Ask Question
21 July, 18:13

Imagine that you open your own business. In the first year your business generate $300,000 in revenues. You also incur various accounting costs associated with operating the business, such as the rental cost of the office, office equipment, licenses and so on. These accounting costs add up to $80,000. Also assume that in order to run this business you had to give up your previous job that paid $120,000/year. In the first year of operations, what was the economic profit?

+5
Answers (1)
  1. 21 July, 19:48
    0
    Economic profit = $100,000

    Explanation:

    Giving the following information:

    In the first year, your business generates $300,000 in revenues.

    Accounting costs add up to $80,000.

    Also, assume that to run this business you had to give up your previous job that paid $120,000/year.

    The economic value of the business must include the opportunity cost of leaving the previous job.

    economic profit = 300000 - 80000 - 120000 = $100,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Imagine that you open your own business. In the first year your business generate $300,000 in revenues. You also incur various accounting ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers