I am trying to create an formula to solve a mathematical problem with profit calculation. I am not sure if it is possible. I have an offer price, a bunch of expenses, an expense total and a profit target. From that I want to work out how much to pay for the real estate site to achieve a percentage of profit based on expenses. ie. profit target is X% of expenses. I need to know what is the maximum you can pay for the site. I will post an example of the information I have here:

Purchase Offer price = $500000.00.

Total Costs = $751654.11 (one of these expenses if offer price so as offer price lowers expenses drop).

Profit Target is X% of Total Costs - where X=20% Profit Target = $155319.90

Total Sales Are $850000.00

Net Profit is $73430.48

Total Profit % achieved = 9.46%

I need to work out the maximum to pay for the site to achieve X% profit (in this case 20% profit). I am not sure if we have enough information to build an equation. The problem being as the purchase offer price drops this changes total costs which changes net profit and net profit percentage. So it seems to be a circular reference. The way i approached it was to work out with other formulas what happens to each part of the equation as the offer price drops. So I worked out the following as a starting point:

For every $1 that your purchase offer price drops by profit increases by $1.06889 (taking into account gst).

At the same time for every $1 drop in offer price total costs (made up of costs including offer price) decreases by $0.0683.

For every $1 drop in offer price profit target decreases by $0.214.

So to make a 20% profit what is the maximum I can offer for the property. I can provide more detailed information like other formulas etc. if needed so feel free to email me or request more information here. Thanks for reading and offering your opinion. Kind Regards, Craig

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