Repayment of the principal of the loan

Assignment Help Macroeconomics
Reference no: EM131163608

Norita has a job as a manager in a bakery shop in Jitra earning RM30,000/year. She is considering to take another job as a manager of another bakery shop in Alor Star for RM40,000/year or to purchase a bakery shop in Jitra that will generate a revenue of RM200,000/year.

To purchase the bakery shop, Norita would have to use her RM20,000 savings and borrow another RM80,000 at an interest rate of 10% per year. The bakery shop that Norita intend to purchase has additional expenses of RM80,000 for supplies, RM40,000 for hired worker, RM10,000 for rent, and RM5,000 for utilities.

Assume that income and business taxes are zero and that the repayment of the principal of the loan does not start before three years.

What would be the business (accounting) and economic profit if Norita decided to purchase the bakery shop? Should Norita purchase the bakery shop? Explain.

Suppose that Norita expects that another bakery shop will open in Jitra at the end of three years and this will drive the economic profit of her bakery shop to zero. What would the revenue of her bakery shop be in three years?

Reference no: EM131163608

Questions Cloud

Demand and supply diagram for bagel : What could be responsible for this pattern - a rise in the price of flour or a rise in the price of milk? Illustrate and explain your answer with demand and supply diagram for bagel
Who determines ethical standards for advertising : In what ways has advertising affected American culture? What are the key persuasive techniques used in consumer advertising? Illustrate with specific examples, explaining how each technique works.
Government of nicaragua decided to discontinue : In 2009, the government of Nicaragua decided to discontinue its largest conditional cash transfer program, and the country has not had such a program in place since then.
Should use as evidence primarily passages from the work : Analytical essays should be focused on making a debatable claim about the work in question; creative submissions should be focused on presenting a work or kind of work from a different angle. Informational essays or essays consisting of summary ar..
Repayment of the principal of the loan : Assume that income and business taxes are zero and that the repayment of the principal of the loan does not start before three years. What would be the business (accounting) and economic profit if Norita decided to purchase the bakery shop? Shoul..
Perform the calculations for project : Based on just ONE of your calculations should the project be accepted or rejected - Critique the results of the other three calculations you completed.
Identify all of the hipaa violations present in the scenario : Identify and discuss all of the HIPAA violations present in this scenario. Also, point out situations that do not represent HIPAA violations. For those situations in which you believe a violation has taken place, make a recommendation to correct t..
What is your estimate of the fluid viscosity : The tube diameter is 2 mm, and the rate of draining is found to be 1.9 cm3 /s. What is your estimate of the fluid viscosity? Is the tube flow laminar?
In examining the costs of pension plans : In examining the costs of pension plans, Helen Kaufman, CPA, encounters certain terms. The components of pension costs that the terms represent must be dealt with appropriately if generally accepted accounting principles are to be reflected in the fi..

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  The role of government in the economy

With the ongoing debate about Healthcare and the current efforts to pull the economy out of the doldrums, the question comes up what is the role of government in the free market?

  Discuss a hypothetical economy where both the price

Suppose the following equations discuss a hypothetical economy where both the price level and interest rates are fixed.

  Calculate the equilibrium exchange rate

Discuss the differences between the classical and Keynesian versions of macroeconomic model - Calculate the equilibrium exchange rate, level of income and net exports.

  Discount to active and retired military personnel

Home Depot, a home and garden supply store, offers a 10% discount to active and retired military personnel, reservists, and to their families. Home Depot certainly has some market power, and can identify military personnel using their military ide..

  What equal annual deposits must be made at

What equal annual deposits must be made at t=2,3,4,5,8,9 and in 10 in order to accumulate $40,000 at t=15 if money is worth 10% compounded annually?

  Discuss the competitive strategies

Question: Malaysia Airlines is facing tough challenges due to the highly competitive home market and the recent air disasters involving flights MH370 and MH17. Discuss the competitive strategies (in terms of ECONOMICS) that the airline could imple..

  What policies are needed to achieve the target

List the arguments on each side of this debate. What are the strongest two arguments on each side? What policies are needed to achieve this target? What do you recommend?

  Tommy and how much is taxed to virginia

Virginia gives her 14-year-old grandson, Tommy, $10,000 in common stock. One month later, a $100 dividend is paid to Tommy on the stock. How much income is taxed to

  Elucidate the macroeconomic and microeconomic concepts

Elucidate the macroeconomic and microeconomic concepts and how they relate to the management of a global organization.

  Filling blanks from utility theory

The entire satisfaction consumer gets from consuming a good or service is________ utility, but the extra or additional satisfaction that a consumer gets from a good or service is ________ utility.

  Illustrate what rate of inflation characterized this economy

Illustrate what rate of inflation characterized this economy during 1994.

  We often look at gross domestic product and how it relates

We often look at gross domestic product and how it relates to a recession. In the U.S. we recently went through an economic decline. Do you find people consume less overall when their is a downturn economy?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd