Roses Are Red
New member
- Joined
- Aug 21, 2011
- Messages
- 8
Seriously, I am not good in math, and I know I messed up somewhere within one of these problems. Would someone look over these 3 problems to see if they are correct? Thank you!
Problem 1:
The Smith family has saved for many years, and they have decided to start a hardware business with $250,000. They estimate that sales to customers will be about $6,000 per month during the first year. On average, the budgeted monthly costs will be:
Wages for labor: $900
Rent on store building: $1,500
Utilities: $300
Advertising: $500
Delivery Costs: $400
A. What is the projected monthly profit?
B. What is the expected annual return on investment?
My answer:
What is the projected monthly profit?
$900 + $1,500 + $300 + $500 + $400 = $3,600
$6,000 - $3,600 = $2,400
What is the expected annual return on investment? $2,400 x 12 = $28,800 profit per year giving an annual return of 11.52%
Problem 2:
Cindy invested $200,000 into a business that earned a profit of $2,700 during the past month. Cindy believes the business will earn an annual profit equal to 12 times the monthly profit. Assume Cindy wants to take $25,000 from the business each year for her personal use.
See table below:
Resources created from sales: $19,000
Resources consumed:
Materials: $8,000
Insurance: $2,000
Rent: $1,500
Utilities: $1,300
Wages: $3,500
Total cost of resources consumed: $16,300
Profit earned: $2,700
A.Determine the company's return on investment.
B.Determine Cindy's return of investment.
My answer:
$19,000.00 - $16,300.00 = $2,700.00 x 12 = $32,400.00
$32,400.00 Annual Profit
$25,000.00 Withdraw each year
$7,400.00 Return of Investment 16/2%
The total profit is $32,400.00, and the amount of withdrawal is $25,000.00, so the difference is the return of the owner's investment in the amount of $7,400.00 ($25,000 withdrawal and $32,400 profit) each year.
Problem 3:
You are considering opening a kiosk in the mall that will sell customizable aprons. you need to borrow money from the bank to get the business started and estimate that you will need approximately $20,000. The bank would like you to prepare an estimated profit statement showing what the expectation of the paint and supplies company are. you will pay $6 for the aprons and will sell them for $10. You estimate that you can sell 1,000 aprons per month. the cost to customize the aprons will be $1 per apron. the cost of rent of the kiosk will be $500/month. utilities will be $200 per month. wages of workers will total $1,000 per month.
A.calculate the estimated profit of your company for the first year of operation.
My answer:
Monthly income = 1,000 aprons x $10 each = $10,000
Monthly Expenses = $500 + $200 + $1,000 + $6,000 = $7,700
Monthly profit = $7,700 - $6,000 = $1,700
Annual profit = $1,700 x 12 = $20,400
Here are photos of the actual problems:
Problem 1:
http://www.flickr.com/photos/62474130@N03/6827374072/sizes/l/in/photostream/
Problem 2:
http://www.flickr.com/photos/62474130@N03/6827374442/sizes/l/in/photostream/
Problem 3:
http://www.flickr.com/photos/62474130@N03/6827374256/sizes/l/in/photostream/
Problem 1:
The Smith family has saved for many years, and they have decided to start a hardware business with $250,000. They estimate that sales to customers will be about $6,000 per month during the first year. On average, the budgeted monthly costs will be:
Wages for labor: $900
Rent on store building: $1,500
Utilities: $300
Advertising: $500
Delivery Costs: $400
A. What is the projected monthly profit?
B. What is the expected annual return on investment?
My answer:
What is the projected monthly profit?
$900 + $1,500 + $300 + $500 + $400 = $3,600
$6,000 - $3,600 = $2,400
What is the expected annual return on investment? $2,400 x 12 = $28,800 profit per year giving an annual return of 11.52%
Problem 2:
Cindy invested $200,000 into a business that earned a profit of $2,700 during the past month. Cindy believes the business will earn an annual profit equal to 12 times the monthly profit. Assume Cindy wants to take $25,000 from the business each year for her personal use.
See table below:
Resources created from sales: $19,000
Resources consumed:
Materials: $8,000
Insurance: $2,000
Rent: $1,500
Utilities: $1,300
Wages: $3,500
Total cost of resources consumed: $16,300
Profit earned: $2,700
A.Determine the company's return on investment.
B.Determine Cindy's return of investment.
My answer:
$19,000.00 - $16,300.00 = $2,700.00 x 12 = $32,400.00
$32,400.00 Annual Profit
$25,000.00 Withdraw each year
$7,400.00 Return of Investment 16/2%
The total profit is $32,400.00, and the amount of withdrawal is $25,000.00, so the difference is the return of the owner's investment in the amount of $7,400.00 ($25,000 withdrawal and $32,400 profit) each year.
Problem 3:
You are considering opening a kiosk in the mall that will sell customizable aprons. you need to borrow money from the bank to get the business started and estimate that you will need approximately $20,000. The bank would like you to prepare an estimated profit statement showing what the expectation of the paint and supplies company are. you will pay $6 for the aprons and will sell them for $10. You estimate that you can sell 1,000 aprons per month. the cost to customize the aprons will be $1 per apron. the cost of rent of the kiosk will be $500/month. utilities will be $200 per month. wages of workers will total $1,000 per month.
A.calculate the estimated profit of your company for the first year of operation.
My answer:
Monthly income = 1,000 aprons x $10 each = $10,000
Monthly Expenses = $500 + $200 + $1,000 + $6,000 = $7,700
Monthly profit = $7,700 - $6,000 = $1,700
Annual profit = $1,700 x 12 = $20,400
Here are photos of the actual problems:
Problem 1:
http://www.flickr.com/photos/62474130@N03/6827374072/sizes/l/in/photostream/
Problem 2:
http://www.flickr.com/photos/62474130@N03/6827374442/sizes/l/in/photostream/
Problem 3:
http://www.flickr.com/photos/62474130@N03/6827374256/sizes/l/in/photostream/