The sole proprietor of the "Books and Children" bookstore receives all accounting profits earned by her firm and a $28,000-a-year salary she pays herself. She has a standing salary offer of $35,000 a year if she agrees to work for alarge corporation. If she had invested her capital outside her own company, she estimates that would have returned $22,000 a year. Last year, her accounting profit was $50,000.a. Calculate her implicit cost.b. Calculate her economicprofit.

The objective of this question is to calculate the implicit cost and the economic profit for the…

Answered: The sole proprietor of the "Books and…

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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The Green Giant Corp. has a management contract with its CEO. The company will need to pay her $3,350,000 one-time when she has been with the company for 5 years The company wants to set aside an equal amount of funds each year until then to cover this anticipated cash outflow. The company can earn 8 percent on these funds. What should the annual deposit be to accumulate enough to cover the required payment?
Rachel owns 100 percent of a gift shop with an equity value of $150,000. If she keeps the shop open 5 days a week, EBIT is $75,000. If the shop remains open 6 days a week, EBIT increases to $92,000 annually. Rachel needs an additional $50,000 which she can raise today by either selling stock or issuing debt at an interest rate of 7 percent. The principal amount would be repaid in equal annual payments at the end of the next five years. Ignore taxes. What will be the cash flow for the year to Rachel if she issues debt, remains open 5 days a week, and distributes all the residual cash flow to the shareholders? Multiple Choice $46,125 $61,500 $65,000 $71,500 $67,880
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Ac Please answer fast
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