You are considering opening your own restaurant. To do so, you will have to quit your current job, which pays $46k per year, and cash in your life savings of $200k, which have been in a certificate of deposit paying 6% per year. You will need this $200k to purchase equipment for your restaurant operations. You estimate that you will have to spend $4k during the year to maintain the equipment so as to preserve its market value at $200k. Fortunately, you own a building suitable for the restaurant. You currently rent out this building on a month-by-month basis for $2,500 per month. You anticipate that you will spend $50k for food, $40k for extra help, and $14k for utilities and supplies during the first year of operations. There are no other costs involved in this business. We want to know how much revenue your restaurant must bring in order to have positive economic profits. a. What is your direct cost (or explicit cost) of operating the restaurant during the first year? I b. What is your opportunity cost (or implicit cost) of operating the restaurant during the first year?

You are considering opening your own restaurant. To do so, you will have to quit your current job, which pays $46k per year, and cash in your life savings of $200k, which have been in a certificate of deposit paying 6% per year. You will need this $200k to purchase equipment for your restaurant operations. You estimate that you will have to spend $4k during the year to maintain the equipment so as to preserve its market value at $200k. Fortunately, you own a building suitable for the restaurant. You currently rent out this building on a month-by-month basis for $2,500 per month. You anticipate that you will spend $50k for food, $40k for extra help, and $14k for utilities and supplies during the first year of operations. There are no other costs involved in this business. We want to know how much revenue your restaurant must bring in order to have positive economic profits. a. What is your direct cost (or explicit cost) of operating the restaurant during the first year? I b. What is your opportunity cost (or implicit cost) of operating the restaurant during the first year?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are considering opening your own restaurant. To do so, you will have to quit
your current job, which pays $46k per year, and cash in your life savings of $200k,
which have been in a certificate of deposit paying 6% per year. You will need this
$200k to purchase equipment for your restaurant operations. You estimate that you
will have to spend $4k during the year to maintain the equipment so as to preserve
its market value at $200k. Fortunately, you own a building suitable for the
restaurant. You currently rent out this building on a month-by-month basis for
$2,500 per month. You anticipate that you will spend $50k for food, $40k for extra
help, and $14k for utilities and supplies during the first year of operations. There
are no other costs involved in this business. We want to know how much revenue
your restaurant must bring in order to have positive economic profits.
a. What is your direct cost (or explicit cost) of operating the restaurant during the
first year?
b. What is your opportunity cost (or implicit cost) of operating the restaurant
during the first year?
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O Focus
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