15. Integrating Problem Samantha Roberts has a job as a pharmacist earning $30,000 per year, and...
15. Integrating Problem Samantha Roberts has a job as a pharmacist earning $30,000 per year, and she is deciding whether to take another job as the manager of another pharmacy for $40,000 per year or to purchase a pharmacy that generates a revenue of $200,000 per year. To purchase the pharmacy, Samantha would have to use her $20,000 savings and borrow another $80,000 at an interest rate of 10 percent per year. The pharmacy that Samantha is contemplating purchasing has...
Suppose an assistant professor of economics is earning a salary of $80,000 per year. One day she quits her job, sells $115,000 worth of bonds that had been earning 4 percent per year, and uses the funds to open a bookstore. At the end of the year, she shows an accounting profit of $87,500 on her income tax return. 1. What is her economic profit? Her economic profit for the year is ? 2. What is her accounting profit?
Jim resigns from his job, from which he was earning $40,000 per year, and then uses his own savings as the only source of capital to start a new firm. In the first year, his revenue is $120,000 and the total explicit cost is $60,000. Jim does not want to reveal how much own-savings he uses in his business, but implies that if the interest rate was higher than 5%, he would prefer not to start his own business. Refer...
Lydia is trained as a statistician. She has a job offer with a business consulting company where she will earn $100,000 a year. However, she wants to start her own business consulting firm. She expects the firm to generate annual revenues of $300,000. Her expenses from the consultancy is given in the table below. What is her economic profit? Expense Item Annual Cost in dollars Rent for office space $60,000 Compensation for Hired Employees $40,000 Software Applications $20,000 o А...
A prospective MBA student earns $60,000 per year in her current job and expects that amount to increase by 14% per year. She is considering leaving her job to attend business school for two years at a cost of $40,000 per year. She has been told that her starting salary after business school is likely to be $80,000 and that amount will increase by 14% per year. Consider a time horizon of 10 years, use a discount rate of 9%,...
Case 2 Jim resigns from his job, from which he was earning $40,000 per year, and then uses his own savings as the only source of capital to start a new firm. In the first year, his revenue is $120,000 and the total explicit cost is $60,000. Jim does not want to reveal how much own- savings he uses in his business, but implies that if the interest rate was higher than 5%, he would prefer not to start his...
Violet quit her job on Bay street earning $91,000 a year to start her own financial planning business. She earned $171,000 in revenue. She paid herself $100,000 and spent $30,000 on materials, rent, client retention etc. Based on this information, what were her economic profit, economic costs and her accounting costs?
Although Goldman Sachs paid Heather $110,000.00 per year, she was not satisfied with her job. She had loved going white-water rafting and skiing with her family in Utah since she was a little girl. So last year, she decided to open her own business: Family Adventures. During the summer, she takes families on different white-water trips, and in the winter, she leads clients on skiing trips. To start her business, Heather borrowed $100,000 from a bank and used $100,000.00 of...
Although Goldman Sachs paid Heather $120,000.00 per year, she was not satisfied with her job. She had loved going white-water rafting and skiing with her family in Utah since she was a little girl. So last year, she decided to open her own business: Family Adventures. During the summer, she takes families on different white-water trips, and in the winter, she leads clients on skiing trips. To start her business, Heather borrowed $100,000 from a bank and used $90,000.00 of...
Although Goldman Sachs paid Heather $90,000.00 per year, she was not satisfied with her job. She had loved going white-water rafting and skiing with her family in Utah since she was a little girl. So last year, she decided to open her own business: Family Adventures. During the summer, she takes families on different white-water trips, and in the winter, she leads clients on skiing trips. To start her business, Heather borrowed $100,000 from a bank and used $120,000.00 of...