A Firm's Average Cost Function Is Given By $A C = \frac { 800 } { Q } + 2 Q + 18$

question 1

Multiple Choice

A firm's average cost function is given by $A C = \frac { 800 } { Q } + 2 Q + 18$ Find, to the nearest whole number, the value of Q at the lowest point on the graph of AC plotted against Q, in the interval, 0 c Q c 30.

• A)25
• B)20
• C)15
• D)5
• E)10

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Definitions:

Normal Cash Flows

Cash flows that occur in a predictable pattern, where an initial outlay is followed by a series of income receipts.

Real Internal Rate of Return

The real internal rate of return is the annual rate of growth an investment is expected to generate, adjusted for inflation.

Multiple IRR Problem

A situation in capital budgeting where a project has more than one internal rate of return due to changing cash flow signs over the project's duration.

Normal Cash Flows

Regular inflows or outflows of cash associated with operational activities of a business within a specific period.