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A Lot of Work Has already been put into this assignment
New Project Templates was provided today:
Assignment 2: Course Project—Cost-Volume-Profit Analysis with Capital Budgeting
In this assignment, your goal is to use CVP analysis in a presentation of your project to enable a prospective investor to decide if your project is worth investing in. You will apply the concepts of CVP analysis learned in Modules 3 and 4 to the project you selected in Module 2.
Review the
Course Project Guidelines
.
Assignment Overview:
From the Microsoft Excel worksheet you developed in Modules 3 and 4, create a basic pro forma statement necessary to convince someone to provide the start-up funding of the project and then use this information, along with other outside research to create a Microsoft Power Point presentation. The slides of your presentation should be visually appealing—only containing the key points while the speaker notes associated with each slide should provide the essential details.
Assignment Tasks:
To create a pro forma statement:
Calculate the break-even point for the project and the expected financial returns. (This is the work you have been doing in the CVP template).
Save your final calculations as MS6010_M5A2_CVP_Lastname_Firstinitial.xls. The completed template must accompany the slide presentation.
- Open the Cost-Volume-Profit spreadsheet that you have been working in and calculate the break-even point.of your proposed project. (Access the CVP template if you have not yet begun this work)
- The project must use a 6.5% cost of capital and a tax rate of 25%.
- Complete IRR (Internal Rate of Return) and NPV (Net Present Value) for the project.
- You should have also considered key points of any intangible benefits or costs associated with the project and begun supplementing your pro forma statement with sufficient background information to enable a prospective investor to decide if your company is worth investing in.
The detail must have enough historic data to give an investor an understanding of trends.
You should also have sufficient written background so that a potential investor understands the business. Use the speaker notes area of your presentation to add background information that you would communicate verbally in a presentation. This background information should be 1 to 2 pages in length.
Make sure you show your Excel formulas or provide calculations so your instructor can review your work.
Submission Details:
Use this
APA Citation Helper
as a convenient reference for properly citing resources.
Your submission should include the following.
- Your MS Excel worksheet named MS6010_M5A2_CVP_Lastname_Firstinitial, detailing all calculations.
- A minimum of 15 Microsoft PowerPoint slides (full copy of slides with notes) presentation.
- Include the required information concisely highlighting only the key points necessary for the purpose of this presentation, which is to convince a prospective investor to decide if your project is worth investing in.
- Your presentation should include sections addressing the topics listed and presented in bulleted format, avoiding long paragraphs of content.
- Speaker notes totaling 2–3 pages providing the background summary and details for each slide.
Support your predictions and suggestions with scholarly resources and empirical evidence.
Use APA format to cite your sources.
> Breakeven Analysis ($)
(%)
.0
%
0. 0.0% 0.0% $ – $ – $ – $ – $ – $ – $ – $ – $ – $ – $ – $ – $ – Other (specify) $ – $ – $ – $ – $ – 0.0 0 .xls
Total will be calculated automatically. are those which change as your volume of business changes. They are expressed as a percent of sales. Inventory, raw materials and direct production labor, for example, are usually variable costs. %, rather than .45%. per unit
Use the precentage as specified s
1 2 4 5 Deprn Rate
0% 0% 0% 0% 0% $0 $0 $0 $0 $0 $0 Equipment $0 0 0 0 $0 0 1 2 3 4 5 20xx 20xx 20xx 20xx 20xx 0 0 0 0 0 0 $0.00 $0.00 $0.00 $0.00 $0 $0 $0 $0 $0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $0 $0 $0 $0 $0 0 0 $0 $0 $0 $0 $0 $0 $0 Doug Letsch: Breakeven Analysis ($)
(%)
0.0% 0.0% $ 250 $ 3,000 $ – $ – $ – Other (specify) $ – $ – $ – $ 2,000 04
262 Total will be calculated automatically.
MS60 1 0 Course Project Guidelines Your course project will consist of a 1 5 – 2 0-slide Microsoft PowerPoint presentation. These slides will help you present your investment idea to the President and CEO of the public company. As such, the slides must be well crafted to help convince the leader of the company of the need for the investment, the possible risks, and potential returns. Remember, the slides should outline the key points to be made and not overwhelm the viewer with too many details. You will provide the details in the speaker notes for each slide. The slide presentation must include:
1. Cover page listing the company, project, date, and presenter. 2. Sufficient background so that a potential investor understands the business.
3 . The investment idea and summary justification. 4 . Enough historic data from the worksheet you develop in Modules 3 and 4 to give an investor an understanding of revenues, costs, expenses, cash flows, and potential returns in dollars and using capital budgeting analysis concepts to demonstrate viability.
5. The break-even of the project.
6. Your final analysis summary that details why the company should invest the money in this project.
7. Speaker notes in your Microsoft PowerPoint presentation to include background information that you would communicate verbally in a presentation. This speaker notes content should be the length necessary to explain the outline presented in the slides. Each slide must have the requisite speaker notes to explain the material/data presented in the slides as if you are making a formal presentation and expect to verbalize those words.
This slide presentation is due before the end of class on Day 5 of Module 5 and is worth 25 % of your course final grade or 2 50 points. Combined with the other submitted elements of the project, the total points allocated to this course project will be 500 points or 50% of your grade. The grading of this project will be extensive to match the percentage of course grade. Make sure you provide substantial work in the creating of this project.
Breakdown of Course Project Work
Module
Major Task
Points
Select public company and begin planning project. Seek approval of the company, project investment idea, and justification by completing the Project Approval Input in the link provided. 30 Begin working on the Excel worksheet provided with the project to outline the revenues, costs, expenses, and resulting cash flows. Submit the final Excel worksheet showing all data and calculations. Submit Microsoft PowerPoint presentation complete with speaker notes before the end of class Day 4. 470
Grading Criteria
Assignment Components
Proficient
Max Points
By end of Module 2, complete the Project Approval Input and answer the questions provided. Selects US public company and provides name and stock symbol. Explains interest in the company and in the investment project.
30 Excel Worksheet Requirements: Identify the various revenues, expenses, costs, expenses, and cash flows. If a manufacturing company and investment deals with projects, the analysis breaks down costs into fixed and variable, direct and indirect. All costs, revenues, expenses, and cash flows required to implement the project are identified, listed, and summed appropriately 180 Calculate the CVP or break-even point for the project. Calculations are complete and accurate. 15 Calculate NPV and IRR. Provides the numeric viability of the project investment. Calculations are complete and accurate. Slide Presentation Requirements: Includes a minimum of 15 slides Each slide is formatted consistently with proper spelling and grammar. 30 Cover page listing the company, project, date, and presenter 10 Company summary Sufficient written background so that a potential investor understands the business. 40 Data from Excel Worksheet Enough historic data from the graded worksheet to give an investor an understanding of revenues, costs, expenses, cash flows, and potential returns in dollars and using capital budgeting analysis concepts to demonstrate viability. 30 Analysis slides Present the breakeven and other types of analysis for the project.
Final recommendations Provide your final analysis summary that details why the company should invest the money in this project.
40 Speaker notes on each slide Speaker notes in your PowerPoint presentation to include background information that you would communicate verbally in a presentation. This background information should be the length necessary to explain the outline presented in the slides. Each slide must have the requisite speaker notes to explain the material/data presented in the slides as if you are making a formal presentation and expect to verbalize those words.
50
Total:
500
INVESTMENT PROPOSAL Investment Proposal Student Name
University
Introduction
Dr. Pepper Snapple Group, Inc. is soft drink Company based in the United States, and it focuses on the production, marketing, and supply of soft drinks. The company’s beverage products are categorized in two, the non-carbonated soft drinks and the carbonated beverages that are flavored. The company operates in three segments for it to be able to meet its customers’ demands. The departments are Soft drink Concentrates, Packaging department, and the Latin American soft drinks. The first segment, the beverage concentrates is accountable for production and sale of the carbonated beverages among other branded syrups and concentrates. The second section which is the packaging segment is responsible for production and distribution of the packaged soft drinks among other products through the direct delivery system to the retail outlets. The third portion focuses on producing and supplying syrups, concentrates and finished soft drink products. Dr. Pepper Snapple Group, Inc. holds a market share of 14.7% positioning it in the third place after Pepsi-Cola which has 35.3% of its market share (Hill, 2012). Dr. Pepper Snapple Group, Inc. has defined its briefcase efficiently through concentrating on their sales and marketing resources. The company’s marketing strategy will enable the organization to focus on the various market analyses which will allow the company to identify the impact the critical brands produced and how they could improve them to gain a more significant market share (Hoskisson, 2012).
