$70,000

Therefore I would conclude that the increase in GDP woulb be $70,000.

However I know that something is incorrect and I'm probably missing like 50% of the other questions. I don't understand how I'm suppose to use the profits and commisson they give me. How do I find the Net Domestic Income? How do I "calculate the specific changes in each affected component in the final goods statement"?

I don't think the question is that complicated its just that there are soo many numbers and questions going on that it confuses me. I hope someone can clarify any part of this problem or give me some tips to answer it more easily.

THANKS!

Utilization

dimitrz200 — Thu, 12 Nov 2009 16:11:09 GMT

Hi

Dont know if this is the right forum for this.

I have a perplexing problem for which I believe only a mathematic whiz can provide a solution

I have a team who are into call taking (ie they handle incoming calls)

My delima is to find out their utilization effectively.

Our company requires that a person contribute around 192 hours a month. calculated as 24 days or 22 working days in a month multiplied by 8 hours a day ( 24x8= 192 hrs)

My people on an average take around 1000 calls a month each and I estimate that they spend approx 5 mins per call

Based on that I derived at this formula - 1000 (calls) x 5 (mins) divided by 60 (min) to get the conversion in hours - so if a person takes 1000 calls then he/she gets 83.33 hours a month.

But this is where my delima lies

1) Is this method of calculation correct ?

2) as you can see by this method - they fall short by around 100 hours - even though I know that they have been utilized more- this method shows that they are under utilized - any help or suggestion welcome

Please help

HElp please??

Ife — Thu, 12 Nov 2009 08:36:12 GMT

Ms. Smith takes out an endowment policy with an insurance company which involves making a fixed payment of $ P each year. At the end of n years, Ms. Smith expects to receive a payout of a sum of money which is equal to her total payment together with interest added at the rate of x % per annum of the total sum in the fund.

(a) Show that the total sum in the fund at the end of the second year is $P (R+R^2) , where
R = (1+ x /100 )
.
(b) Show, by making a valid argument, that the total sum in the fund at the end of the nth year is given by

$PR (R^n - 1) / R-1

(c)Find the value of P, to the NEAREST dollar, when n = 10, x = 8 and the payout is 1.5 million.

Interest Rate and principal calculations

Ife — Thu, 12 Nov 2009 08:32:15 GMT

Can i get some guidance with this calculation please?? (Headbang)

At the start of the month, a customer owes a credit card company $1000. In the middle of the month, the customer pays $P to the company, where P< $1000.
At the end of the month, the company adds interest at the rate, R, of 3% of the amount still owing. This procedure is repeated in each subsequent month.

a. Find the value of P for which the customer owes $1000 at the end of every month.

b. Find the value of P, for which the whole amount is paid off after the second payment.

c. Assuming that the debt is not paid off after 4 payments, show that the amount still owing at the beginning of the 5th month can be expressed as

$ (1000R^4 - (PR(R^4-1))/R-1 ), R=1.03

d. Show that the value of P for which the whole amount owing is exactly paid off after the nth payment is given by

P = (1000R^n-1 (R-1) ) / (R^n - 1)