Steven John owns a cab for which he purchased a Rs. 18,000 operating licence two years ago. Mr. John makes Rs. 36,000 per year as an individual, but has the option of selling the cab and permit for Rs. 73,000 and working as a dispatcher for Santino Taxi Co. For a 40-hour week, the dispatcher role earns Rs. 31,000 per year. Mr. John works about 55 hours each week driving his own cab. He will invest Rs. 73,000 if he sells his firm and can make a 10% return. Needed 1. Calculate the opportunity cost of owning and managing your own firm. 2. Should Mr. John sell the cab and take the dispatcher post merely on financial grounds? 3. Discuss the qualitative and quantitative elements that Mr. John should take into account
Steven John owns a cab for which he purchased a Rs. 18,000 operating licence two years ago. Mr. John makes Rs. 36,000 per year as an individual, but has the option of selling the cab and permit for Rs. 73,000 and working as a dispatcher for Santino Taxi Co. For a 40-hour week, the dispatcher role earns Rs. 31,000 per year. Mr. John works about 55 hours each week driving his own cab. He will invest Rs. 73,000 if he sells his firm and can make a 10% return. Needed 1. Calculate the opportunity cost of owning and managing your own firm. 2. Should Mr. John sell the cab and take the dispatcher post merely on financial grounds? 3. Discuss the qualitative and quantitative elements that Mr. John should take into account
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 31P
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Question
Steven John owns a cab for which he purchased a Rs. 18,000 operating licence two years ago. Mr. John makes Rs. 36,000 per year as an individual, but has the option of selling the cab and permit for Rs. 73,000 and working as a dispatcher for Santino Taxi Co. For a 40-hour week, the dispatcher role earns Rs. 31,000 per year. Mr. John works about 55 hours each week driving his own cab. He will invest Rs. 73,000 if he sells his firm and can make a 10% return.
Needed
1. Calculate the opportunity cost of owning and managing your own firm.
2. Should Mr. John sell the cab and take the dispatcher post merely on financial grounds?
3. Discuss the qualitative and quantitative elements that Mr. John should take into account.
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