Question

Two quick questions: please show basic caculations.

1.) Determine the payback period if the initial cost is $50,000, billable revenue of $50 per hour and cost to operate $15 per hour plus the operator cost at $20 per hour. The billable hours per year are 1,020. MUST show calculations to receive full credit

2.) Calculate the total profit and percentage of construction revenue that became profit: Revenue: $700,000 Total construction costs: $200,000 General overhead: $100,000. MUST show calculations to receive full credit.

Answer 1

Question 1)

Given

Initial cost I=$50000

Billable revenue R=$50 per hour

Operating cost O=$15 per hour

Operator cost C=$20 per hour

Billable hour in a year B=1020

So Total Net Profit per year P=(R-O-C)*B=(50-15-20)*1020=$15300

Payback period =I/P=50000/15300=3.27 years

Question 2)
Given

Revenue R=$700000

Construction cost C=$200000

Overhead O=$100000

Profit P=R-C-O=700000-200000-100000=$400000

Profit percentage of revenue = P*100/R=400000*100/700000=57.14%