Calculate the total amount of revenue

Reference no: EM131109128

Loans

You are a proud owner of an engraving business. However, you are using an aging rotary engraver to engrave plaques and trophies. The machine has been reliable, but does require regular maintenance and periodic replacement of parts. You have just found out that this engraver will no longer be supported by the manufacturer. This means that service and parts will be hard to get in the future and if it breaks it could take up to three weeks to get a new one up and running. You keep this machine running almost 8 hours a day, every day. Every day that the engraver is down will cost around $975 in lost income.

If you have to buy a new engraver, it would cost around $25,000.

You can get a one-year loan at 12% to buy a new engraver, but you worry that this is a lot of money to spend, especially since the old engraver is still working fine. You have to make a decision.

In this discussion, pose you argument on whether you should purchase a new engraver now or wait until the old engraver breaks before ordering a new engraver?

To help you construct your argument answer the following steps:

The local bank will loan you $25,000 for 1 year at an interest rate of 12% with only one payment due at the end of the year. If you borrow the full $25,000 for the new engraver, what will the total cost of the loan be?

Calculate the total amount of revenue (gross profit) that will be lost if the engraver breaks and is down for 18 business days.

If the engraving business makes $975 per day in revenue and generates a net profit of 25%, how much profit is generated per day?

Given a 25% profit margin and $975 per day in revenue, how many days would it take for the new engraver to earn back the total cost of purchase, if the entire net profit were allocated to pay for the unit?

What other factors should you consider in order to make a good business decision?

Reference no: EM131109128

Questions Cloud

Luggage weight for individual air travelers : From past experience, an airline has found the luggage weight for individual air travelers on its trans- Atlantic route to have a mean of 80 pounds and a standard deviation of 20 pounds.

Create a customer experience map that illustrates the path : Create a customer experience map that illustrates the path a customer will take to complete the same task you identified for the user journey component of Milestone Five.

What is a private pension plan : How does a contributory pension plan differ from a noncontributory plan?

How to extend the code generator for vardecl nodes : Some languages, including Java, require that all variables be initialized. Explain how to extend the code generator for VarDecl Nodes (Figure 12.3) so that both local and global variables are given a default initialization if no explicit initial v..

Calculate the total amount of revenue : Given a 25% profit margin and $975 per day in revenue, how many days would it take for the new engraver to earn back the total cost of purchase, if the entire net profit were allocated to pay for the unit?

Taxable income is expected for the next few years : Warranty expense accrued for financial reporting purposes amounts to $7,000. Warranty deductions per the tax return amount to $2,000.

How we can improve the performance of employees of epa : Research Question How we can improve the performance of employees of EPA?

What is the x-coordinate of the center of mass : What is the x-coordinate of the center of mass - sets of parametric equations differ from each other in terms of extent and dynamics.

What must be done so that both generate the same : What must be done so that both generate the same (shorter) instruction sequence?

User Account

All Pages