Hassan ships cars into Ghana, Nigeria, and Benin republic from Europe. The import duty costs are 10%, 25%, and 12% respectively for used cars from the three countries and 25%, 40% and 20% for new cars.
Assuming VAT is the same in all three countries and Hassan plans to buy a new car lot worth $100,000 in three months for his business expansion. His current car lot capacity in each country is 50 cars, but he has a credit facility in Europe that allows him to ship as many cars as he wants. Hassan has the following options as a strategy to meet his planned target.
A: Give discounts that guarantees the sale of at least 10 cars every week
B: Ship 100 cars for the two months, lease space from his friends at a cost, and maintain the standard markup
C: Import more luxury cars with a huge markup
Which of the above options is best for Hassan?
A
B
C
D
Answers
Answer:A
Step-by-step explanation:
Answer:
The correct option is A
Step-by-step explanation:
Given:
Import tax into Nigeria for used car = 25%
Import tax into Nigeria on new car = 40%
Car to import = $12,000 used car
Car to import = $30,000 new car
Discount = 10%
Profit = 15%
Find:
What should the markup be?
Solution
Find out the price of two cars:
import tax for used car = 25%
Price with import tax = 100 + 25
Price with import tax = 125%
Price with import tax = 125% x 12,000
Price with import tax = 1.25 x 12,000
Price with import tax = $15,000
import tax on new car = 40%
Price with import tax = 100 + 40
Price with import tax = 140%
Price with import tax = 140% x 30,000
Price with import tax = 1.4 x 30,000
Price with import tax = $42,000
Total price of 2 cars with import tax = $15000 + $42000
Total price of 2 cars with import tax = $57,000
Find the price after profit:
Profit = 15%
Price after profit = 100 + 15
Price after profit = 115%
Price after profit = 115% x 57,000
Price after profit = 1.15 x 57,000
Price after profit = $65,550
Find the price before discount:
Discount = 10%
Price after discount = 100 - 10
Price after discount = 90%
90% = $65,550
100% = (65550 ÷ 90 ) x 100
100% = $72,833
Answer: He would have to sell two cars for $72,833 to make a profit of 15%
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