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Let's take a look at the company should take a look at this chart. You'll see. In year one, we started out with one lemonade stand. We add one a year, and then we by year five, we're up to seven because we've got a big expansion plan. Our price per cup goes up a nickel a year and our revenue goes from $800 and starts to grow fairly quickly.

And the growth comes from increased prices for cups of lemonade. And it also comes from. More stands. So by year five, we have almost $8,000 in revenue. Our costs are relatively constant, which is lemonade and the sugar. That's about $1,702. We have depreciation as the more and more standard. Start to wear out over time, we've got labor expense.

But by year five, that business is actually doing pretty well. We went from a 1.3% margin to over a 28% margins. The business is now up the scale. We're starting to cover some of our costs. We're growing. We're still paying $25 a year in interest for our loan. And we have earnings before taxes after interest of $2,300 by the end of year five.

So we put $500 into the. We borrowed two 50 and by year five, we're making a profit of $2,300. That sounds pretty good. Now we have to pay taxes to the government. That's about 35% and we generate net income or another word for profits of $1,500 by the fifth. And about a dollar a share. So if you think about this our friend put up $500 to buy 500 shares of stock.

He paid a dollar and after five years, if our business goes, as we expect, he's actually making a dollar a share in profit. That sounds like a pretty good deal.