Fatima is an owner of a building and she can lease her building for 100,000 AED per year for two years. The explicit cost of maintaining the building is 30,000 AED, and the implicit cost is 50,000AED. All revenues are received, and costs borne, at the end of each year. If the interest rate is 10 percent, determine the present value of the stream of Accounting Profits? Economic Profits?

Fatima is an owner of a building and she can lease her building for 100,000 AED per year for two years. The explicit cost of maintaining the building is 30,000 AED, and the implicit cost is 50,000AED. All revenues are received, and costs borne, at the end of each year. If the interest rate is 10 percent, determine the present value of the stream of Accounting Profits? Economic Profits?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 12P

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