Use the Following to Answer Question

question 192

Multiple Choice

Use the following to answer question:
-(Table: Cakes) Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 3 mixers and bakes 400 cakes per day,what is her average total cost?

• A)$10.25
• B)$12.50
• C)$16.50
• D)$2,504.00

---

Definitions:

NPV

Net Present Value: a capital budgeting technique that assesses the profitability of a proposed investment or project.

CCA Rate

Capital Cost Allowance Rate, which is the rate at which businesses in Canada can claim depreciation on certain assets for tax purposes.

Required Rate of Return

The minimum annual percentage return an investor expects to receive from an investment, considering its risk.

NPV

Net Present Value; a calculation used to assess the profitability of an investment by summing the present values of incoming and outgoing cash flows.