Are they now earning economic profits

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Reference no: EM131237296

Two former Northwestern University students worked in aninvestment bank at a salary of $60,000 each for 2 years afterthey graduated. Together they saved $50,000. After 2 years,they decided to quit their jobs and start a business designingWeb sites. They used the $50,000 to buy computer equipment,desks, and chairs. For the next 2 years, they took in $40,000 inrevenue each year, paid themselves $10,000 annually each,and rented an office for $18,000 per year. Prior to the investment,their $50,000 was in bonds earning interest at a rate of10 percent. Are they now earning economic profits?

Reference no: EM131237296

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