Problem Solving

Can anyone please help me figure out how the answer to the first question is A and second question D?

Thanks!

It's pretty easy, though.

For the first question,

Profit = Revenue - Expenses
= Revenue * 1,000€ - (# of professionals) * 3,500€
= 3,728*1,000€ - 110*3,500€
= 3,343 * 1,000€
= A

For the second question, I'd need to know whether the business is Type I or Type II (or both).

Matt -

I understand how the answer is A for question 1, but I have not been able to figure out how the answer is D for question 2. I keep getting C instead.

Could you help?

Thanks!

Matt@VeritasPrep wrote:It's pretty easy, though.

For the first question,

Profit = Revenue - Expenses
= Revenue * 1,000€ - (# of professionals) * 3,500€
= 3,728*1,000€ - 110*3,500€
= 3,343 * 1,000€
= A

For the second question, I'd need to know whether the business is Type I or Type II (or both).

For company A:

Profit = 6,108,000-(281*3500) = 5,124,500

Type I investment is 50,000 since the growth between year X and year X-1 is 18%
Type II investment is 500 euro for professionals from 100 to 150 and 1,000 euro for professionals above 150.
so Investment type II is (50*500)+(131*1000) = 156,000

Money to be split = 5,124,500 - 50,000 - 156,000 = 4,918,500
For each partner = 4,918,500/34 = 144,661 = 144.66

Personally I think Type II is poorly written. The first sentence reads "no investment will be made if the number of professionals in the company is less than 100" which makes you think each condition is separate depending on the number of professionals in the company

mserje wrote:Matt -

I understand how the answer is A for question 1, but I have not been able to figure out how the answer is D for question 2. I keep getting C instead.

Could you help?

Thanks!

Eek, somehow I never saw this message! Profuse apologies!

The only way I can get to D is by assuming:

i) The company makes both Type I and Type II investments
ii) Expenses per person only are paid per professional, not also per partner
iii) "between 100 and 150" means 100 ≤ x ≤ 150 (which is terrible)

Assuming all that, we have

A's growth = 6.108 / 5.172 ≈ 1.18%, so that merits a 50,000€ investment.

A has 281 professionals, so we invest another 51*500€ + 131*1000€ => 156,500€.

We know Profits = Revenue - Expenses = 6,108,000€ - 3,500*281€ = 5,124,500€

We know the money to be split = Profits - Investment = 5,124,500€ - (50,000 + 156,000)€ = 4,918,500

We're splitting that among 34 partners, so 4,918,500€/34 ≈ 144,661€