And then, what's the state of affairs in our city now?

Here in this situation, I actually make money.

He's only running at 25 utilization.

I do lose a couple of these people because they are willing to walk a little bit further for a cupcake.

And that worked out pretty well.

And, I think, the number I used in the last video, he sold 500,000 cupcakes.

Let's ignore this for a little bit because now, in this reality, I'm getting a 15 return on my asset.

Imran is essentially at break even. He's making no money.

I actually want you to notice something right here, what happened immediately.

So we're all tapped out, we're at 100 capacity utilization.

Google is one of our big partners here.

He's getting this great return on asset.

People want cupcakes so badly, so I could raise prices to 2.

If I charge 1.60 per cupcake and I only sell 400,000 cupcakes,

And Vikram does the same at 2.

Imran came here. I think he was he was selling 500,000, right?

And let's say Vikram is selling 380,000 cupcakes in a year.

But there was an underlying support.

He wants to see bigger and bigger returns.

But his return on asset has gone down to 20. and, because he's at that utilization, his return on asset has gone down to 20 .

When you have huge returns, as Sal's Cupcakes had in this video or in this worksheet over here

High utilization will allow you to raise prices and when you raise price you'll get a better return on your asset, and then the other side effect is, when you have that high return on asset, you'll also have more investment going on to build more capacity.

So I just sell out. I just sell out of cupcakes.

But from an investment point of view it makes even more sense.

And so this is our yield.

So, let's say, I took some business, so he's only selling 400,000 cupcakes and now, the aggregate cupcake and actually not.

The amount of money you get.

I have all the capacity.

But, as you can see, there's a couple of key learning points in this set of videos.

So it's 50 utilization and then, my return on asset is my operating income divided by my initial investment, right?

The last two examples I gave contribute to the collective wealth society, some of which you share, and that is your return on the investment.

In fact, I'm expecting some type of a return on this investment.

Call it a math project or engineering project.

So the total assets were 5 billion in assets.

He'd be willing to take a lower return as long as he was allowed to invest in less risky investments.

Let's say there's a third party, Vikram and he just has a love for making cupcakes and he says, well, you know, what if I could spend my life making cupcakes and, even if I just get a 7 return, that's a pretty good living.

And I make 962,000 a year and I have a huge return on asset, 88 .

Investment

And at 3 per cupcake, I'm able to sell you 750,000 cupcakes.

Malibu Equity and Investments.

Well their intention was to take these home equity loans and put that money to work, invest it in some way.

I can make cupcakes too and I have some money to build a factory.

He just goes and he sells two million cupcakes a year.

He valued what we already had at 5 million dollars.

They're valuing these assets at 1 million.