Question

10: A stadium brings in $16.25 million per year. It pays football-related expenses of $13.5 million and stadium expenses of $2.7 million per year. What is the stadium's current profit margin?

Answer 1

The stadium brings is $16,250,000 per year. (Revenue)

Football-related expenses equal $13,500,000 per year. (Cost)

Stadium expenses equal $2,700,000 per year. (Cost)

Profit margin is calculated by dividing net profit with the revenue.

To get net profit, subtract the revenue with the total cost.

First, add the two costs together to get the total cost.

$13,500,000 + $2,700,000 = $16,200,000 (total cost)

$16,250,000 (revenue) - $16,200,000 (total cost) = $50,000 (net profit)

$50,000 (net profit) ÷ $16,250,000 (revenue) = 0.0030769

To turn that decimal into a fraction, multiply it with 100

0.0030769 x 100 = 0.30769%

Round this up to 0.308%

The stadium's current profit margin is 0.308%