Your child wants to start a lemonade stand. The ingredients would cost: S3 for 3 pounds of sugar (half a pound per gallon) $9 for 3 dozen lemons (6 lemons per gallon) $4 for a dozen oranges (2 oranges per gallon) S3 for 100-count of plastic cups 6 gallons of lemonade will be sold (use 100 cups sold @ S0.50 each) 1. What is the ROI (write as a percentage)? 2. Is it a good idea (Yes or No, based on ROI)?
Your child wants to start a lemonade stand. The ingredients would cost: S3 for 3 pounds of sugar (half a pound per gallon) $9 for 3 dozen lemons (6 lemons per gallon) $4 for a dozen oranges (2 oranges per gallon) S3 for 100-count of plastic cups 6 gallons of lemonade will be sold (use 100 cups sold @ S0.50 each) 1. What is the ROI (write as a percentage)? 2. Is it a good idea (Yes or No, based on ROI)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![### Start a Lemonade Stand: Understanding Costs and ROI
Your child wants to start a lemonade stand. Below are the estimated costs for the ingredients and materials needed:
- **$3 for 3 pounds of sugar** (each pound can make half a gallon of lemonade)
- **$9 for 3 dozen lemons** (6 lemons are required per gallon of lemonade)
- **$4 for a dozen oranges** (2 oranges are needed per gallon of lemonade)
- **$3 for a 100-count of plastic cups**
- You plan to sell **6 gallons of lemonade**, assuming you will sell **100 cups** priced at **$0.50 each**.
### Questions:
1. **What is the ROI (Return on Investment) (write as a percentage)?**
- Calculate the total costs.
- Calculate the total revenue.
- Use the formula:
\[
\text{ROI} = \left( \frac{\text{Total Revenue} - \text{Total Cost}}{\text{Total Cost}} \right) \times 100
\]
2. **Is it a good idea (Yes or No, based on ROI)?**
- Evaluate whether the ROI is positive or negative.
### Calculations:
1. **Total Cost:**
- **Sugar:** $3
- **Lemons:** $9
- **Oranges:** $4
- **Cups:** $3
\[
\text{Total Cost} = $3 + $9 + $4 + $3 = $19
\]
2. **Total Revenue:**
- **100 cups at $0.50 each:**
\[
\text{Total Revenue} = 100 \times 0.50 = $50
\]
3. **ROI Calculation:**
\[
\text{ROI} = \left( \frac{50 - 19}{19} \right) \times 100 = \left( \frac{31}{19} \right) \times 100 \approx 163\%
\]
### Conclusion:
Based on the ROI calculation, this appears to be a good idea as the ROI is significantly positive.
\[ \text{Is it a good idea?} \quad \text{Yes} \]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1ca7387d-b450-4a9e-ae7e-0c4b39a366a7%2F070dca5c-9505-48a3-a0ae-7e3bbbc1569a%2F77lw33_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Start a Lemonade Stand: Understanding Costs and ROI
Your child wants to start a lemonade stand. Below are the estimated costs for the ingredients and materials needed:
- **$3 for 3 pounds of sugar** (each pound can make half a gallon of lemonade)
- **$9 for 3 dozen lemons** (6 lemons are required per gallon of lemonade)
- **$4 for a dozen oranges** (2 oranges are needed per gallon of lemonade)
- **$3 for a 100-count of plastic cups**
- You plan to sell **6 gallons of lemonade**, assuming you will sell **100 cups** priced at **$0.50 each**.
### Questions:
1. **What is the ROI (Return on Investment) (write as a percentage)?**
- Calculate the total costs.
- Calculate the total revenue.
- Use the formula:
\[
\text{ROI} = \left( \frac{\text{Total Revenue} - \text{Total Cost}}{\text{Total Cost}} \right) \times 100
\]
2. **Is it a good idea (Yes or No, based on ROI)?**
- Evaluate whether the ROI is positive or negative.
### Calculations:
1. **Total Cost:**
- **Sugar:** $3
- **Lemons:** $9
- **Oranges:** $4
- **Cups:** $3
\[
\text{Total Cost} = $3 + $9 + $4 + $3 = $19
\]
2. **Total Revenue:**
- **100 cups at $0.50 each:**
\[
\text{Total Revenue} = 100 \times 0.50 = $50
\]
3. **ROI Calculation:**
\[
\text{ROI} = \left( \frac{50 - 19}{19} \right) \times 100 = \left( \frac{31}{19} \right) \times 100 \approx 163\%
\]
### Conclusion:
Based on the ROI calculation, this appears to be a good idea as the ROI is significantly positive.
\[ \text{Is it a good idea?} \quad \text{Yes} \]
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