Maurice Tutor

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Teaching Since: May 2017
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  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 11 Feb 2018 My Price 6.00

pre-tax profits

I just need help with question 2, please

ABC company has a cost of goods of 60% of the selling price of its products. It has $250,000 in fixed overhead for administrative expenses, rent and salaries. In addition, it spends 18% of every sales dollar on marketing.

1) What is the companyAc€?cs break-even point? I got $ 595,238.10

In order to start the business the owner got an investor to put up $500,000. The owner wants to pay back the investor out of profits, using 30% of the pre-tax profits to pay the investor, and he has guaranteed the investor he will get back $750,000.

2) How long will it take to pay back the investor, if sales in year one are $2 million, and sales increase 15% each year. (It is assumed that fixed expenses will increase each year at the rate of infllation or about 2%)

For the above answers there is no need to take into account or to use Net Present Value concepts.

 

Answers

Maurice Tutor
(5)
Status NEW Posted 11 Feb 2018 03:02 PM My Price 6.00

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