New engraver cost: $25,000 one-year loan cost: 12% interest revenue
New engraver cost: $25,000
One-year loan cost: 12% interest
Revenue per day from engraving: $975
Profit margin on engraving: 25%
Potential days lost, if engraver breaks: 18
1. The local bank will loan Charlie $25,000 for 1 year at an interest rate of 12% with only one payment due at the end of the year. If Charlie borrows the full $25,000 for the new engraver, what will the total cost of the loan be?
2. Calculate the total amount of revenue (gross profit) that will be lost if the engraver breaks.
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?