Through the information gathered from the market, analysis sources show that the company expense will not be affected because the products that the targeted population need are not new products in the market. Also through the third-party distribution plan and the increase of the in-store activity contributes significantly to minimizing the cost of the advertisement.
The Break-Even Point The break-even point is calculated by comparing the amount of units that have to be sold in order to cover for the fixed and variable costs. In the case of Dr. Pepper Snapple Group, Inc, the break-even point analysis will be based on the number of units that the company has to sell in order to cover for all expenses.
Break-even point in units= Fixed Costs/(Sales price per unit-variable cost per unit)
=$100,000/$75-$67
=$100,000/$8
=12,500 units
Internal Rate of Return The internal rate of return (IRR) will be used to assess the profitability of the project undertaken by Dr. Pepper Snapple Group, Inc.
With a break-even point in units of 12,500, and a calculated volume of 12,500, the company can reach its break-even point within one period.
(NPV) 0 = P0 + P1/(1+IRR) + P2/(1+IRR)2 + P3/(1+IRR)3 + . . . +Pn/(1+IRR)n
0=937,500+937,500(1+IRR)
0=937,500+937,500+937,500IRR
0=1,875,000+937,500IRR
937,500IRR=-1,875,000
IRR=-2%
Net Present Value
NPV=-937,500+(75*12,500) (1-2%)
=937,500+937,500(1-0.02)
=937,500+918750
=1,856,250
Conclusion
The marketing and distribution strategies allow the company to perform tests, observations, and analyses thus enabling it to be in a position to come up with a valid marketing plan for its products and the ability to venture into new markets. The company has been able to survive the competitive market of soft drinks due to its effort of investing in promotion and advertising. Also creating it awareness with its consumers through the collaboration with the third-party distribution and focusing on the ethnic population in America will enable the company to increase its market share in the soft drink industry. References
Hill, M. E. (2012). Marketing Strategy: The Thinking Involved. London: SAGE.
Hoskisson, R. E. (2012). Strategic Management Cases: Competitiveness and Globalization.
* * * INVESTMENT PROPOSAL Investment Proposal Student Name
University
Introduction
Dr. Pepper Snapple Group, Inc. is soft drink Company based in the United States, and it focuses on the production, marketing, and supply of soft drinks. The company’s beverage products are categorized in two, the non-carbonated soft drinks and the carbonated beverages that are flavored. The company operates in three segments for it to be able to meet its customers’ demands. The departments are Soft drink Concentrates, Packaging department, and the Latin American soft drinks. The first segment, the beverage concentrates is accountable for production and sale of the carbonated beverages among other branded syrups and concentrates. The second section which is the packaging segment is responsible for production and distribution of the packaged soft drinks among other products through the direct delivery system to the retail outlets. The third portion focuses on producing and supplying syrups, concentrates and finished soft drink products. Dr. Pepper Snapple Group, Inc. holds a market share of 14.7% positioning it in the third place after Pepsi-Cola which has 35.3% of its market share (Hill, 2012). Dr. Pepper Snapple Group, Inc. has defined its briefcase efficiently through concentrating on their sales and marketing resources. The company’s marketing strategy will enable the organization to focus on the various market analyses which will allow the company to identify the impact the critical brands produced and how they could improve them to gain a more significant market share (Hoskisson, 2012).
Through the information gathered from the market, analysis sources show that the company expense will not be affected because the products that the targeted population need are not new products in the market. Also through the third-party distribution plan and the increase of the in-store activity contributes significantly to minimizing the cost of the advertisement.
The Break-Even Point The break-even point is calculated by comparing the amount of units that have to be sold in order to cover for the fixed and variable costs. In the case of Dr. Pepper Snapple Group, Inc, the break-even point analysis will be based on the number of units that the company has to sell in order to cover for all expenses.
Break-even point in units= Fixed Costs/(Sales price per unit-variable cost per unit)
=$100,000/$75-$67
=$100,000/$8
=12,500 units
Internal Rate of Return The internal rate of return (IRR) will be used to assess the profitability of the project undertaken by Dr. Pepper Snapple Group, Inc.
With a break-even point in units of 12,500, and a calculated volume of 12,500, the company can reach its break-even point within one period.
