Economics Rate of Interest Calculation For Buying Statues Exercise

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Economics

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A group of engineering technology students have begun 3d printing and selling mini statues of their classmates from 3d scans they're taking with sophisticated cameras. They're afraid that the school administration will shut down this operation, so they're trying to determine how much they'd need to charge for these 3d printed objects in order to justify purchasing their own 3d printer and materials. EXY TAZ The LulzBot TAZ 6 is currently listed for sale on Amazon for $2,500.00. The consumable filament currently costs $0.6134 per ounce, but, you've realized that the price is falling consistently by $0.005 per ounce each month. You expect this decline in price to continue at the same pace for at least the next six years. The statues you've printed are averaging 2.25 ounces of material (including waste), and you plan to sell 43 statues per month. Since you're not doing this for just the Lulz, you want to earn a return of at least 2.8% per month during the next four years. What do you need to charge for each statue to earn your desired rate of return? N I/Y PV II II II II II ||||| PMT FV
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Running head: ECONOMICS

1

Economics
Student’s Name
Institution Affiliation

ECONOMICS

2

What to charge for each statute to earn return rate of 2.8% per month
Return wanted per month (rate of return, i) = 2.8%
Number of months (n) (4 years) = 4*12 = 48
Current costs per ounce (PV) = $0.6134
Price of ounce is falling consistency per month (for next 6 years) = $0.005
Periodic rate (I/Y) = 0.005/0.6314 = 0.8151%
PMT = $0.005
FV =PV (1-i/y)n-1 = 0.6134(1-0.008151)47 = $0.4203
Cost incurred due to usage in the month=. For 43 statues the printer is using 2.25 ounces of the
material and its cost in the nth month is (0.6314-0.005(n-1...


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