Scott Thatcher is the owner of the 50 Yard Line Lounge. He believes his business is good,

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Scott Thatcher is the owner of the 50 Yard Line Lounge. He believes his business is good, and from what he reads, his profit margins are reasonable. But Scott wants to know more about the financial performance of his business.

Help Scott complete and analyze the following income statement prepared at the end of last year, as well as the additional information provided, and then answer the questions Scott is pondering.

50 YARD LINE LOUNGE Income Statement For the Year Ended December 31, 2010 Total Cost of Sales GROSS PROFIT:
Total Gross Profit OPERATING EXPENSES:
Salaries and Wages Food 102,556 Beverage 699,505 Total Sales 7 COST OF SALES:
Food 26,510 Beverage 151,000 Food 76,046 Beverage 548,505 161,500 Employee Benefits 3,500 Direct Operating Expenses 61,500 Music and Entertainment Marketing Utility Services Repairs and Maintenance Administrative and General Occupancy Depreciation Total Operating Expenses Operating Income Interest Income Before Income Taxes Income Taxes 7,624 18,250 26,100 5,325 108,100 24,500 5,650 84,889 47,000

a. What was Scott’s |
before-tax income?

b. What was Scott’s | ‘@
after-tax net income?

c. Assume Scott’s investment in the Lounge was $750,000. Calculate Scott's before-tax ROI.
Money Earned on Funds Invested oy

d. Assume again Scott's investment in the Lounge was $750,000. Calculate his after-tax ROI.
| Money Earned on Funds Invested Funds Invested

e. What before-tax income would Scott need to return a before-tax ROI of 17% on his invested funds of $750,000?
Money Earned on Funds Invested ea

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