(NPV) 0 = P0 + P1/(1+IRR) + P2/(1+IRR)2 + P3/(1+IRR)3 + . . . +Pn/(1+IRR)n
0=937,500+937,500(1+IRR)
0=937,500+937,500+937,500IRR
0=1,875,000+937,500IRR
937,500IRR=-1,875,000
IRR=-2%
Net Present Value
NPV=-937,500+(75*12,500) (1-2%)
=937,500+937,500(1-0.02)
=937,500+918750
=1,856,250
Conclusion
The marketing and distribution strategies allow the company to perform tests, observations, and analyses thus enabling it to be in a position to come up with a valid marketing plan for its products and the ability to venture into new markets. The company has been able to survive the competitive market of soft drinks due to its effort of investing in promotion and advertising. Also creating it awareness with its consumers through the collaboration with the third-party distribution and focusing on the ethnic population in America will enable the company to increase its market share in the soft drink industry. References
Hill, M. E. (2012). Marketing Strategy: The Thinking Involved. London: SAGE.
Hoskisson, R. E. (2012). Strategic Management Cases: Competitiveness and Globalization.
INVESTMENT PROPOSAL Investment Proposal Student Name
University
Introduction
Dr. Pepper Snapple Group, Inc. is soft drink Company based in the United States, and it focuses on the production, marketing, and supply of soft drinks. The company’s beverage products are categorized in two, the non-carbonated soft drinks and the carbonated beverages that are flavored. The company operates in three segments for it to be able to meet its customers’ demands. The departments are Soft drink Concentrates, Packaging department, and the Latin American soft drinks. The first segment, the beverage concentrates is accountable for production and sale of the carbonated beverages among other branded syrups and concentrates. The second section which is the packaging segment is responsible for production and distribution of the packaged soft drinks among other products through the direct delivery system to the retail outlets. The third portion focuses on producing and supplying syrups, concentrates and finished soft drink products. Dr. Pepper Snapple Group, Inc. holds a market share of 14.7% positioning it in the third place after Pepsi-Cola which has 35.3% of its market share (Hill, 2012). Dr. Pepper Snapple Group, Inc. has defined its briefcase efficiently through concentrating on their sales and marketing resources. The company’s marketing strategy will enable the organization to focus on the various market analyses which will allow the company to identify the impact the critical brands produced and how they could improve them to gain a more significant market share (Hoskisson, 2012).
Through the information gathered from the market, analysis sources show that the company expense will not be affected because the products that the targeted population need are not new products in the market. Also through the third-party distribution plan and the increase of the in-store activity contributes significantly to minimizing the cost of the advertisement.
The Break-Even Point The break-even point is calculated by comparing the amount of units that have to be sold in order to cover for the fixed and variable costs. In the case of Dr. Pepper Snapple Group, Inc, the break-even point analysis will be based on the number of units that the company has to sell in order to cover for all expenses.
Break-even point in units= Fixed Costs/(Sales price per unit-variable cost per unit)
=$100,000/$75-$67
=$100,000/$8
=12,500 units
Internal Rate of Return The internal rate of return (IRR) will be used to assess the profitability of the project undertaken by Dr. Pepper Snapple Group, Inc.
With a break-even point in units of 12,500, and a calculated volume of 12,500, the company can reach its break-even point within one period.
(NPV) 0 = P0 + P1/(1+IRR) + P2/(1+IRR)2 + P3/(1+IRR)3 + . . . +Pn/(1+IRR)n
0=937,500+937,500(1+IRR)
0=937,500+937,500+937,500IRR
0=1,875,000+937,500IRR
937,500IRR=-1,875,000
IRR=-2%
Net Present Value
NPV=-937,500+(75*12,500) (1-2%)
=937,500+937,500(1-0.02)
=937,500+918750
=1,856,250
Conclusion
The marketing and distribution strategies allow the company to perform tests, observations, and analyses thus enabling it to be in a position to come up with a valid marketing plan for its products and the ability to venture into new markets. The company has been able to survive the competitive market of soft drinks due to its effort of investing in promotion and advertising. Also creating it awareness with its consumers through the collaboration with the third-party distribution and focusing on the ethnic population in America will enable the company to increase its market share in the soft drink industry. References
Hill, M. E. (2012). Marketing Strategy: The Thinking Involved. London: SAGE.
