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Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year?
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Nicole owns a small pottery factory.she can make 1000 pieces of potter...
Profit and Loss Calculation:
Nicole's revenue from selling 1000 pieces of pottery = 1000 x 100 = Rs. 1,00,000
Cost of raw materials = Rs. 20,000
Total cost of production = Rs. 20,000 + Rs. 50,000 (investment) + Rs. 5,000 (interest on borrowed money) = Rs. 75,000
Profit = Revenue - Total cost of production = Rs. 1,00,000 - Rs. 75,000 = Rs. 25,000
Return on Investment Calculation:
Return on investment (ROI) = (Profit / Total investment) x 100
Total investment = Rs. 1,00,000 (savings) + Rs. 50,000 (borrowed money) = Rs. 1,50,000
ROI = (Rs. 25,000 / Rs. 1,50,000) x 100 = 16.67%
Opportunity Cost Calculation:
If Nicole works at a competing pottery factory, she can earn Rs. 40,000 per year. Therefore, her opportunity cost of running her own pottery factory is Rs. 40,000.
Should Nicole continue running her pottery factory?
Yes, Nicole should continue running her pottery factory as her ROI is higher than the opportunity cost of working at a competing pottery factory. Her ROI of 16.67% is higher than the interest rate of 10% at which she borrowed money. Therefore, she is making a profitable investment by running her own pottery factory.
Nicole's revenue from selling 1000 pieces of pottery = 1000 x 100 = Rs. 1,00,000
Cost of raw materials = Rs. 20,000
Total cost of production = Rs. 20,000 + Rs. 50,000 (investment) + Rs. 5,000 (interest on borrowed money) = Rs. 75,000
Profit = Revenue - Total cost of production = Rs. 1,00,000 - Rs. 75,000 = Rs. 25,000
Return on Investment Calculation:
Return on investment (ROI) = (Profit / Total investment) x 100
Total investment = Rs. 1,00,000 (savings) + Rs. 50,000 (borrowed money) = Rs. 1,50,000
ROI = (Rs. 25,000 / Rs. 1,50,000) x 100 = 16.67%
Opportunity Cost Calculation:
If Nicole works at a competing pottery factory, she can earn Rs. 40,000 per year. Therefore, her opportunity cost of running her own pottery factory is Rs. 40,000.
Should Nicole continue running her pottery factory?
Yes, Nicole should continue running her pottery factory as her ROI is higher than the opportunity cost of working at a competing pottery factory. Her ROI of 16.67% is higher than the interest rate of 10% at which she borrowed money. Therefore, she is making a profitable investment by running her own pottery factory.
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Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year?
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Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year?.
Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year?.
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Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year?, a detailed solution for Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year? has been provided alongside types of Nicole owns a small pottery factory.she can make 1000 pieces of pottery per year and sell them for rs 100each it cost Nicole rs20000 for the raw materials to produce the 1000pieces of pottery.she has invested rs100000 in her factory and equipment rs 50000 from her savings and rs 50000 borrowed at 10percent.assume that she could have loaned her money out at 10percent too.nicole can work at a competing pottery factory for rs 40000 per year? theory, EduRev gives you an
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