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Business obtains a $5,000,000 loan with a 5% interest rate

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Question

Scenario: Business obtains a $5,000,000 loan with a 5% interest rate that must be paid back in equal installments over a 5 year period. The business yearly operational costs total $10,000,000.;The first year after the investment, sales equal 95,000 boxes of gadgets and revenue equals $9,500,000.;Assuming that sales volume remains unchanged over the remaining 4 year period, prepare a report on the following;1. The sale price of each box of gadgets during the first year after the investment.;2. The rate of annual inflation as applied to each box of gadgets over the remaining four-year period that will assure that the business break even and will be able to pay off the loan on time. Also explain how you determined the rate.;Then assume that each box of gadgets is priced at $142. All of your other sales and cost variables are the same as above. However, the economy has entered a period of deflation. Prepare a report on the following;? The rate of annual deflation as applied to each box of gadgets over the remaining 4-year period below which your venture will become unprofitable. Explain how you determined the rate.

 

Paper#22551 | Written in 18-Jul-2015

Price : $22
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