2. Masood quit his job at the bank Muscat where he earned RO 50,000 a year to start his own businesses, a Digital marketing company. He estimates his entrepreneurial talent or forgone entrepreneurial income to be OR 5,000 a year. He used RO 100,000 in savings that earned 5 percent interest annually to finance the new business. In the first year, the firm earned total revenue of OR 250,000. The spent 50,000 on purchase of machines. It pays annual rental costs of 18,000 and 80,000 for supplies. It employs 5 workers and paying each annual salary of 6000 RO. Calculate: a). The accounting profit for the new business? b). The economic profit (or loss)? Show your calculations for both questions.
2. Masood quit his job at the bank Muscat where he earned RO 50,000 a year to start his own businesses, a Digital marketing company. He estimates his entrepreneurial talent or forgone entrepreneurial income to be OR 5,000 a year. He used RO 100,000 in savings that earned 5 percent interest annually to finance the new business. In the first year, the firm earned total revenue of OR 250,000. The spent 50,000 on purchase of machines. It pays annual rental costs of 18,000 and 80,000 for supplies. It employs 5 workers and paying each annual salary of 6000 RO. Calculate: a). The accounting profit for the new business? b). The economic profit (or loss)? Show your calculations for both questions.
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter8: Business Organizations
Section: Chapter Questions
Problem 14AA
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Economics Today and Tomorrow, Student Edition
Economics
ISBN:
9780078747663
Author:
McGraw-Hill
Publisher:
Glencoe/McGraw-Hill School Pub Co
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Economics Today and Tomorrow, Student Edition
Economics
ISBN:
9780078747663
Author:
McGraw-Hill
Publisher:
Glencoe/McGraw-Hill School Pub Co
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax