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Help Save & ExitSubmit 9 You skipped this question in the previous attempt A professional photographer who specializes in wedding-related activities pakd $45,000 for equipment that will have a $2000 salvage value after 5 years. He estimates that his costs associated with each event amount to $65 per day. If he charges $450 per day for his services, how many days per year must he be employed in order to break even at an interest rate of 8% per year? The number of days required for break even is determined to be per year. points 0432 39 eflook Hint References Prex 8 of 13 Next> upExplanation / Answer
A professional photographer paid “45,000” for equipment, we can assume it as “initial investment” with salvage value “2,000”. His estimated cost is “65” and charges “450” per day, => net income per day is “450-65=385”.
So, if he will work “n” days => yearly income is “385*n”.
So, at the break even the PW should be “0” at the given rate of return
PW = (-45,000) + 385*n/1.08 + 385*n/(1.08^2) + 385*n/(1.08^3) + 385*n/(1.08^4) + 385*n/(1.08^5) + 2000/1.08^5 = 0.
=> (-45,000) + 1,361.17 + 385*n( 1/1.08 + 1/1.08^2 + 1/1.08^3 + 1/1.08^4 + 1/1.08^5) = 0.
=> (-43,638.83) + 385*n[ 0.9259 + 0.8573 + 0.7938 + 0.7350 + 0.6806] = 0.
=> 385*n*3.9926 = 43,638.83, => n = 43,638.83 / (385*3.9926) = 28.39
=> number of days should be approximately equal to “28” per year at the break even.
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