23, Abiola, a programmer, earned $35,000 in 2015, but in 2016, he began to manufacture body boards. After one year, he submitted the following data to his accountant. He stopped renting out his apartment for $3,500 a year and used it as his factory. The market value of the apartment increased rom $70,000 to $71,000. He spent $50,000 on materials, phone, utilities, etc. He leases machines for $10,000 a year. He paid $15,000 in wages. He used $10,000 from his savings account, which pays 5% a year interest. He borrowed $40,000 at 10% a year from the bank. he sold $160,000 worth of body boards. Normal profit is $25,000 a year. Question: Calculate Abiola's economic profit in 2016, and if Abiola's accountant recorded the depreciation on Abiola's apartment during 2016 as $7,000, calculate Abiola's accounting profit or loss in 2016.

23, Abiola, a programmer, earned $35,000 in 2015, but in 2016, he began to manufacture body boards. After one year, he submitted the following data to his accountant. He stopped renting out his apartment for $3,500 a year and used it as his factory. The market value of the apartment increased rom $70,000 to $71,000. He spent $50,000 on materials, phone, utilities, etc. He leases machines for $10,000 a year. He paid $15,000 in wages. He used $10,000 from his savings account, which pays 5% a year interest. He borrowed $40,000 at 10% a year from the bank. he sold $160,000 worth of body boards. Normal profit is $25,000 a year. Question: Calculate Abiola's economic profit in 2016, and if Abiola's accountant recorded the depreciation on Abiola's apartment during 2016 as $7,000, calculate Abiola's accounting profit or loss in 2016.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter16: Interest, Rent, And Profit

Section: Chapter Questions

Problem 2WNG

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