To expand your business, you hire a banker to raise $1 mm in order to finance a building designed by an architect. You also hire an attorney for 10 hours, and a computer programmer for 15 hours. What is the total cost for these services?
| Computer Programmer | $75 / hour | Architect | $8,000 flat fee |
|---|---|---|---|
| Attorney | $250 / hour | Banker | 2% of capital raised |
Answer (2)
The total cost for the services required for business expansion is $31,625. This includes $20,000 for the banker, $8,000 for the architect, $2,500 for the attorney, and $1,125 for the computer programmer. By adding all these costs together, we obtain the total.
;
Calculate the banker's fee: 1 , 000 , 000 × 0.02 = $20 , 000 .
Calculate the attorney's fee: 250 × 10 = $2 , 500 .
Calculate the computer programmer's fee: 75 × 15 = $1 , 125 .
Add all the fees together: 20 , 000 + 8 , 000 + 2 , 500 + 1 , 125 = $31 , 625 .
Explanation
Problem Analysis We need to calculate the total cost of hiring a banker, an architect, an attorney, and a computer programmer. We are given the fees for each of these services. Let's break down the costs for each one.
Banker's Fee First, let's calculate the banker's fee. The banker charges 2% of the capital raised, which is $1,000,000. To find the banker's fee, we multiply 1 , 000 , 000 b y 0.02 : 1 , 000 , 000 \t \t × 0.02 = 20 , 000 T h e bank e r ′ s f ee i s $20,000$.
Attorney's Fee Next, let's calculate the attorney's fee. The attorney charges $250 per hour, and we hired them for 10 hours. To find the attorney's fee, we multiply the hourly rate by the number of hours: 250 \t \t × 10 = 2 , 500 The attorney's fee is $2 , 500 .
Computer Programmer's Fee Now, let's calculate the computer programmer's fee. The computer programmer charges $75 per hour, and we hired them for 15 hours. To find the computer programmer's fee, we multiply the hourly rate by the number of hours: 75 \t \t × 15 = 1 , 125 The computer programmer's fee is $1 , 125 .
Architect's Fee The architect charges a flat fee of $8 , 000 .
Total Cost Finally, to find the total cost, we add up the fees for the banker, architect, attorney, and computer programmer: 20 , 000 + 8 , 000 + 2 , 500 + 1 , 125 = 31 , 625 The total cost for these services is $31 , 625 .
Examples
When starting a new business or expanding an existing one, it's crucial to understand all the costs involved. This problem demonstrates how to calculate the total cost of various professional services, such as financial advice from a banker, architectural design, legal assistance, and software development. By breaking down each cost and summing them up, you can get a clear picture of your expenses. This type of calculation is essential for budgeting and financial planning in any business venture, ensuring you have enough capital to cover all necessary services.
