A deli made $320,000 in revenue last year. Due to the increased popularity of the deli, the owner predicts that revenue will increase by 23% next year. How much revenue does the owner think the deli will generate next year? O $320,230 O $322,300 O $343,000 O $393,600 O $422,400

A deli made $320,000 in revenue last year. Due to the increased popularity of the deli, the owner predicts that revenue will increase by 23% next year. How much revenue does the owner think the deli will generate next year? O $320,230 O $322,300 O $343,000 O $393,600 O $422,400

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter4A: Nopat Breakeven: Revenues Needed To Cover Total Operating Costs

Section: Chapter Questions

Problem 1EP

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Question

Answer the question below

A deli made $320,000 in revenue last year. Due to the increased popularity of the deli, the owner predicts that revenue will
increase by 23% next year. How much revenue does the owner think the deli will generate next year?
O $320,230
O $322,300
O $343,000
O $393,600
O $422,400

Expert Solution

Step 1

In the given case, we have provided the revenue for last year along with the growth rate of revenue for next year .

Since as per the given information , due to increased popularity of deli , the owner predicts that revenue will increase by 23% next year.

It means growth rate of revenue for next year is 23%.

So,

Revenue for next year = Revenue for last year * (1+ growth rate of revenue for next year)

Explanation:

Revenue is the sales or the turnover of the company . If the growth rate of revenue increases , it means revenue for next year is also increased.

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