Korey’s comic book store has been up and running for 4 years. korey feels that his store has been successful and is considering moving to a larger property to allow for greater inventory and customer opportunities in his business. he would like investors to cover the cost of his expansion.
the profits of korey’s comic book store for its first four years are outlined below. according to this information, what would be the best estimate for korey to quote as expected profits in the next year in his new business plan?
year
net profits
1
$14,250.00
2
$15,390.00
3
$16,621.20
4
$17,950.90
5
a.
$20,550.19
b.
$19,090.90
c.
$19,280.60
d.
$19,386.97
Had to look for the rest of the details and here is my answer.
Based on the given table of data attached to this question, the best estimate for Korey to quote as expected profits in the next year for his business plan next year would be $19,386.97. Here is the given information of his net year profits.
Year
Net Profits
1: $14,250.00
2 : $15,390.00
3 : $16,621.20
4 : $17,950.90
5 : ?
Hope this answer helps.
D. $19,386.97
Step-by-step explanation:
When determining expected profits, one should analyse net profits results from previous years in order to observe a trend or pattern and consequently make a projection. In this case, Koreyâs comic book store has been experiencing a steady 8% growth in net profits in each year for the previous 4 years:
[tex]14,250.00 * 1.08 = 15,390.00\\15,390.00*1.08 = 16,621.20\\16,621.20*1.08=17,950.90[/tex]
Therefore, it is fair to assume that the company will continue to experience this steady growth and project an 8% increase in profits for the next year:
[tex]Profits = 17,950.90*1.08=19,386.97[/tex]
Year Net Profit
1 $14,250.00
2 $15,390.00
3 $16,621.20
4 $17,950.902
We need to get the increase of the net profit of the current year from the previous year.
Percentage increase = (Current year - Previous Year)/ Previous Year * 100%
Year 2: (15,390 - 14, 250) / 14,250 * 100% = 0.08 * 100% = 8%
Year 3: (16,621.20 - 15,390) / 15,390 * 100% = 0.08 * 100% = 8%
Year 4: (17,950.90 - 16,621.20) / 16,621.20 * 100% = 0.08 * 100% = 8%
Every year the net income increases by 8%. So, the net income in Year 5 will be:
17,950.90 x 1.08 = 19,386.97 Choice D.
The answer is D: $19,386.97
Explanation:
D. $19,386.97 is the right answer
had it on a test
D. $19,386.97 is the right answer
had it on a test
Year Net Profit
1 $14,250.00
2 $15,390.00
3 $16,621.20
4 $17,950.902
We need to get the increase of the net profit of the current year from the previous year.
Percentage increase = (Current year - Previous Year)/ Previous Year * 100%
Year 2: (15,390 - 14, 250) / 14,250 * 100% = 0.08 * 100% = 8%
Year 3: (16,621.20 - 15,390) / 15,390 * 100% = 0.08 * 100% = 8%
Year 4: (17,950.90 - 16,621.20) / 16,621.20 * 100% = 0.08 * 100% = 8%
Every year the net income increases by 8%. So, the net income in Year 5 will be:
17,950.90 x 1.08 = 19,386.97 Choice D.