After graduation, you face a choice. You can work for a multinational consulting firm and earn a starting salary (including benefits) of $45,000, or you can start your own consulting firm using $5,500 of your own savings. If you keep your money in a savings account, you can earn an interest rate of 5 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 $18,000 for rent, $1,000 for office supplies, $26,000 for labor, and $4,700 for telephone expenses. After operating your consulting firm for a year, your total revenues are $95,000. Instructions: Enter your answers as a whole number. a. What is your accounting profit? $ b. What is your economic profit?

After graduation, you face a choice. You can work for a multinational consulting firm and earn a starting salary (including benefits) of $45,000, or you can start your own consulting firm using $5,500 of your own savings. If you keep your money in a savings account, you can earn an interest rate of 5 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 $18,000 for rent, $1,000 for office supplies, $26,000 for labor, and $4,700 for telephone expenses. After operating your consulting firm for a year, your total revenues are $95,000. Instructions: Enter your answers as a whole number. a. What is your accounting profit? $ b. What is your economic profit?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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