You decide to start your own martial arts studio. You quit your $3,000 per month job, and earn $4,500 per month in total revenue. To operate, it costs you... $2,500 per month to rent the building (in a lease contract) $500 per month in business licensing and regulatory fees (you must pay these for the year, even if you close down) $1,000 per month in staff wages (at-will; can let go of employees at any time) $100 per month in cleaning supplies
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You decide to start your own martial arts studio. You quit your $3,000 per month job, and earn $4,500 per month in total revenue. To operate, it costs you...
$2,500 per month to rent the building (in a lease contract)
$500 per month in business licensing and regulatory fees (you must pay these for the year, even if you close down)
$1,000 per month in staff wages (at-will; can let go of employees at any time)
$100 per month in cleaning supplies
Step by step
Solved in 2 steps
- 1. You decide to start your own martial arts studio. You quit your $3,000 per month job, and earn $4,500 per month in total revenue. To operate, it costs you... $2,500 per month to rent the building (in a lease contract) $500 per month in business licensing and regulatory fees (you must pay these for the year, even if you close down) $1,000 per month in staff wages (at-will; can let go of employees at any time) $100 per month in cleaning supplies What is your monthly accounting profit? What is your monthly economic profit? What is your average fixed cost per student if you have 6 students? What is the yearly total for variable costs? Which of the costs was an implicit cost?Suppose, you start your own business which is a pet store. The total cost of purchasing supplies and hiring labor is $50,000 per year. To run the pet store, you quit your job that pays $45,000 per year and use the building that you already own (a building like yours rents out for $60,000 per year). Also, your car payment is $24,000 per year (you may use your car for the business sometimes). What is the total opportunity cost of opening up a pet store for a year?You're a graduate and the company that hires you offers a job that includes a paid apartment in Austin. You only need to pay for services and maintenance. You go ahead and make calculations and come up that each year you need to pay $36,000 to cover all expenses. Each year it sums up to $36,500 and every consequent year increasing by $500 through year 10. At an interest rate of 10% per year, the present worth of the maintenance costs are going to be how much?
- Consider the following scenario in relation to your Notary, Loan Signing Agent and Marriage officiant practice in Hawaii and determine the opportunity cost of leaving your job to become an entrepreneur. You currently make $90,000 per year at your job plus benefits (equal to 30% of your salary). On January 1 of the New Year, you start your own business. After the first year, your accountant informs you that you made $45,000 and out of that you paid $6,000 for health insurance. What was your opportunity cost? If your opportunity cost is higher than you would like, how can you lower your opportunity cost in the future years?The median annual income for someone with an Associates Degree is $31,936. The median annual income for someone with a Bachelor's Degree is $45,221. Suppose you have an associate's degree. If you quit your job and go back to school to study two years for a bachelor's degree, it will cost you $55,000 in tuition and fees plus approximately $64,000 in lost earnings. After graduation, how long will it take you to earn back that money?The cardio equipment at a fitness studio needs to be replaced. The cost of new equipment is $16 500. The owner of the studio does not have enough cash to pay for it. She has two options: • Use a line of credit with an interest rate of 12.4%, compounded monthly. • Lease the equipment for 2 years, for $1000 down and $480 each month. a) What is the cost of buying with a line of credit if the owner pays off the loan in 2 years? b) What is the cost of leasing for 2 years? c) The equipment depreciates at 30% per year. What is its value after 2 years?
- John got a new job through Island Recruiting Company.The job pays $55K per year, and the agency fee is equal to 30% of 1 month’s pay.How much must the employer pay the agency?In the upcoming year, the income from your current job will be $50,000. There is a 0.5 chance that you will keep your job and earn this income, and 0.2 chance that you will get a rise and earn 75,000. However, there is 0.3 chance that you will be laid off, putting you out of work for a time and forcing you to accept a lower paying job. In this case, your income is $25.000. The expected value of your income is thus $47,500.a) If your utility function has the formula 500I - 0.0002I2, determine the risk premium associated with this lottery.b) Provide an interpretation of the risk premium in this particular example.You plan on starting a lawn mowing business by investing $700 of your own money and purchase $500 of equipment. You plan to work 330 hours per month and charge your customers $18 per hour. Your anticipated costs include: Advertising Gas $18.00 per month Depreciation $1.40 per hour $33.00 per month $10.00 per hour Assistant's Wages Miscellaneous Expenses $40.00 per month Calculate the Equipment net of Accumulated Depreciation at the end of your second month of business on the budgeted balance sheet. +
- You are currently in a job as a chef in a restaurant earning $100,000 per year. You are considering opening up a restaurant in a building which you currently own. You estimate that, if you wanted to, you could rent out your building for $25,000 per year to another restaurant. Last year, your revenues and expenses from the restaurant were the following: Revenues $400,000Cost of Food $120,000Salaries/Wages $100,000Utilities $25,000Taxes $20,000 What is your accounting profit? Show your calculations What is your economic profit? Show your calculations Assuming that you are indifferent between being a chef or owning a restaurant, should you open up your restaurant? Explain why. Now suppose that instead of owning the building where your restaurant will be located, you had to pay rent of $25,000 per year for the building. Will your answers to parts 1-3 change? Show your calculations. Explain how and why your answers will change or…You have a lawn mowing business. You plan to work 250 hours per month and charge your customers $22 per hour. Your anticipated costs include: Advertising $25 per month Gas $1.50 per hour Depreciation on mowers $25 per month Assistant's Wages $7.00 per hour Miscellaneous Expenses $50 per month You plan on paying 60% of your monthly costs in the month incurred, 30% in the second month and the remainder in the following month. Calculate the amount of cash payments for operating activities in your second month of business.You have a lawn mowing business. You plan to work 300 hours per month and charge your customers $23 per hour. Your anticipated costs include: Advertising $30 per month Gas $1.20 per hour $25 per month $9.00 per hour $20 per month Depreciation on mowers Assistant's Wages Miscellaneous Expenses You plan on paying 60% of your monthly costs in the month incurred, 30% in the second month and the remainder in the following month. Calculate the amount of cash payments for operating activities in your second month of business.