INSTRUCTION - Answer ALL questions AD Auto operated a second-hand imported car dealership for a major Japanese distributor. AD Auto's owner, Mr. Adam Daniel, attributed much of the business's success to its no-frills policy of competitive pricing and immediate cash payment. The business was basically a simple one - the firm imported these second-hand cars at the beginning of each quarter and paid the Japanese distributor at the end of each quarter. The revenues from the sale of these cars covered the payment to the distributor and the expenses of running the business, as well as providing Mr. Adam with a good return on his equity investment. By the fourth quarter of 2010, sales were running at 150 cars a quarter. Since average sale price of each car was about RM60,000, this translated into quarterly revenues of 150 x RM60,000 = RM9 million. The average cost of each imported car was RM500,000. After paying wages, rent, and other recurring costs of RM50,000 per quarter and deducting depreciation of RM200,000, the company was left with earnings before interest and taxes (EBIT) of RM800,000 a quarter and net profits of RM577,000