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 8 hours and a computer programmer for 12 hours. What is the total cost for these services?
| Computer Programmer | $100/hour | Architect | $12,000 flat fee |
|---|---|---|---|
| Attorney | $225/hour | Banker | 2% of capital raised |
Answer (2)
The total cost for hiring a banker, architect, attorney, and computer programmer is $35,000. This includes the banker's fee of $20,000, the attorney's fee of $1,800, the computer programmer's fee of $1,200, and the architect's flat fee of $12,000. By adding all these expenses together, you arrive at the total cost.
;
Calculate the banker's fee: 0.02 × $1 , 000 , 000 = $20 , 000 .
Calculate the attorney's fee: 8 × $225 = $1 , 800 .
Calculate the computer programmer's fee: 12 × $100 = $1 , 200 .
Add all the fees together: $20 , 000 + $12 , 000 + $1 , 800 + $1 , 200 = $35 , 000 . The total cost is $35 , 000 .
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.
Banker's Fee Calculation First, let's calculate the banker's fee. The banker charges 2% of the capital raised, which is $1,000,000. So the banker's fee is: 0.02 × $1 , 000 , 000 = $20 , 000
Attorney's Fee Calculation Next, let's calculate the attorney's fee. The attorney charges $225 per hour and worked for 8 hours. So the attorney's fee is: 8 × $225 = $1 , 800
Computer Programmer's Fee Calculation Now, let's calculate the computer programmer's fee. The computer programmer charges $100 per hour and worked for 12 hours. So the computer programmer's fee is: 12 × $100 = $1 , 200
Architect's Fee The architect charges a flat fee of $12,000.
Total Cost Calculation Finally, let's calculate the total cost by adding up all the fees: $20 , 000 ( B ank er ) + $12 , 000 ( A rc hi t ec t ) + $1 , 800 ( A tt or n ey ) + $1 , 200 ( C o m p u t er P ro g r amm er ) = $35 , 000 So, the total cost for these services is $35,000.
Examples
When starting a new business, it's crucial to understand all the costs involved. This problem illustrates how to calculate the total cost of professional services like banking, architecture, legal, and programming. Knowing these costs helps in budgeting and financial planning, ensuring the business has enough capital to cover these essential services. For instance, accurately estimating these expenses can prevent overspending and ensure that the business can allocate resources effectively, leading to better financial stability and growth.
