Chapter 5.4, Problem 4E

EXERCISES

Net Profit Margin The net profit margin tells how much profit a company makes for every dollar it generates in revenue. If $N$ is the net income (the income after tax have been paid) and R is the total revenue, then the net profit margin $M$ is given by,

$M\left(N,R\right)=\frac{N}{R}$

A certain company pays a tax rate of 20% on its income.

a. Use $I$ for the income before taxes, and express the net income N in terms of $I$. (Be careful: $N$ is the part of $I$ that is left after taxes-not the part you pay in taxes.).

b. Use a formula to express the net profit margin in terms of the variables $I$ and $R$.