Question

Rockstar Games is thinking about developing a new thrilling game, Excel at Excel! To date they have spent $45,000 on development. But the launch will require additional funding. A new server needs purchased for hosting and will cost $125,000. The server lasts ten years and is depreciated to $5,000 on a straight line basis. A new software engineer will need to be hired to run continuing maintenance and the game cannot run without this employee. The starting salary will be $85,000 and a raise of 3% per year is estimated. A marketing associate currently on staff earns $35,000 per year. This associate will support the launch. If and when sales exceed 2100 units per year, the associate will be awarded a $3,000 bonus in each year those sales eclipse the target. Historically Rockstar has seen returns of 13.35% on its game releases. The entire purchase of the server will be made using a line of credit which requires a 4% simple interest rate. Additional advertising expenditures will amount to 4% of revenues each year. Additional taxes on profits from Excel at Excel! will be levied at 22.5%. If EBT is negative, no tax will be paid. The sales estimates are as follows:

          Rockstar Games is thinking about developing a new thrilling game, Excel at Excel! To date they have spent $45,000 on development.
But the launch will require additional funding. A new server needs purchased for hosting and will cost $125,000. The server lasts ten
years and is depreciated to $5,000 on a straight line basis. A new software engineer will need to be hired to run continuing maintenance
and the game cannot run without this employee. The starting salary will be $85,000 and a raise of 3% per year is estimated.
A marketing associate currently on staff earns $35,000 per year. This associate will support the launch. If and when sales exceed
2100 units per year, the associate will be awarded a $3,000 bonus in each year those sales eclipse the target. Historically Rockstar has
seen returns of 13.35% on its game releases.
The entire purchase of the server will be made using a line of credit which requires a 4% simple interest rate. Additional advertising
expenditures will amount to 4% of revenues each year.
Additional taxes on profits from Excel at Excel! will be levied at 22.5%. If EBT is negative, no tax will be paid.
The sales estimates are as follows:

Rockstar Games is thinking about developing a new thrilling game, Excel at Excel! To date they have spent 45,000 on development.
But the launch will require additional funding. A new server needs purchased for hosting and will cost125,000. The server lasts ten
years and is depreciated to 5,000 on a straight line basis. A new software engineer will need to be hired to run continuing maintenance
and the game cannot run without this employee. The starting salary will be85,000 and a raise of 3% per year is estimated.
A marketing associate currently on staff earns 35,000 per year. This associate will support the launch. If and when sales exceed
2100 units per year, the associate will be awarded a3,000 bonus in each year those sales eclipse the target. Historically Rockstar has
seen returns of 13.35% on its game releases.
The entire purchase of the server will be made using a line of credit which requires a 4% simple interest rate. Additional advertising
expenditures will amount to 4% of revenues each year.
Additional taxes on profits from Excel at Excel! will be levied at 22.5%. If EBT is negative, no tax will be paid.
The sales estimates are as follows:

Added by Jerry R.

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