Quantitative Methods for Business: Loan and Profit Analysis Assignment

This assignment delves into quantitative methods applied to business scenarios, specifically focusing on loan and profit analysis. It presents two loan options, one from a bank and another from a family friend, comparing interest rates and repayment terms to determine the most advantageous choice. The assignment also explores profit analysis, calculating break-even points for delivery services under different pricing and cost structures. It analyzes how changes in delivery costs impact the break-even quantity. Furthermore, the assignment examines how variations in delivery distances influence costs and, consequently, the break-even point, providing a comprehensive understanding of financial decision-making in a business context. The solution is provided in a well-structured format, including summaries for each question and relevant appendices.

QUANTITATIVE METHODS FOR BUSINESS
STUDENT ID:
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Question 4
Summary
It is apparent that if Jim and Jane approached the local bank, then the resultant quarterly
instalment would amount to $ 2,750.40 to repay a loan of $ 30,000 over a period of three
years. The bank is offering the loan at 6% per annum. Alternatively, if Jim and Jane decided
to finance the loan from the family friend Pacino, then the applicable interest rate would be
comparatively higher at 13.07% p.a. with monthly instalments of $ 3,200 being paid for 10
months. Comparing the two options at hand, it is apparent that the taking the loan from the
bank may be advisable since the offered rate is significantly lower than the one charged by
Pacino. Further, in case of the bank loan, a longer duration implies lower repayment burden
making it more preferable for Jim and Jane.
Question 5
Summary
a) Based on the given information, if Travis charges $ 80 per delivery, then the break-even
would be achieved at 84 deliveries.
b) Considering that 85 deliveries is greater than the breakeven point, hence net profit would
be achieved at this point.
Net profit = (85*80) – 6650 = $150
c) Let the price at which 75 deliveries per month be the break-even quantity. Let the charge
per delivery be $X
Hence, 75X = 6590
Solving the above X = $87.87
d) Number of deliveries to break even would be lower in this case. This is because the
average distance travelled per delivery is lower in this case. As a result, for the same number
of deliveries, the cost of diesel and truck cleaning would be lower. Since these costs would be
lower and the charge per delivery would remain the same, hence break-even would be
achieved at a lower quantity.

Appendix
Question 4-A
Question 4-B

Question 5