Reference no: EM132964287

Problem 1. Your grandmother gave you a nice amount of money for your 18th birthday. You don't need the money for urgent matters, so you decide to invest the money in a small activity. You buy 20 electric steps at a purchase price of 857 euro for 1 step and you rent them out for 2years (so you amortize them on 2years. At the end of the 2 years you will sell the whole lot of steps for an amount of 3000 euro (this is the residual value for all steps together). You will rent out the steps for a price of 536euro for 1 step for 1 year. Calculate the accounting rate of returns (%).

Problem 2. Costs are classified as variable or fixed based on ------------?

Problem 3. A business man is selling jeans trousers for 91 euro a piece. The production has three stages. Firstly, cutting and secondly sewing. The washing activity is outsourced to another company so it becomes a variable cost. For the washing of 1 jeans we have to pay this company 53euro. We estimate we will sell 30,000 pieces. Calculate the safety margin (%).