JNU DOUBTS

[Shefali]

1..asset which lasts forever is expected to give a return of Rs.600 each year. If the rate of interest is 12 per cent, the present value of the asset is
(a) Rs. 7,200 (b) Rs. 12,000 (c) Rs. 5,000 (d) Rs. 2,00

[Homer Simpson]

1(c)
2(c)
A23(b)

[Shefali]

tSUKI...PLSSS expalin...i'm not getting :((

[Homer Simpson]

1) Present value of perpetuity = C/i = 600/0.12 = 5000

2) take C = f+cq (plug values and solve for c)

3) 7% of x = 35, solve for x

[ViV]

@Tsuki: How did u do the 1st one ?

[ViV]

got it thanks!!

[akanksha]

shefali..
here MC from 10 chocolates to 30 chocolates will be o.5 (20-10/30-10)
but for the 31st chocolate u can't find the mc..since total cost is not available..
hence the ans is e)

[Shefali]

thankuuu tsuki
wt abt mc one...pls confirm

[ViV]

@Shefali
at Q = 10,TC =10
TC =TFC+TVC
If TFC = 5, TVC = 5 and TVC = c.Q
where c is a per unit cost.
c= 10-5/10 =0.5
Similarly, at Q=30, TC = 20. TFC = 5, TVC =15
c = 15/30 =0.5
hence (c)

[Shefali]

hw IS TVC 5??

[Homer Simpson]

I dont think its necessary to put any values of TFC or TVC here. What we can say for sure is that

C = TFC + TVC and TVC = cQ
so, C = TFC+cQ

When C=10, Q=10,     10 = TFC+10c -(i)
  and C=20, Q=30,      20 = TFC+30c -(ii)

Subtract (i) from (ii) -

10 = 20c
c=1/2

[ViV]

Yeah!! We can work this way also..
Thanks!!!