1. Your Buddy comes to you with a sure fire way to make some quick money and help pay off your student loans. His idea i

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1 Your Buddy Comes To You With A Sure Fire Way To Make Some Quick Money And Help Pay Off Your Student Loans His Idea I 1 (41.41 KiB) Viewed 35 times

1. Your Buddy comes to you with a sure fire way to make some quick money and help pay off your student loans. His idea is to sell T-shirts with the words "I get" on them. "You get it?" He says, "You see all those bumper stickers and T-shirts that say, 'got milk' or 'got surf.' So this says, 'I get." It's funny! All we have to do is buy a used silk screen press for $4,000 and we are in business!" Assume there is $4,000 fixed costs, and you depreciate the 4,000 in the first period. Further, taxes are 34 percent a. How many shirts would you need to sell to break even if each shirt cost $16 to make and you can sell them for $20 a piece? Now assume one year has passed and you have sold 5,000 shirts! You find out that the Dairy Farmers of America have copyrighted the "got milk” slogan and are requiring you to pay $20,000 to continue operations. You expect this craze will last for another five years and that your discount rate is 10 percent b. What is the present value break-even point for you enterprise now?