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- To generate leads for new business, Gustin Investment Services offers free financial planningseminars at major hotels in Southwest Florida. Gustin conducts seminars for groupsof 25 individuals. Each seminar costs Gustin $3,500 and the average first-year commissionfor each new account opened is $5,000. Gustin estimates that for each individualattending the seminar, there is a 0.01 probability that he/she will open a new account. a. Determine the equation for computing Gustin’s profit per seminar, given values of therelevant parameters.To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3000, and the average first-year commission for each new account opened is $4600. Gustin estimates that for each individual attending the seminar, there is a 0.01 probability that he/she will open a new account. Determine the equation for computing Gustin’s profit per seminar, given values of the relevant parameters. Round your answers to the nearest dollar.Profit = (New Accounts Opened × $ fill in the blank 1) – $ fill in the blank 2 What type of random variable is the number of new accounts opened? (Hint: Review Appendix 16.1 for descriptions of various types of probability distributions.)The number of new accounts opened is a random variable with fill in the blank 4 trials and fill in the blank 5 probability of a success on a single trial. Assume that the…To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3000, and the average first-year commission for each new account opened is $5800. Gustin estimates that for each individual attending the seminar, there is a 0.01 probability that he/she will open a new account. Determine the equation for computing Gustin’s profit per seminar, given values of the relevant parameters. Round your answers to the nearest dollar.Profit = (New Accounts Opened × $( ) – $ ( ) What type of random variable is the number of new accounts opened? (Hint: Review Appendix 16.1 for descriptions of various types of probability distributions.)The number of new accounts opened is a random variable with fill in the blank 4 trials and fill in the blank 5 probability of a success on a single trial. Assume that the number of new accounts…
- You have a tea stall in operation at Ramna park since 2015. Information of your business in 2018 are as follows: Selling price was BDT 10 per cup Average Sales volume was 35 cup per day Annual sales growth was 12% Price increases by 20% every year Monthly average selling and administration cost of the stall was: Police Commission = BDT 500/month Rent = BDT 1,000/month Utility = BDT 200/month Depreciation = BDT 60/month During a normal situation, the following growth has been observed: Raw material cost increases by 10% every year Labor cost increases by 8% every year MOH cost increases by 12% every year Selling and administration cost increases by 4% every year Make a Master Budget (Sales/Production/RM/Labor/MOH/Selling & Administrative/Cash budget) for the year 2019 (Pre CORONA virus year ) and another Master Budget for the year 2020 (CORONA virus year). You need to calculate your own production cost (raw…Calico Restaurants is planning to create a new online meals-to-order service and has estimated that creating it will have the following effects on its operations: a. Annual revenues will increase from $800,000/year to $1,300,000/year, for the next 3 years. b. While the restaurant earns an EBITDA margin (EBITDA as percent of sales) of 30% currently, it expects to earn an EBITDA margin of 40% on just its incremental online sales. c. The tax rate is 20% and the appropriate cost of capital for online restaurant businesses is 12%. Assuming that there will be an initial cost of $450,000 for creating the service, which will be depreciated straight line over 3 years to a salvage value of zero, estimate the NPV for the investment. a. 112,365 b. 9,865 C. -2,354 d. 6,348The Martins know that setting up some projected Income Statements are important. They need to look at what the first year of operations might look like and if possible they will need to look at the years thereafter to get an impression of what the long term might look like. RM Purchases: $132,000* (Raw Material Purchases is a part of COGS) Sales Salaries: 80,000 Advertising: 3,000 Travel: 2,000 Revenue: 360,000 Financing Costs: 10,000 Office Lease: 13,000 Depreciation: 38,000 Income Taxes: 22,000 Admin Salary: 40,000 A second financial statement that is key to understanding a business is the Balance Sheet. The Martins have estimated the following accounts to be a part of their initial Balance Sheet. Trade Receivables: $35,000 Cash: 15,000 Short Term Loan: 30,000 Share Capital: 100,000 Long Term Liabilities: 60,000 Property, Plant:…
