Sunday, November 4, 2012

Textbook Page 61 Question 19

19.) A company made a profit of $8.6 million in its first year. It lost $5.9 million in its second year and lost another $6.3 million in its third year.

A.) What was the average profit or loss per year over the first three years?

The company has the average loss of $1.2 million per year over the first three years.

How much money they had:

Year 1= $8.6 million
Year 2= $2.7 million
Year 3= -$3.6 million
-$3.6 million divided by 3 (number of years) = -$1.2 million dollars.

B.) The company broke even the first four years. What was its profit or loss in the fourth year?

The company made the profit of $3.6 million.

By the end of the third year the company had the debt of $3.6 million and in order for them to get that money back they will have to make the profit of $3.6 million.

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