The Following Information Is Available for the Three Product Lines

question 42

Multiple Choice

The following information is available for the three product lines produced by Pitts Ltd: The labour availability is limited to 400 hours at these costs and before overtime payments are necessary.
If the market will only accept a maximum total of 200 units of any of the three product lines combined, which product(s) should Pitts produce?

• A) Product A and C
• B) Products A and B
• C) Product B
• D) Product C

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Definitions:

Present Value

The value today of a sum of money to be received in the future, after accounting for a certain return rate.

Compound Interest

Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It's the result of reinvesting interest rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.

Earnings Rate

The return on an investment for a specific period, typically expressed as a percentage of the investment's initial cost.

Internal Rate Of Return

A financial metric used to evaluate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows from a project equal to zero.