Suppose a New Business Makes a $1,000 Profit in Its

question 9

Multiple Choice

Suppose a new business makes a $1,000 profit in its first month and has its profit increase by 9% each month for the next 2 years. How much profit will it earn in its first year? Round your answer to the nearest cent. ​

• A)$2,014.07
• B)$7,523.33
• C)$40,281.44
• D)$20,140.72
• E)$76,789.81

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Definitions:

Creditors

Individuals or entities to whom money is owed by a debtor, usually in the form of loans or credit extended for business operations.

Millions

A numeric unit indicating one thousand thousand (1,000,000) of any quantity.

Net Working Capital

The difference between a company’s current assets and its current liabilities, indicating short-term financial health.

Taxable Income

The amount of income subject to tax, after all deductions and exemptions are taken into account.