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Bona Bonjela's Salary per year = $45,500
Leslie Bonjela's Salary per year = $18,500
Interest of deposit per year = $23,660
Income = $87,660
Bona and his wife earn $64,000 amount per annum when Bona Bonjela works as a bricklayer and his wife, Leslie works in a part- time job. As well as Leslies inheritance of $300,000 and their salaries also $45,500 and $18,500 invested in a bank deposit, it will generate a 6.5% interest per annum. So simply they earn an interest $23,660 per annum. Then they earn revenue about $87,660 for a year.
If they buy a news agency costing $450,000 there is a gross profit calculation in below.
Sales Gross Profit Amount
Newspaper and Magazines $1,200,000 15% $180,000
Stationary $154,000 25% $38,500
Books $172,000 15% $25,800
Confectionary $12,500 45% $5,625
Other Sales $24,320 25% $6,080
Total $1,562,820 $256,005
There will be sales revenue about $1,562,820 and gross profit of $256,005. Before that Bona and Leslie have approached to bank and they took a business loan of $150,000 at 8.25% per annum. Then there will be an annual interest about $12,375.
Interest for Loan = $150,000 8.25% = $12,375
Bona and Leslie's Business
For the year ended
Sales $ 1,562,820
Cost of sales (1,306,815)
Gross Profit 256,005
Shop attendant wages 28,500
Telephone and utility 12,500
Vehicle expenses 15,890
Trade subscriptions 3,200
Depreciation expenses 11,000
Loan interest 12,375 (149,825)
Net Profit 106,180
Bona and Leslie both will be getting a net profit about $106,180 from the business. But they can only earn revenue about $87,660 from their current jobs and interest from the bank deposits. So we can assume that they will be better off financially by buying the news agency, because they earn a profit more than their salary and excess interest. It is better off from financially, but when it is come to long term it will be earn losses. Therefore, there will be decrease in demand of newspapers, because most people will be using e-newspapers, e-mails, etc. Then Bona and Leslie will have to add more things to business for earn profits.
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