Please help me with c. Thanks! You are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless youearn an accounting profit that is on average at least as great as your current salary. You look into opening a small grocery store.Suppose that the store has annual costs of $150,000 for labor, $70,000 for rent, and $30,000 for equipment. There is a one-halfprobability that revenues will be $230,000 and a one-half probability that revenues will be $400,000.Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) infront of those numbers. Enter a loss as a negative number.a. In the low-revenue situation, what will your accounting profit or loss be?$-20000What will your accounting profit or loss be in the high-revenue situation?150000b. On average, how much do you expect your revenue to be?315000Your accounting profit?65000Your economic profit?$5000Will you quit your job and try your hand at being an entrepreneur?Yes c. Suppose the government imposes a 25 percent tax on accounting profits. This tax is levied only if a firm is earning positiveaccounting profits. What will your after-tax accounting profit be in the low-revenue case?$-20000In the high-revenue case?What will your average after-tax accounting profit be?What will be your average after-tax economic profit?Will you now want to quit your job and try your hand at being an entrepreneur?Nod. Other things equal, does the imposition of the 25 percent profit tax increase or decrease the supply of entrepreneurship in theeconomy?Decrease

Accounting profit is the profit earned from company’s financial transactions.

c. Suppose the government imposes a 25 percent tax on accounting profits. This tax is levied only if a firm is earning positive accounting profits. What will your after-tax accounting profit be in the low-revenue case? 2$ -20000 In the high-revenue case? 2$ What will your average after-tax accounting profit be? 2$ What will be your average after-tax economic profit? 2$ Will you now want to quit your job and try your hand at being an entrepreneur? No

c. Suppose the government imposes a 25 percent tax on accounting profits. This tax is levied only if a firm is earning positive accounting profits. What will your after-tax accounting profit be in the low-revenue case? 2$ -20000 In the high-revenue case? 2$ What will your average after-tax accounting profit be? 2$ What will be your average after-tax economic profit? 2$ Will you now want to quit your job and try your hand at being an entrepreneur? No

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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