Question

You need to ensure your game is successful once placed in the market. The potential success of your video game has been modeled by the equation P(s) = -4s + 12s + c. How much debt can your company handle so it will break even?

A) Debt equal to c
B) Debt equal to 12s
C) Debt equal to 4s
D) Debt equal to 7s - 3

Answer 1

To break even on the video game, the debt that the company can handle must equal 'c' in the given financial model P(s) = -4s + 12s + c, which simplifies to P(s) = 8s + c. Hence the company can handle debt equal to c to break even.

Step-by-step explanation:

The question asks about the potential success of a video game based on the financial model P(s) = -4s + 12s + c. To break even, the total profits (P) must be zero, which means the revenue generated will exactly cover the costs and debts. According to the equation, to break even, the debt represented by 'c' must match the profits generated by sales ('s' terms). Since the equation simplifies to P(s) = 8s + c, for P(s) to be zero, c must be the debt that the company can handle while breaking even. Therefore, the answer is A) Debt equal to c.