Asked by RICKY
You are graduating in September and would like to start your own business making wine coolers. You collect the following information on the initial costs:
Cost of Plant & Equipment = $500,000
Licensing & Legal Costs = $50,000
You also have been left a tidy inheritance that will cover the initial cost, and is currently invested in a bank account earning 10%. You estimate that you can sell one million bottles a year at $1/bottle. You estimate your costs as follows:
Variable costs/bottle = 50 cents
Fixed Costs/ year = $ 200,000
Adding up state and local taxes, you note that you will be in the 50% tax bracket. To be conservative, you assume that you will terminate the business in five years and that you will get nothing from the plant and equipment as salvage (you also use straight line depreciation.). Should you take on the project?
Cost of Plant & Equipment = $500,000
Licensing & Legal Costs = $50,000
You also have been left a tidy inheritance that will cover the initial cost, and is currently invested in a bank account earning 10%. You estimate that you can sell one million bottles a year at $1/bottle. You estimate your costs as follows:
Variable costs/bottle = 50 cents
Fixed Costs/ year = $ 200,000
Adding up state and local taxes, you note that you will be in the 50% tax bracket. To be conservative, you assume that you will terminate the business in five years and that you will get nothing from the plant and equipment as salvage (you also use straight line depreciation.). Should you take on the project?
Answers
Answered by
Anonymous
How to do
There are no AI answers yet. The ability to request AI answers is coming soon!
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.