Question

7. Steve receives $1500/month from a trust fund for 30 years when he turns 20 years old. What is the present value of total payment given discount rate of 7%. 8. You rent a booth in Christina Mall to sell cell phone covers. You order the covers from a ware house for $28 a dozen (12 pieces). The average selling price for the covers is $9.98. You have to pay $3200 for the monthly rent and $200 administration fee every month. Please calculate your monthly Break Even Point. 9. You rent a booth in Christina Mall to sell cell phone covers. You order the covers from a ware house for $28 a dozen (12 pieces). The average selling price for the covers is $9.98. You have to pay $3200 for the monthly rent and $200 administration fee every month. You also need to pay a sales person commission $1.2 per cover sold. Please calculate your monthly Break Even Point.

Answer 1

7 Monthly amount Discount rate Monthly discount rate Present value factor for 360 months Present value of total payments $1,500 a 7% 0.58% 150.3076 b $225,461 a*b Annual discount factor is converted to monthly discount factor PV is calculated based on (1+i)^n/n for 360 months Units 8 Break even point in units Fixed cost Contribution margin per unit $3,400 $7.65 444 Selling price Variable cost Contribution margin $9.98 $2.33 $28/12 $7.65 Units 9 Break even point in units Fixed cost Contribution margin per unit $3,400 $6.45 527 Selling price Variable cost Sales commission Contribution margin $9.98 $2.33 $28/12 $1.20 $6.45