Question

Korey is planning to open a comic book store. His store will cost $12,500 to open and will come with a $8,000 total annual operational cost. If his store makes $12,000 in profit during the first year, and profits increase by 6% each year from then, how long will it take for Korey to see an overall profit in his business (where total profits exceed total expenses)? a. Korey will see an overall profit in his first year of business. b. Korey will see an overall profit in his second year of business. c. Korey will see an overall profit in his third year of business. d. Korey will see an overall profit in his fourth year of business.

Answer 1

Answer:

c. Korey will see an overall profit in his third year of business

Step-by-step explanation:

His cost for first year

= 12500+8000

=$ 20500

Profit first year= $12000

Net Profit first year= -$8500

Second year cost= $8000

Profit second year

= 12000+12000(0.06)

= 12000+720

=$ 12720

Net profit second year = -8500+12720-8000

= -3780

Third year

Cost = $8000

Profit= 12720+12720(0.06)

Profit=$13483.2

Net profit= 13483.2-8000-3780

Net profit= $1703.2