Rain Forest Inc. Imports fruit from Latin America and sells them in boxes to retailers in the U.S.

a) Today the company signed a contract with a major software company to purchase, customize, and implement an Enterprise Resource Planning (ERP) system. Rain Forest is taking a loan from a bank of $3 million, which is the value of the ERP contract. The bank offers an APR (annual percentage rate) of 4.3% for 120 monthly payments. How much Rain Forest has to pay per month for the loan taken to purchase the warehouse?

b) A competing bank heard that Rain Forest will take a loan and made an offer that is supposedly more advantageous for Rain Forest than the loan described in (a). The competing bank is offering a $3 million loan to be paid back in 125 monthly payments of $30 thousand each. Assuming that Rain Forest wants the loan with the lowest APR, which loan should they take?

c) The cost of each box of fruit is $4.35. Rain Forest sells each box for $4.89 to retailers. Retailers buy 45,000 boxes per month. Considering that the only relevant fixed expense is the payment made each month for the ERP contract described in (a), show total revenue, total variable cost, fixed expenses, and profit (or loss) per month. Is Rain Forest profitable? If not, would Rain Forest be profitable if it decided not to implement the ERP system? Tip: be careful with the signs, especially if you are referencing a result from item (a)!

d) Considering the price in c), build a table that shows total revenue for several quantities of boxes. Your table should show revenues for quantities varying from 40,000 to 60,000 in steps of 2,000. The result should be a table with 2 columns (quantity and revenue), and 11 rows (one for each quantity).

e) Considering the cost and fixed expense in c), add a column to the table above that is (total variable cost + fixed expense with ERP).

f) Add a line chart with one line for total revenue, another line for (total var. cost + fixed expense with ERP), and quantity sold in the horizontal axis. Based on the chart, what is the quantity the company needs to sell to break-even? How would the break-even quantity change if the ERP system cost 20% less?

g) Considering the variable cost and fixed expense in c), build a table that shows profit (or loss) for several quantities of boxes and prices per box. Your table should show profits for quantities varying from 40,000 to 60,000 in steps of 2,000, and prices varying from $4.79 to $5.19 in steps of $0.05.

h) For a selling price of $4.89 per box, what is (approximately) the quantity of boxes that Rain Forest needs to sell to break-even? Is this quantity the same as the one you found in the chart? (It should.)

i) For a total quantity of 50,000 boxes per month, what price (approximately) does Rain Forest need to charge per box to make a profit of more than $3,600 per month?