Should I Buy New Equipment Now? Essay
$975 x 18 days = $17,550 3. If the engraving business makes $975 per day in revenue and generates a net profit of 25%, how much profit is generated per day?
$975 x 25% = $243.75
$975 + $243.75 = $1,218.75 4. What is the total net profit lost if the engraver is out of commission for the full 18 days?
$1,218.75 x 18 days = $21937.50 5. If the engraver is kept busy 269 full days per year, how much revenue (gross profit) will be generated?
Revenue = (269 days x $975) – $28,000
Revenue = $262,275 - $28,000
Revenue = $234,275
6. If the engraver is kept busy 269 full days per year, how much net profit will be generated?
Net Profit = ($1,218.75 x 269) – $234,275
Net Profit = $327,843.75 - $234,275
Net Profit = $93,568.75 7. Given a 25% profit margin and $975 per day in revenue, how many days would it take for the new engraver to earn back the total cost of purchase, if the entire net profit were allocated to pay for the unit? Round your answer to the next full day.
$28,000 / $1,218.75 = 22.9
23 days 8. What other factors should Charlie consider in order to make a good business decision?
Charlie should consider selling his old engraver to someone that may have use for it and use the money to put towards the new engraver, resulting in a smaller loan and less to pay back. 9. Should Charlie