Lucy is starting a graphic design business, working from home to save on costs. However, the computer equipment, software and administrative costs to get started still add up to $8105.00 and her monthly expenses are $1150.00.

Question

Lucy earns an average of $1888.00 per month. How many months will pass before she has paid off her start-up costs?

Answer 1

To calculate how many months it will take for Lucy to pay off her start-up costs, we need to first determine the total amount she needs to cover.

Start-up costs: $8105.00
Monthly expenses: $1150.00
Monthly earnings: $1888.00

Total amount to cover: $8105.00 + $1150.00 = $9255.00

Each month, Lucy earns $1888.00 but her expenses are $1150.00 for a total net profit of $1888.00 - $1150.00 = $738.00

Now let's divide the total amount to cover by the net profit per month to find out how many months it will take Lucy to pay off her start-up costs:

$9255.00 / $738.00 = 12.53

Since Lucy cannot partially pay off her start-up costs, we will round up to ensure she has covered the full amount. Therefore, it will take Lucy approximately 13 months to pay off her start-up costs.