Suppose a businessman is considering the purchase of a business machine that is expected to be obsolete in five years. The machine is worth Php 100,000.00.The prevailing rate of interest is 15% per year. Suppose he made an estimate of his gross yearly income as follows:
Year
Income
1- Php 20,000.00
2- Php 25,000.00
3- Php 35,000.00
4- Php 30,000.00
5- Php 28,000.00
Is the business profitable? Why or why not?
Answers
Answered by
0
Answer:
loss
Explanation:
expense 175000php
profit 138000php
=loss of 37000
Answered by
0
Answer:
The Business is Quite PROFITABLE.
Explanation:
keeping in mind that the machine becomes OBSOLETE in five years, good profits can be expected from this Business.
A profit of 20% can be expected.
In fact the Business man recovers his own investments with some good and appreciable amount of profit being made in such a deal.
- the total investment along with interest sums upto 115,000
as the initial amount + interest amount adds upto 115,000.
- the yearly income for 5 successive years add upto 138,000
Gross 5 year Income gives - initial Investment :
(138,000 - 115,000 = 23,000)
thus a profit of 23,000 is expected which is equal to almost 20% of total investments.
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