RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:hey, Mac, screen change questionJesus, I'm getting tired of corredting my ownmistakes, much less Mac's.
The analysis below is OK until I get to valuing the little stones thrown away.
1) You did not get US$5,000,000 for the 62 little stones, but US$500,000
2) You did not just give up the income from the 62 little stones, but the entire revenue from all the 618 + 62 = 680 little stones
3) So you gave up revenue of 680 X US$8 = US$5,500,00
4) So you netted US$23,400,000 – US$5,500,000 =
US$117,900,000 by incrfeasing production by 10% and throwing away all the small stones.
I hope I don't discover any more of my own mistakes - but it could happen, so watch out!
tinytot wrote: Look at it this way:
You have 3,253 stones, 81% are big, 19% are little. You sell all 3,253 for US$240,000,000
You sold the 618 little stones (19%) for US$8each = US$4,900,000
That means you sold the 2,635 big stones (81%) for US$240,000,000 – US$4,900,000 = US$235,100,000
Which in turn means that you got US$235,100,000 / 2,635 carats = $89/carat for the big stones.
Now you decide to up production by 10% and throw away all the little stones.
That means you are going to get 263 more big stones which you will sell for 263 X $89 = US$23.400,000
However you will be throwing away 62 little stones for which you would have been paid US$8 = US$5,000,000
So your increase in revenue on the deal will be US$23,400,000 – US$5,000,000 = US$18,400,000.
End of story.