Techstreet.com is a small web design business that provides services for two main types of websites: brochure sites and e-commerce sites. One package involves an up-front payment of $90,000 and monthly payments of 1.4¢ per “hit.” Kathy Cutler has a new eBay franchise and is considering the e-commerce package. She expects to have at least 6000 hits per month, and hopes that 1.5% of the hits will result in a sale. If the average income from sales (after fees and expenses) is $150, what rate of return per month will Kathy realize if she uses the website for 2 years?

Techstreet.com is a small web design business that provides services for two main types of websites: brochure sites and e-commerce sites. One package involves an up-front payment of $90,000 and monthly payments of 1.4¢ per “hit.” Kathy Cutler has a new eBay franchise and is considering the e-commerce package. She expects to have at least 6000 hits per month, and hopes that 1.5% of the hits will result in a sale. If the average income from sales (after fees and expenses) is $150, what rate of return per month will Kathy realize if she uses the website for 2 years?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 6PROB

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