Carlos was made redundant from his job in a factory. He used his redundancy money and some of his savings to start a new business. He bought a boat to give trips to tourists on a river near his home. The boat cost him $150000. Table 1 shows the revenue and cost estimates that Carlos made. Table 1: Revenue per boat trip $80, Variable cost per boat trip $30, Average number of boat trips per week 25, Weekly overhead costs [fixed costs] $500. Carlos wanted his business to give him job security and to give a return on his investment of at least 20% each year. He estimates that annual profits will be $37500.

1. (a)What is meant by ‘made redundant’?[2]
2. (b)Identify two examples of overhead costs that Carlos might incur. Example 1: ..., Example 2: ...[2]
3. (c)Using the information given in Table 1, draw a break-even chart for Carlos' business. [Figure: Weekly Break-Even Chart][4]
4. (d)Identify and explain three methods that Carlos could use to promote his new business. Method 1: ..., Explanation: ..., Method 2: ..., Explanation: ..., Method 3: ..., Explanation: ...[6]
5. (e)Carlos wanted his business to give him job security and a return on capital of at least 20%. Do you think that his business will help him achieve these objectives? Justify your answer.[6]

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