Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter22: Getting Divisions To Work In The Firm’s Best Interests
Section: Chapter Questions
Problem 22.3IP
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Question
Zippy is earning $25,000 per year working for Joe's Car Repair. He also has savings of $150,000, on which he is earning 10% annual interest. He decides to leave Joe's Car Repair to invest his savings in starting his own car repair business.
In the first year, Zippy's Speedy Car Repair ears revenues of $200,000 and has explicit costs of $100,000.
Zippy's economic profit (or loss) in the first year is $. (round your answer to the nearest dollar. )
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