- You have a tea stall in operation at Dhanmondi lake since 2018. Information of your business in 2019 are as follows: Selling price was BDT 10 per cup Average Sales volume was 35 cup per day Annual sales growth was 12% Price increases by 20% every year Monthly average selling and administration cost of the stall was: Police Commission = BDT 500/month Rent = BDT 1,000/month Utility = BDT 200/month Depreciation = BDT 60/month During a normal situation, the following growth has been observed: Raw material cost increases by 10% every year Labor cost increases by 8% every year MOH cost increases by 12% every year Selling and administration cost increases by 4% every year Make a Master Budget (Sales/Production/RM/Labor/MOH/Selling & Administrative/Cash budget) for the year 2020 (PCORONA virus year ) and another Master Budget for the year 2021 (year of new normal). You need to calculate your own production cost (raw material cost + labor cost + MOH cost) and opening/closing inventory. Show…Kamal Fatehl, production manager of Kennesaw Manufacturing, finds his profit at $15,000 (as shown in the state-ment below)—inadequate for expanding his business. The bank is insisting on an improved profit picture prior to approval of a loanfor some new equipment. Kamal would like to improve the profitline to $25,000 so he can obtain the bank’s approval for the loan.% OF SALESSales $250,000 100%Cost of supply chain purchases 175,000 70%Other production costs 30,000 12%Fixed costs 30,000 12%Profi t 15,000 6%a) What percentage improvement is needed in a supply chainstrategy for profit to improve to $25,000? What is the cost ofmaterial with a $25,000 profit?b) What percentage improvement is needed in a sales strategy forprofit to improve to $25,000? What must sales be for profit toimprove to $25,000?Wilson Bryant Air Conditioning, a Middle Georgia HVAC company, wanted to build a web-based project tracking for all small HVAC companies in Middle Georgia. Wilson Bryant Air Conditioning asked SunTrust Bank for a loan of $5 million presenting their idea. They had an agreement with the SunTrust that they will repay the loan by allocating 80% of the company's profits each year for the first 4 years to SunTrust. In the fifth year, the company will pay the remaining balance on the loan in cash. The company assumes that it will not earn any profit in the first year. Also, the company anticipates that the profits will be $1.5 million per year in years 2 through 4. If the SunTrust accepts the deal at an interest rate of 14% per year, and the company's plan will work to perfection, what is the projected amount of the last loan payment (in year 5)? Draw the cash flow diagram.
- A new book publishing and sales project estimates that the first year 7,000 printed units and 2,000 digital units will be sold.The printer will charge them $5 for each book.The publisher will sell the books for $12 each.The virtual books will be sold for $6 through a platform and the publisher receives $3.The authors of the books receive 5% of the sales made by the publisher, whether online or in print, which is recorded as an expense. The market study suggests that sales of printed books can increase at 20% per year and those of digital format at 30% per year.The initial equipment will be reduced, since they work with the subcontracting of printed material. Basically, they include computer equipment, software and furniture that have a value of 20,000; In addition, a vehicle will be purchased for a value of 15,000. Computer equipment, software and furniture are depreciated instraight line in 5 years. In year 6, these equipments must be bought again for the same value.The vehicle is…Northwest Iron and Steel is considering getting involved in electronic commerce. A modest e-commerce package is available for $30,000. The company wants to recover the cost in 2 years. Find the equivalent amount of new revenue that must be realized every 6 months at an interest rate of 3% per quarter using a factor formula, and a single-cell spreadsheet function that includes an EFFECT function. Round your answer to the nearest whole dollar.Solve each of the following questions using both pricing formulas and Excel. 5. You are managing a small company and need to buy some equipment for your product line. Kangaroo Manufacturing is offering free credit on a $20,000 piece of equipment. You pay down $2,000 and then $600 a month for the next 30 months. Turtle Machines does not offer free credit but will give you $2,000 off the list price. If the rate of interest is 10% (APR) a year, which company is offering a better deal?
