Sarah used to work as a business manager in a small company for $50,000 per year but quit to start her own fashion business factory. To invest in her factory, she withdrew $25,000 from her savings, which paid 4 percent interest, and borrowed $30,000 from her brother, whom she pays 4 percent interest per year. Last year she paid $27,000 for ingredients and had revenue of $70,000. She is asking you to calculate both accounting and economic profits for her. Show all your calculations and explanations.

Sarah used to work as a business manager in a small company for $50,000 per year but quit to start her own fashion business factory. To invest in her factory, she withdrew $25,000 from her savings, which paid 4 percent interest, and borrowed $30,000 from her brother, whom she pays 4 percent interest per year. Last year she paid $27,000 for ingredients and had revenue of $70,000. She is asking you to calculate both accounting and economic profits for her. Show all your calculations and explanations.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Jill took $50,000 that she had in savings and started her own business. If left in investments, she would have earned $5,000 this year. Jill also left a job that paid her $70,000 a year and plans on paying herself $40,000. Materials and other labor costs will be $80,000. The company is located in a building that Jill owns. She has an insurance and mortgage payment of $20,000. She could have rented the building out for $40,000. What are the accounting and economic costs? The accounting cost is $ and the economic cost is $
How much should they save annually for the next three years if they want to build up Joseph's college fund to $31,000, assuming a 5 percent rate of return and ignoring taxes on the interest?
After graduation, you face a choice. One option is to work for a multinational consulting firm and earn a starting salary (benefits included) of $40,000. The other option is to use $6,000 in savings to start your own consulting firm. You could earn an interest return of 5 percent on your savings. You choose to start your own consulting firm. At the end of the first year, you add up all of your expenses and revenues. Your total includes $9,000 in rent, $850 in office supplies, $18,000 for office staff, and $3,500 in telephone expenses. Your explicit costs are $ Your implicit costs are $
Help please
Eduardo has $7,000 in savings. His bank pays 6% interest per year on savings. He withdraws all of his savings to purchase a machine for his business. At the end of the year, he can resell the machine for $1,000. Based on this information, what are Eduardo's economic costs for the year, in dollars? Enter a number only, no $ sign.
Wow and beautiful expert Hand written solution is not allowed
James has been working as a Mechanical Engineer ever since he graduated five years ago. Two years ago, he bought and financed a new $25,000 Jeep Compass and still owes $15,750 on his car loan. He has never been late with a car payment. James has one major credit card, with a $1,000 limit. He has had it since his senior year of college and was two months late with a payment one time during that first year. He is currently carrying a balance of $600 on this card. In the last year, James applied for six store credit cards at places that he shops a lot so that he can earn points and get discounts. He carries no balances Part 1: Calculate James’ credit score. Recalculate his credit score if he had not opened the six store credit cards. Part 2: James is tired of paying rent and would like to purchase a condo so that he can start building equity in his home. He is looking for a 30-year mortgage to purchase a $240,000 condo. What interest rate does James qualify for on a mortgage with his…
I asked this question it was not answered and I was charged please issue me a refund and answer this question. Dina is working for a consulting firm making $60,000 per year but considers starting her own consulting company. Dina has determined that to launch the business, she needs to invest $100,000 of her own funds. The annual cost of running the business will include $70,000 for the rent of the office space, $210,000 for employee wages, and $5,000 for materials and utilities. Dina plans to manage the business, which means that she will have to quit her current job. Suppose that the interest rate (or rate of return) on investments in the economy is 6%. Dina's total implicit cost per year is . Dina's total cost per year is .
The following table shows the end of the year account entries of a small company Item Amount ($) Total Revenue 560,000.00 Wages and Salaries 420,000.00 Ingredients and Materials 50,000.00 Interest paid 10,000.00 Other Payments 10,000.00 Forgone Salary 60,000.00 Forgone rent 12,000.00 Forgone interest 4,500.00 a. According to the above information calculate the following: I. Implicit and explicit cost II. Economic profit and normal profit/loss b. Briefly explain the following economic concepts with appropriate examples I. Economies of scale and diseconomies of scale II. Law of diminishing marginal returns and increasing marginal returns
Sabrine purchased 4,500 shares of a mutual fund at an offer price of $8.88 per share. Later, she sold the investment for $7.38 per share. During the time she owned the shares, the fund paid a dividend of $0.52 per share. What was her return on her investment? (Round to the nearest tenth.)
3
Many retirement funds charge an administrative fee equal to 0.25% on managed assets. Suppose that Alex and Spenser each invest $50,000 in the same year. Alex invests in a no-load fund (that doesn’t charge the 0.25% fee) and earns 5% a year. Spenser uses another retirement fund that charges the 0.25% fee and so only earns 4.75%. After 30 years, how much more will Alex have than Spenser?