Mary Graham has worked as a real estate agent for Piedmont Properties for 15 years. Her annual income is approximately $100,000 per year. Mary is considering establishing her own real estate agency. She expects to generate revenues during the first year of $2 million. Salaries paid to her employees are expected to total $1.50 million. Operating expenses (e.g., rent, supplies, utility services) are expected to total $250,000. To begin the business, Mary must borrow $300,000 from her bank at an interest rate of 15%. Equipment will cost Mary $50,000. At the end of one year, the value of this equipment will be $30,000, even though the depreciation expense for tax purposes is only $5,000 during the first year. What is the (pre-tax) accounting profit for this venture? A. $185,000.00 B. $85,000.00 C. $100,000 D. $200,000.00 What is the (pre-tax) economic profit for this venture? A. $185,000.00 B. $85,000.00 C. $200,000.00 D. $100,000
Mary Graham has worked as a real estate agent for Piedmont Properties for 15 years. Her annual income is approximately $100,000 per year. Mary is considering establishing her own real estate agency. She expects to generate revenues during the first year of $2 million. Salaries paid to her employees are expected to total $1.50 million. Operating expenses (e.g., rent, supplies, utility services) are expected to total $250,000. To begin the business, Mary must borrow $300,000 from her bank at an interest rate of 15%. Equipment will cost Mary $50,000. At the end of one year, the value of this equipment will be $30,000, even though the
What is the (pre-tax) accounting profit for this venture?
A. $185,000.00
B. $85,000.00
C. $100,000
D. $200,000.00
What is the (pre-tax) economic profit for this venture?
A. $185,000.00
B. $85,000.00
C. $200,000.00
D. $100,000
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