Question

Sam is planning to start a pool cleaning business from his home. He has developed the following cost analysis for the set-up and operation for the first year of his business. He has $9,000 in savings and $23,000 in credit that he can use for the business. Will Sam be able to afford the operational costs of the first year of business on his own?

Item
Cost
Truck
$9,000
Pool Cleaning Supplies
$6,000
Payroll
$23,000
Advertising
$1,500
a.
No, Sam will be short $7,500.
b.
No, Sam will be short $15,500.
c.
Yes, Sam will have $7,500 to spare.
d.
Yes, Sam will have $15,500 to spare.


Please select the best answer from the choices provided

A
B
C
D
Mark this and return

Answer 1

A

Total costs = $9,000 + $6,000 + $23,000 + $1,500 = $39,500.
Available funds = $9,000 + $23,000 = $32,000.
Shortfall = $39,500 − $32,000 = $7,500.