What is wrong with estimate of his gross profit margin

Assignment Help Financial Management

Reference no: EM13927774

Tony works full-time as a computer-repair technician who makes on-site repairs for individuals and small businesses. He says his gross profit margin is 94% because last year his total revenues were $100,000 and his expenses were $6,000. “I’m actually doing better than Microsoft. They talk about gross profit margins of 80%” says Tony. What is wrong with Tony’s estimate of his gross profit margin?

Reference no: EM13927774

Questions Cloud

Find the maturation value of the account : Hector deposits $250,000 into an account earning 3.85% simple interest annually. Find the maturation (future) value of the account after 8 ½ years.

Risk-free rate in order to establish target expected return : Suppose that the risk-free rate is 4.5 percent and the expected return on the tangency portfolio of risky assets is 12.5 percent. An investor with $2.5 million to invest wants to achieve a 17.5 percent rate of return on a portfolio combining a risk-f..

What penalty is the company incurring by its present order : What penalty is the company incurring by its present order size? The manager would prefer ordering 10 times each month but would have to justify any change in order size. One possibility is to simplify order processing to reduce the ordering cost.

Why is it important to be able to assume that demand : Why is it important to be able to assume that demand will be level during each six month period?If the vendor is willing to offer a discount of $ 10 per order for ordering in multiples of 50 units would you advise the manager to take advantage of t..

What is wrong with estimate of his gross profit margin : Tony works full-time as a computer-repair technician who makes on-site repairs for individuals and small businesses. He says his gross profit margin is 94% because last year his total revenues were $100,000 and his expenses were $6,000. “I’m actually..

Calculates the present value of redemption value to equal : [Actuarial Math] On 1/1/2014, PJ buys a 10,000 par value bond that pays annual coupons with the 1st coupon due on 12/31/2014. The redemption value is 10,000. PJ pays 10,000 for the bond. At issue, PJ calculates the duration of the bond to equal 15.83..

Zero-coupon bond assuming full immunization is met : [Actuarial Math] Company ABC is required to pay their customers $20,000 after 3 years. Based on an annual effective interest rate of 4%, Andy, the company’s actuary, uses full immunization strategy to construct a portfolio of assets using a 2-year ze..

Continously compounded zero rate : The 6-month zero rate is 6% with semiannual compounding. The price of a 1-year bond that provides a coupon of 10% per annum semiannually is 96. What is the 1-year continously compounded zero rate?

Actuarial math-etermine the modified duration of the payment : An annuity-immediate has level payments for n years. The average time of the payments using the method of equated time is 7 years. Determine the modified duration of the payments if the annual effective rate of interest is 5%.

User Account

All Pages