A government project costs $500 million and is expected to generate $600 million

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Question: A government project costs $500 million and is expected to generate $600 million in revenue. What is the profit margin? (2023)

Options:

Correct Answer: 25%

Exam Year: 2023

Solution:

Profit Margin = ((Revenue - Cost) / Revenue) * 100 = ((600 - 500) / 600) * 100 = 16.67%.

A government project costs $500 million and is expected to generate $600 million in revenue. What is the profit margin? (2023)

A government project costs $500 million and is expected to generate $600 million in revenue. What is the profit margin? (2023)

Step 1: Identify the total cost of the project, which is $500 million.
Step 2: Identify the total revenue expected from the project, which is $600 million.
Step 3: Calculate the profit by subtracting the cost from the revenue: Profit = Revenue - Cost = 600 - 500.
Step 4: Calculate the profit, which is $100 million.
Step 5: Calculate the profit margin using the formula: Profit Margin = (Profit / Revenue) * 100.
Step 6: Substitute the values into the formula: Profit Margin = (100 / 600) * 100.
Step 7: Calculate the profit margin: Profit Margin = 0.1667 * 100.
Step 8: The profit margin is approximately 16.67%.

Profit Margin – The profit margin is a financial metric that shows the percentage of revenue that exceeds the costs of a project or business.