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 $6,000 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 $14,000 for rent, $1,600 for office supplies, $22,000 for labor, and $4,900 for telephone expenses. After operating your consulting firm for a year, your total revenues are $102,000. Instructions: Enter your answers as a whole number. a. What is your accounting profit? $ 44,500| b. What is your economic profit? $ 4,150

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 $6,000 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 $14,000 for rent, $1,600 for office supplies, $22,000 for labor, and $4,900 for telephone expenses. After operating your consulting firm for a year, your total revenues are $102,000. Instructions: Enter your answers as a whole number. a. What is your accounting profit? $ 44,500| b. What is your economic profit? $ 4,150

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Your 13-year old cousin knows that you are in college and learning corporate finance. She is very interested in knowing about the time value of money and tells you: “Cousin, I want to be a millionaire and learn everything about the time value of money. I need you to explain some concepts that I read on the internet, but I don’t quite understand. 1.What is compounding and discounting? 2.What is the difference between them? 3.why should I be willing to invest in the promise that I will receive a future payment? 4.Does the answer depend on who is making the promise?"
What causes the yield on a discount bond to exceed the coupon rate on a bond?
Would you take stock options in lieu of a higher salary?Why or why not?
A bond provides a fixed return on the buyer’s investment. True or false
An employer-provided retirement savings plan is -- an opportunity for employees to get a raise an opportunity for employees to pay more taxes an opportunity for employees to make pretax retirement contributions an opportunity for employees to save for short-term goals
You buy a bond that has an annual interest rate of 2 percent and a coupon of $4. What is the price of the bond?
After graduation, you face a choice. One option is to work for a multinational consulting firm and earn a starting salary (benefits included) of $40,000. The other option is to use $6,000 in savings to start your own consulting firm. You could earn an interest return of 5 percent on your savings. 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 total includes $9,000 in rent, $850 in office supplies, $18,000 for office staff, and $3,500 in telephone expenses. Your explicit costs are $ Your implicit costs are $
You are working for a company that is considering investing in a foreign country. Investing in countries with different traditions is an important element of your company's long-term strategic goals. As such, management has requested a report regarding the attractiveness of alternative countries based on the potential return of FDI. Write your report to discuss how you would measure country attractive and eventually making a investment choice in a particular country.
After graduation, you face a choice. You can work for a multinational consulting firm and earn a starting salary (including benefits) of $40,000, or you can start your own consulting firm using $5,000 of your own savings. If you keep your money in a savings account, you can earn an interest rate of 7 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 $14,000 for rent, $1,000 for office supplies, $24,000 for labor, and $4,500 for telephone expenses. After operating your consulting firm for a year, your total revenues are $88,000. Instructions: Enter your answers as a whole number. a. What is your accounting profit? 2$ b. What is your economic profit? 2$
Emily and Joel Schumaker 1.Emily and Joel Schumaker are married clients who have just been approved for a twenty-year, $150,000 mortgage. They have been given a choice of two loans. One loan has an annual percentage rate (APR) of 8 percent and does not carry a fee, and the other has an APR of 7.5 percent but carries a discount fee of 2 percent of the initial loan amount. The fee for the second mortgage is payable in cash at loan inception and cannot be financed with the loan. From a present value cost perspective, which loan is the better deal, assuming (a) they sell their home immediately after making ten years’ worth of payments and (b) they require a 9 percent effective annual rate of return? Stated another way, which option has the lower cost? When conducting the analysis, assume all required payments are made at the end of each month and that interest is compounded monthly. Remember to consider the difference in loan payment, the difference in remaining balance at the time of…
Janine and John share profits of their partnership in the ratio of 2:3. If Janine's share in the profit for last year was P 30,000.00, how much was John's share in the profit of the business?
"Knowing how to secure your financial well-being is one of the most important things you'll ever need in life. You don't have to be a genius to do it. You just need to know a few basics, form a plan, and be ready to stick to it. No matter how much or little money you have, the important thing is to educate yourself about your opportunities. At the SEC [Securities and Exchange Commission], we enforce the laws that determine how investments are offered and sold to you. These laws protect investors, but you need to do your part, too. No one can guarantee that you'll make money from investments you make." Use the excerpt from the SEC's Guide to Saving and Investing to answer the following. Be sure to write in complete sentences. Explain different types of investments and savings accounts and how they help your money grow over time. Describe the importance of government agencies, like the SEC, in protecting your investments.