Question 9 • FowU - Financial Math - B
In the first year, Sam’s $45,000 profit is $4,500 less than the $49,500 setup and first-year cost. In year two, his profit rises to $45,000 × 1.055 = $47,475, and expenses are $30,500, so he gains $16,975 that year. That more than makes up the first-year shortfall, so his cumulative profits exceed his cumulative expenses in the second year: choice b, “Sam will see an overall profit in his second year of business.”
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