Will it speed up production and increase his income allowing him to pay it off even
quicker. How expensive are the replacement parts? How much does a routine upkeep
visit cost?
1.
The local bank will loan Charlie $25,000 for 1 year at an interest rate of 12% with
only one payment due at the end of the year. If Charlie borrows the full $25,000 for the
new engraver, what will the total cost of the loan be? The total cost of the loan would
be $25,300. ($25,000 x.012 = $300).
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2.
Calculate the total amount of revenue (gross profit) that will be lost if the
engraver breaks. The total amount of revenue lost if the engraver breaks for 18 days is
$17,750. ($975*18 days = $17, 550)
3.
If the engraving business makes $975 per day in revenue and generates a net
profit of 25%, how much profit is generated per day? The amount of profit generated
per day is $243.75. ($975*25% = $243.75 per day profit).
4.
What is the total net profit lost if the engraver is out of commission for the full 18
days?
The amount of profit if the engraver breaks is $4,387.50. ($17,550*25% =
$4,387.50).
5.
If the engraver is kept busy 269 full days per year, how much revenue (gross
profit) will be generated? If the engraver is kept running for 269 days @ $975 in
revenue per day the total amount would be $262,275.00.
6.
If the engraver is kept busy 269 full days per year, how much net profit will be
generated? If the engraver kept running for 269 full days the amount of profit would be
$65,568.75. ($243.75*269=$65,568.75).
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 Fall '12
 don'tremember
 Math, Generally Accepted Accounting Principles, Charlie, engraver

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