chapter 3 analytical Flashcards
an elderly relative offers to sell you their used 1958 cadillac eldorado for $52,000. you note that very similar cars are selling on the open market for $87,000. you don’t care for classic cars and would rather buy a new ford explorer for $35,000. what is the net value of buying the cadillac?
$35,000, since this is the difference between purchase and resale price of the cadillac
as an oil reformer, you are able to produce $77 worth of unleaded gasoline from one barrel of Alaska North Slope crude oil. because of its lower sulfur content, you can produce $78 worth of unleaded gasoline from one barrel of West Texas Intermediate crude. another oil refiner is offering to trade you 10,150 bbl of ANS crude oil for 10,000 bbl of WTI crude oil. assuming you currently have 10,000 bbl of WTI crude, the added benefit (cost) to you if you take the trade is closest to ?
$1550
as an oil reformer, you are able to produce $76 worth of unleaded gasoline from one barrel of Alaska North Slope crude oil. because of its lower sulfur content, you can produce $77 worth of unleaded gasoline from one barrel of West Texas Intermediate crude. assuming you currently have 10,000 bbl of WTI crude, the added benefit (cost) to you if you were to sell the 10,000 bbl of WTI crude and use the proceeds to purchase and refine ANS crude is closest to ?
$3908
as an oil reformer, you are able to produce $76 worth of unleaded gasoline from one barrel of Alaska North Slope crude oil. because of its lower sulfur content, you can produce $77 worth of unleaded gasoline from one barrel of West Texas Intermediate crude. assuming you just purchased 9950 bbl of WTI crude at the current market price, the total revenue (cost) to you if you were to refine this crude oil and sell the unleaded gasoline is closest to ?
$766,150
as an oil reformer, you are able to produce $76 worth of unleaded gasoline from one barrel of Alaska North Slope crude oil. because of its lower sulfur content, you can produce $77 worth of unleaded gasoline from one barrel of West Texas Intermediate crude. another oil refiner is offering to trade you 10,100 bbl of ANS crude oil for 9950 bbl of WTI crude oil. assuming you just purchased 9950 bbl of WTI crude at the current market price, the total revenue (cost) to you if you take the trade is closest to ?
$767,600
as an oil reformer, you are able to produce $77 worth of unleaded gasoline from one barrel of Alaska North Slope crude oil. because of its lower sulfur content, you can produce $78 worth of unleaded gasoline from one barrel of West Texas Intermediate crude. assuming you currently have 10,000 bbl of WTI crude, the total benefits to you if you were to sell the 10,000 bbl of WTI crude and use the proceeds to purchase and refine ANS is closest to ?
$784,091
as an oil reformer, you are able to produce $76 worth of unleaded gasoline from one barrel of Alaska North Slope crude oil. because of its lower sulfur content, you can produce $77 worth of unleaded gasoline from one barrel of West Texas Intermediate crude. another oil refiner offering to trade you 10,150 bbl of ANS crude oil for 10,000 bbl of WTI crude oil. assuming you currently have 10,000 bbl of WTI crude, what should you do?
sell 10,000 bbl WTI crude on the market and use the proceeds to purchase and refine ANS crude
in a trade with the government of an oil producing nation, a manufacturer will deliver 13 caterpillar D9 tractors, with a value of $320,000 per tractor, and receive 45,000 barrels of oil, valued at $120 per barrel. what is the net benefit of this trade to the manufacturer?
$1,240,000
a wholesale food retailer is offered $15.60 per two-layer carton for 5000 cartons of peaches. the wholesaler can buy peaches from their growers at $13.20 per carton. shipping costs $2.40 per carton, for the first 1000 cartons, and $1.90 per carton for every carton after that. will taking this opportunity increase the value of the wholesale food retailer?
yes, the costs are $2000 less than the benefits
heavy duty company, a manufacturer of power tools, decided to offer a rebate of $130 on its 16-inch mid-range chain saw, which currently has a retail price of $490. heavy duty’s marketers estimate that, as a result of the rebate, sales of this model will increase from 60,000 to 80,000 units next year. the profit margin before the rebate is $180. based on the given information, is the decision to give the rebate a wise one?
no, since costs are $6,800,000 more than benefits
refer to the table above. an international seafood supplier is offered 9.52 million yen today for 1000 pounds of abalone frozen in the shell. 1000 pounds of abalone can be sourced from various countries at the prices shown above. the current market exchange rates between the U.S. and the other relevant currencies are also shown. in addition, $1 U.S. = 102 yen. what is the value, in U.S. dollars, of the best deal the international seafood supplier can make?
$13,333
a metal fabrication company is pricing raw supplies of aluminum. the following are the costs to the company to receive one ton of aluminum from various sources. which source offers the best price for aluminum per ton?
5888 Brazilian reals per ton, with $0.507 U.S. = 1 BRL
you own 1000 shares of newstar financial stock, currently trading for $57 over share. you are offered a deal where you can exchange these stocks for 900 shares of amback financial group stock, currently trading at $63 per share. what is the value of this trade, if you choose to make it?
-$300
a company intends to install new management software for its warehouse. the software will cost $47,000 to buy and will cost an additional $148,000 to install and implement. it is anticipated that it will save the company $44,000 trough reductions in staff and $69,000 in general inventory costs in the first year after installation. what is the total benefit to the company in the first year if they choose to install the software?
$113,000
you have a used CD store. at an estate sale, you can purchase 230 CDs for $356.5. You believe you could sell the CDs for an average of $3.05 each. what is the net benefit of buying the CDs at the estate sale and selling them in your store?
$345
a company decides to close down its plastic division. it has on hand 20 tons of styrene monomer, a raw material that has a market price of $800 per ton, which had been originally purchased at $750 per ton. given that the company has no use for the styrene monomer, and that it would cost the company $5200 to store it, what is the total value of the 20 tons of styrene monomer to the company?
$16,000
a firm has contracted to supply 500,000 gallons of propane fuel for $1.46 million to the local municipality. the municipality wants to break the contract. what does the minimum current market price of propane need to be in order for the firm to benefit from breaking the contract?
greater than $2.92 per gallon
a manufacturer of breakfast cereals has the opportunity to purchase barley at $3 a bushel for 10,000 bushels, if it also buys 5,000 bushels of wheat at $16 per bushel. however, the manufacturer does not use any barley in its products, and currently needs 20,000 bushels of wheat. if the current market price of barley is $3.80 per bushel and that of wheat is $15.80 per bushel, should this opportunity be taken, and why?
because the value of the opportunity is positive, the opportunity should be taken
a McDonald’s big mac value meal consists of big mac sandwich, large coke, and a large fries. assuming that there is a competitive market for McDonald’s food items, at what price must a big mac value meal sell to insure the absence of an arbitrage opportunity and uphold the law of one price?
$5.44
a McDonald’s big mac value meal consists of big mac sandwich, large coke, and a large fries. assume that there is a competitive market for McDonald’s food items and that McDonald’s sells the big mac value meal for $4.59. does an arbitrage opportunity exist and if so how would you exploit it and how much would you make on one value meal?
yes, buy a value meal and then sell the big mac, coke, and fries to make arbitrage profit of $0.67