Hoskisson, R. E. (2012). Strategic Management Cases: Competitiveness and Globalization.2
Breakeven Analysis
You can use this template or the one I provided in the discussion area for your project
Enter your company name here
Cost Description
Fixed Costs
Variable Costs
Variable Costs
Cost of Goods Sold
0
Inventory
0%
Raw Materials
Direct Labor (Includes Payroll Taxes)
Fixed Costs
Salaries (includes payroll taxes)
$ –
Supplies
Repairs & maintenance
Advertising
Car, delivery and travel
Accounting and legal
Rent
Telephone
Utilities
Insurance
Taxes (Real estate, etc.)
Interest
Depreciation
Other (specify)
Miscellaneous expenses
Principal portion of debt payment
Owner’s draw
Total Fixed Costs
Total Variable Costs
Breakeven Sales level =
Source: http://www.score.org/downloads/Break-Even%20Analysis
1
Total will be calculated automatically.
Breakeven Sales Level =
Total Fixed Expenses/ ((100-Total Variable Exp%)/100)
Instructions
Note: You may want to print this information to use as reference later. To delete these instructions, click the border of this text box and then press the DELETE key.
Using figures from your Profit and Loss Projection, enter expected annual fixed and variable costs.
Fixed costs are those that remain the same regardless of your sales volume. They are expressed in dollars. Rent, insurance and real estate taxes, for example, are usually fixed.Variable costs
Under the variable expenses column, use whole numbers as a percentage, not decimal numbers. For example, use
4
5
For your business, each category of expense may either be fixed or variable, but not both.
Suggestions
Note: You may want to print this information to use as reference later. To delete these instructions, click the border of this text box and then press the DELETE key.
The categories of expense shown above are just suggestions. Change the labels to reflect your own accounting systems and type of business. Breakeven is a “big picture” kind of tool; we recommend that you combine expense categories to stay within the 22 lines that this template allows.
One of the best uses of breakeven analysis is to play with various scenarios. For instance, if you add another person to the payroll, how many extra sales dollars will be needed to recover the extra salary expense? If you borrow, how much will be needed to cover the increased principal and interest payments? Many owners, especially retailers, like to calculate a daily breakdown. This gives everyone a target to shoot at for the day.Project Capital Budget and BE
Recommended Capital Budgeting Template Used in MS6010 Course Project. You can use another template if desired.
Enter a complete set of financial statements for your company in the other tab.
For this tab, complete only the yellow boxes; everything else is done by formula. I have added several rows below template for you to complete payback calculations, if desired.
Use this template to provide the capital budgeting information on your course project. Change titles to work with your project as needed.
Some items will not apply to your project and can be left blank. Template assumes equipment purchase. If you have purchases other than equipment
you will need to adjust the depreciation rates to achieve correct depreciation
Part 1. Key Input Data: For this project you get to make up reasonable numbers for the project idea you will recommend for the company you choose
Initial Investment Dollars
Enter a reasonable price of recommended initial investment
$ Increase in current assets
How much will your current assets increase as a result of this project
$ Increase in current liabilities
How much will your current liabilities increase as a result of this project
Using some of the data from the left, what is the break even in units?
Unit sales
What are you unit sales each year
Enter in your formula here so that the correct B/E units are shown.
$
Sales price
How much will you sell each item for?
What is the B/E in dollars?
% Variable cost per unit
What is the variable cost per each item sold as a percentage?
$ Variable cost per unit
$ – 0
$ Fixed costs
What are the fixed costs for this project?
