Consider a scenario where you are an entrepreneur planning to expand your production of kitchen gadgets. You
borrow a loan in the amount of $5,000,000. This loan must be paid back in equal installments over a five-year period. The interest rate on this loan is five percent. Your other yearly operational costs total $10,000,000. The first year after the investment, your sales equal 95,000 boxes of kitchen gadgets and your revenue equals $9,500,000. Assuming that your sales volume remains unchanged over the remaining four-year period, prepare a report in Microsoft Word on the following: • The sale price of each box of kitchen gadgets during the first year after the investment. • The rate of annual inflation as applied to each box of kitchen gadgets over the remaining four-year period that will assure that you break even and will be able to pay off your loan on time. Explain how you determined the rate.
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