Real-Life Math
You're an independent cartoonist preparing to publish your first
comic book.
A few months ago, you sent a couple of copies to a comic
book distributor, who liked your work and agreed to advertise it in the catalog
of new comics he sends out to national retailers.
The retailers obviously
liked your work as well, because the distributor told you he needed 8,000
copies of your comic book!
Now comes the tough part -- finding the
money you'll need to get copies of your comic printed by a professional printer
and produce promotional posters to advertise your comic book.
You decide
to go to get a small business loan from your local bank. Since you've got
the order form from the distributor, you should be a pretty safe bet for the
loan. But before you go into the loans office, you have to be able to show
that you can earn enough money to pay back the bank and pay yourself (10 percent
minimum) with the earnings of the comic book sales.
After a visit to
the printers, you find out it will cost $480 for the promotional posters and
$1,000 to print the comics.
You sell each comic to the retailer for
$2.20.
If you account for an interest rate of 4 percent of the amount
borrowed over 4 months (the amount of time you need to repay
the loan), the distributor's take (25 percent of the sales) and the 10 percent
that you need to pay yourself, what is your total profit?