Financial consulting firm

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Sally quit her job as a CFO where she was earning $50,000 per year to start her own financial consulting firm. She converts a building that she owns, which was previously rented for $12,000 per year, into an office. She withdraws and uses her $100,000 savings, which she was earning $5,000 (5 percent) interest per year, to start her business. In her first year of business, she earns $150,000 and has the following expenses: Utilities, $12,000; wages (paid to an assistant), $30,000, and materials, $20,000. Sally tells her friends that despite making profit, it is too costly for her to continue running her consulting firm. How do you justify Sally’s claim? Show work.

Reference no: EM13733853

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