Module Two Problem Set

question 7

Paul, the owner of a local poster shop, comes to you for help. We ve only been breaking even the past two years, and im getting very frustrated? I don' ichow what to do because If eel like Ive already tried to improve our processes as much as possible, but we stali haverit been able to generate a profit. Do you have any suggestions as fo how we can furn things around? 1 just don't think we can even consider moving forward with this business less we can earn $11,000 in operating income next year. Even then well have to think long and hard about what the future holds: Paul shares the tollowing information with you, as you ponder different scenarion to help your friend 1. tower tie seliliog price ty nong to increane saies volume by 5K 2. Advertise on the radio and with social inedia, for a combinel cost of 51.000 ts increase volume by 10x onin. sales volume try 20K parentheses es. (45). Round anwers to 2 decimal ploces es. 5,125.25J After these initial discussions, Paul realizes that he has ienored ary possible tax effects thus far, Heestimates that his buniness will be subject to a 25% tax rate Will any of the proposed scenarios allow hintto reach an after-taxincome gosl of 511,0007 if sa, which one(v)? (Pound antwers to 2 deximal places es 5,125.25 )