What is the accounting profit of Oliver’s salon business? Is the accounting profit equal to the business’ economic profit? If not, please show what the economic profit is. If you were Oliver, would you open the business and why?
Oliver is a hairstylist and is going to start his own salon business. Before he opens...
Matthew is convinced that he should start his own IT business. In order to do so, he must quit his current job. In deciding to quit and start his own business, the salary Matthew earns at his current job is an) cost. The salary that Mark earns at his present employ is: Multiple Choice opportunity Oo oo o verable
Charles lives in Detroit and runs a business that sells pianos. In an average year, he receives $716,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $416,000; he also pays wages and utility bills totaling $274,000. He owns his showroom; if he chooses to rent it out, he will receive $7,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Charles does...
Jake lives in Denver and runs a business that sells boats. In an average year, he receives $711,000 from selling boats. Of this sales revenue, he mus pay the manufacturer a wholesale cost of $411,000; he also pays wages and utility bills totaling $279,000. He owns his showroom; if he chooses to rent it out, he will receive $1,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Jake does...
Fred quits his job with a big accounting firm, where he was earning $95,000 per year, to start his own accounting business in a building he owns. He previously rented the building to someone who paid him rent of $22,000 per year, but now Fred collects no rent because he is using the building himself. Fred pays himself a salary of $32,000 per year and has other expenses of $25,000 per year. The yearly economic cost for Fred's accounting business...
1. Hadey's House of Hummus (HHH) is really taking off and he is considering expanding his business by selling franchises. He estimates that from the moment a franchise opens, it will earn approximately $60000 per year, but that the revenue will increase continuously at a rate of 8% per year. The prevailing interest will be 3.5% for the foreseeable future. a. What is the present value of a 4-year franchise? b. What would the present value of a 4-year franchise...
Joe quits his computer programming job, where he was earning a salary of $50 comma 000 per year, to start his own computer software business in a building that he owns and was previously renting out for $30,000 per year. In his first year of business he has the following expenses: salary paid to himself, $47,500; rent, $0; and other expenses, $25,000. Find the accounting cost and the economic cost associated with Joe's computer software business. The accounting cost of...
William Howe must decide whether to start a business renting beach umbrellas at an ocean resort during June, July, and August of next summer. He believes that he can rent each umbrella to vacationers at $7 a day, and he intends to lease 40 umbrellas for the three-month period for $4,000. To operate this business, he does not have to hire anyone (but himself), and he has no expenses other than the leasing costs and a fee of $3,000 per...
Joe quits his computer programming job, where he was earning a salary of $65,000 per year, to start his own computer software business in a building that he owns and was previously renting out for $20,000 per year. In his first year of business he has the following expenses: salary paid to himself, $42,500; rent, $0; and other expenses, $30,000. Find the accounting cost and the economic cost associated with Joe's computer software business. (Enter numeric responses using an integer.)...
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...
7. Ryan has opened his own delivery business. His revenue in the first year is $186,000. He paid $41,000 to buy a delivery truck, which depreciated by $6000 in the first year. He paid $13,000 for gas and $2200 for insurance. Prior to starting the delivery business Ryan had owned a hotel. With the hotel Ryan had made an annual accounting profit of $119,000. He sold the hotel for $280,000. He used part of the money from the sale to...