Engineering Economy, Student Value Edition (17th Edition)
17th Edition
ISBN: 9780134838137
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 14, Problem 3P
To determine
Ranking the alternatives.
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After graduation, you face a choice. You can work for a multinational consulting firm and earn a starting salary (including benefits) of
$45,000, or you can start your own consulting firm using $6,000 of your own savings. If you keep your money in a savings account,
you can earn an interest rate of 5 percent. 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 expenses include $14,000 for rent, $1,600 for office supplies, $22,000 for labor, and $4,900 for
telephone expenses. After operating your consulting firm for a year, your total revenues are $102,000.
Instructions: Enter your answers as a whole number.
a. What is your accounting profit?
$ 44,500 8
b. What is your economic profit?
$ 4,150
Your monthly budget is $2500.00. You have been asked to save 25% of your monthly budget.
Please show the formula that you would use in excel.
Often it makes a lot of sense to spend some money now so you can save more money in the future. Consider filtered water. A high-tech water filter costs about $60 and can filter 7,200 ounces of water. This will save you purchasing two 20-ounce bottles of filtered water every day, each costing $1.15. The filter will need replacing every 6 months. How much will this filter save you in a year’s time?
Chapter 14 Solutions
Engineering Economy, Student Value Edition (17th Edition)
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