After graduation, you face a choice. You can work for a multinational consulting firm and earn a starting salary (including benefits) of $35,000, or you can start your own consulting firm using $5,000 of your own savings. If you keep your money in a savings account, you can earı an interest rate of 6 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 $15,000 for rent, $1,500 for office supplies, $22,000 for labor, and $4,600 for telephone expenses. After operating your consulting firm for a year, your total revenues are $90,000. Instructions: Enter your answers as a whole number. a. What is your accounting profit? $ b. What is your economic profit? %24
After graduation, you face a choice. You can work for a multinational consulting firm and earn a starting salary (including benefits) of $35,000, or you can start your own consulting firm using $5,000 of your own savings. If you keep your money in a savings account, you can earı an interest rate of 6 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 $15,000 for rent, $1,500 for office supplies, $22,000 for labor, and $4,600 for telephone expenses. After operating your consulting firm for a year, your total revenues are $90,000. Instructions: Enter your answers as a whole number. a. What is your accounting profit? $ b. What is your economic profit? %24
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.6P
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