Mary is considering opening her own business. Mary believes that, with a $30,000 vehicle with a $5,000 salvage value after 10 years and $5,000 in assembly tools and equipment (also a 10-year life), she will be able to generate $70,000 a year in sales. Her other projections include an initial inventory of $15,000, assembly training for $2,500, cost of goods sold approximately $35,000, selling expenses of $9,000 and general and administrative expenses of $7,000. She expects to pay 25% of her earnings in taxes and must earn a 15% return. Is this a profitable business under these conditions?
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This is for a college Finance class, I am in my senior year of college for a Bachelors in Business Administration. I have tried working it out on the Income Statement, Balance sheet, and Owners Equity but still can't figure it out.
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