Market value$ of equipment in Y5
Enter in a reasonable market value in dollars at end of project
Tax rate Percentage
Use the precentage as specified
WACC or Discount Percentage
Part 2. Depreciation Schedule if applicable. If you have equipment, there is always depreciation
Year
Accum’d
Year
Initial Cost
3
Deprn
%
Equipment
Enter in Depreciation %- straight line
Equipment Deprn, Dollars
$0
Ending Bk Val: Cost – Accum’d Deprn
Part 3. Net Salvage Values
Estimated Market Value in Year 5
Book Value in Y5
Expected Gain or Loss
Taxes paid on gain at tax rate percentage
Net cash flow from salvage
Part 4. Projected Net Cash Flows (Time line of annual cash flows)
Years, 1-4 basis
Years, actual year basis
20xx
Investment Outlays at Time Zero:
Equipment 0
Increase in Net Operating WC
Operating Cash Flows over the Project’s Life:
Units sold
Sales price
$0.00
Sales revenue
Variable costs 0 0 0 0 0
Fixed operating costs
Depreciation (equipment)
Oper. income before taxes (EBIT)
Taxes on operating income
Net Operating Profit After Taxes (NOPAT)
Add back depreciation
Operating cash flow
Terminal Year Cash Flows:
Return of net operating working capital
After-tax salvage value
Total termination cash flows
Net Cash Flow (Time line of cash flows)
Part 5. Key Output: Appraisal of the Proposed Project
Net Present Value
Create a formula using the NPV function as specified
IRR
Create a formula using the IRR function as specified
MIRR
Bonus: Create a formula using the MIRR function as specified
Payback
Bonus: How would you calculate payback using Excel?
Enter in any company information to explain project as required by instructions. How will this project help your company’s bottom line?
Enter your initial cost of equipment here
Doug Letsch:
Hit the ? Or help key in the upper right corner of Excel to see how to use NPV function =NPV()
Doug Letsch:
Hit the ? Or help key in the upper right corner of Excel to see how to use IRR function =IRR()
Doug Letsch:
Hit the ? Or help key in the upper right corner of Excel to see how to use MIRR function =MIRR()
Explain Payback here: make calculations belowCopy of Company Fin Statements
Please copy and paste a copy of your public company’s financial statements for the last 3 years.
Include a Balance Sheet, Income Statement, and Statement of Cash flow
Breakeven Analysis
Enter your company name here
Cost Description
Fixed Costs
Variable Costs
Mixed Costs
Variable Costs
These costs go in both the fixed and variable columns. Use dollars in fixed and a percentage in variable.
Cost of Goods Sold
45.0%
Inventory
0.0%
Raw Materials
Direct Labor (Includes Payroll Taxes)
Fixed Costs
Salaries (includes payroll taxes)
$ 2,000
Supplies
$ 1,000
Repairs & maintenance
$ 3,000
Advertising
$ 250
Car, delivery and travel
$ 750
Accounting and legal
Rent
1.0%
Telephone
$ 500
Utilities
$ 600
Insurance
$ 800
Taxes (Real estate, etc.)
$ –
Interest
Depreciation
Other (specify)
Miscellaneous expenses
Principal portion of debt payment
Owner’s draw
Total Fixed Costs
$ 14,150
Total Variable Costs
46.0%
Enter your sales units
100
Breakeven Sales level =
262
Breakeven Sales in Units
Some of the material has been sourced from: http://www.score.org/downloads/Break-Even%20Analysis1.xls
Total will be calculated automatically.
Fixed costs are only those costs that stay the same even when unit sales changes. Not all of these items in this list will be fixed for your particular case. Each one needs to be evaluated.
Variable costs are only those costs that change in equilevant terms when sales units change. Not all of these items in this list will be fixed for your particular case. Each one needs to be evaluated. If you use CGS, you will not use the other three. Change titles if needed. Enter the percent of sales.
These costs are a combination of both variable and mixed. For example your cell phone bill has a monthly rent that never changes and a price per minute for usage.
Cost Volume Profit (CVP) analysis allows you to determine how changes in costs, changes in the units(volume), changes in sales or sales units, or changes in variable cost effect the overall profit of the company. Using this model you can adjust these items and see the result on breakeven.
1
2
3
4
5
25
Cover page
50
4
CVP
Sales price per unit
$75.00
*
Variable Cost per unit
$67.00
Fixed Cost
$100,000.00
Targeted Net Income
$0.00
(assume 0 if you want to calculate breakeven)
Calculated Volume
12,500
calculated
* inputted by user
Break-Even Point
=$100,000/$75-$67
=$100,000/$8
=12,500 units
Internal Rate of Return
0=937,500+937,500(1+IRR)
0=937,500+937,500+937,500IRR
0=1,875,000+937,500IRR
937,500IRR=-1,875,000
IRR=-2%
Net Present Value
NPV=-937,500+(75*12,500) (1-2%)
=937,500+937,500(1-0.02)
=937,500+918750
=1,856,250
4
4
